This is such an excellent piece on how the US risk and compliance tooling works in the financial system, it almost doesn't bother that the author seems to think it's all great!

I first came across Patrick McKenzie (no relation to the ex-OC star cum super serious investigative journalist) aka patio11 when I was doing Tether research. McKenzie's newsletter, Bits About Money is always highly researched and usually worth the read, but this piece on the Southern Poverty Law Center is definitely worth your time because it is an education in how banking works from a compliance perspective.

As you may have heard, the SPLC has fallen under the dour gaze of the government and things do not look good for them.

I was previously unaware of the extent to which the SPLC played an integral role in the financial surveillance tooling in this country.

If you were to have a thousand conversations in the financial industry about non-criminal clients you don’t want to do business with, you would hear the SPLC cited more than any other group or data product.

So it is even more surprising that they should have been so foolish as to operate other aspects of their business in such a way as to fall foul of this same apparatus.

But then again, if you read this piece, you will learn that the laws around bank fraud are rather broad...as in it seems like they were designed to trap everyone and make it easy to prosecute anyone.

The Court held there is no materiality requirement under §1014. You can be convicted of fraud for a lie that doesn’t matter if you tried to influence any decision of a bank.

design of this system is so you don’t have to prove the hard crime, the one where you’re being creative and taking some risks and pushing the envelope. You only have to prove the easy one, in exactly the same way hundreds of cases have won before. You will then use the spectre of conviction for (minimally) that as procedural leverage, and your target will likely settle.

If you are going to read one long article this weekend, make it this.