Open state. Welcome. Thank you for taking the time today.
It's a pleasure to be here. You invited a guy in a mask on your on your podcast. Congratulations, by the way. Appreciate that. Yeah. You are the first to have that distinction, which is great. I've had one NIM, I think, Marks, who's the founder, cofounder and CEO
of Open Secret, which, you know, kinda keeps us on on topic, but you're my you're my first NIM. So and for good reason. And and in fact, you know, the the reason I reached out and wanted to have a conversation is that you are in an incredibly interesting rare position
in,
I believe, from some great conversations you've had with with Stephen, Stefan Lovera, with, Marty Benton and others and your thread on Nostra which I'll post a link to.
You're in an interesting position to strike a balance between burn it all down on the one side and comply harder, you know, on the other. And so I think that's that's the gist of the conversation I'd like to have with you is to to find
what middle point or what middle path is there, if there is one, and to get into certainly your experiences, your insights, and what, if anything, we can do to balance out
the what to me is an incredibly
off kilter imbalance of of power and trust. And so let's start here.
You are a NIM for good reason, and therefore, you know, know, it's not as if I'm gonna point people to your LinkedIn or your Facebook profile.
You've done it before. I'll ask you to do it again here. Give us give us an introduction an introduction,
OpenState,
on
your background,
where you are, and how you got there,
and what your work looks like to the degree that you can share that.
Alright. Well, I used to be a corporate banker, and I used to manage accounts for fairly large businesses that had over a million dollars or more of, corporate lending. And so I used to assess risk. And
at one point, I just got disillusioned with the whole exercise. I realized
that the entire system, the entire financial system was really meant and rigged, and it was meant to enrich kind of a very select
class of individuals.
And this is done through incentives. It's done through messaging. It's done in a number of different ways, but I saw it and I implemented it.
So here I was, doing fairly large loans. I was being told that I was helping businesses who needed to have a new warehouse, a new piece of equipment,
but really I saw through that at some point. I was just facilitating a monetary system that was bloated
and, really incentivized
to
really help the corrupt make more money.
When a bank
doesn't have the money it lines out, is that system really fair? Because the the borrower needs to pay interest.
I saw the huge bonuses. You know, I got huge bonuses. It was great, but I couldn't sleep at night.
So wanting to make a difference.
I looked for roles. I looked for jobs. Kind of at a point where I I wanted to make a difference.
And I saw a few roles being advertised within my government. So I said, well, you know what? There's no way I'm gonna get this. I'm just gonna apply.
I applied, and it just so happened they needed somebody with banking experience.
So they took me on as a
policy and legislation
adviser, which is what I do currently. I've been doing it for a number of years.
And my initial
role was to really help
create and draft legislation and policy
that would help the local industry in my jurisdiction.
I work in a jurisdiction
with a very large financial
sector, financial services sector.
And so
I saw that as a a plus and say, well, this is my opportunity to really help and really do something that means
that will affect change around me. I said, let's do it. So I joined the government. And literally, the first day or two after I joined,
they asked me, well, do you know what
the SETF is? And so I I had no idea at the time. I really didn't know. But I I had to hit the ground running
because my focus
changed from banking
to implementing anti money laundering standards,
which is what you I think you're based in The US. That's the Bank Secrecy Act. Right. It among a number of other anti money laundering pieces
of legislation.
So my role shifted very, very quickly, and then I actually helped draft about 12 different pieces of legislation
that implemented
these anti money laundering global standards in my country. So as a bit of background, I mean, I'm I'd be repeating myself if I just went through all this again, but
my focus of the other talks that I give is really about the
subjugation
of sovereignty
by global standard setting bodies. So
I heard you speak about the DSA in one or two of your previous previous podcasts.
Yep. US won't be able to remove or or abolish the DSA
until it settles its position
in those global standard setting bodies.
The FATF, the Financial Action Task Force, is the global standard setting body that sets all of the requirements
that countries are,
for all of sense and purposes,
obligated
to implement
when it comes to KYC,
when it comes to limits,
suspicious activity reporting,
or recording and detention and
maintenance of beneficial ownership information,
sanctions.
All of those things fall within this umbrella and are, to some extent, dictated by the Financial Action Task Force.
So the Financial Action Task Force is really,
it's a global forum
where unelected bureaucrats like me
of various different countries meet and discuss, oh, what should we do next?
What do we see as wrong? What can we do to fix it?
And even though
elected officials have the ultimate say,
they are not experts. So your your elected representative,
they trust the unelected bureaucrats like me who go to those forums,
who have those important discussions,
and come back and say, well, here's what we need to do. And they have a list
list of five, ten, twenty, thirty, fifty different things that have to be implemented. And the FETF works by a system of mutual evaluation reports
where countries mutually
evaluate themselves.
You might be interested to know what The US is due for its evaluation next year. So What would that look like? What would that, in practice, open up The United States to or require The United States financial regulatory
bodies to to conduct or do?
So there is a distinction between anti money laundering and regulation.
A lot of people can confound the two. Certainly.
However,
anti money laundering is seen more as a criminal offense than a regulatory type of requirement.
And so if you're engaged in, you know,
financing terrorism
or you're you're
laundering the proceeds of crime
and here, the word crime, by the way, is increasingly nebulous,
where even just speaking out on social media is now
perceived as a crime.
So as the term is made more nebulous, its implementation
will also expand and
be prone to
an assessment and ambiguity.
And so the FATF
would meet they set the standards. They said, well, here's what we see types of criminal activities happening. Here's what the criminals are doing.
What can we do to stop it? And that's that's basically
what they say happens at those meetings.
This is the formal side of things. And then they meet and they argue for hours and hours and days and days on a particular word, a particular requirement that has to be put in,
and then it's added to the standards, and then a country like The United States has to implement it.
During
the implementation phase, which is typically two, three years,
a country can have some leeway as to how it implements it.
However, if it deviates in any way in its implementation,
it will have to justify why it deviated.
So if it used a specific term that isn't in the standard,
then assessors will come to the country and look at all the laws,
how they're applied, and say, well, look, you're using this term. It's different.
And then the country will have to explain, well, we chose this because of that. And really, the point is to be
assessed under a microscope
to make sure that you're implementing
the standards exactly to the letter. There's 40 standards pause there for a moment. Sorry about state. So one thing I'm curious about, and I think it's important certainly, I'm curious about is given, as you said rightly, that this is an unelected
group of bureaucrats.
When you say have to, what are the carrots and sticks that FATF has
to and I will I'll use The United States in as much as,
you know, we tend to be the most bravado. Certainly, under the current administration, there is not a tendency to bend the knee, tendency
to
bend
the knee
to European
or other entities. What are those carrots and sticks? What what could FATF do if they come to The United States and Department of Treasury,
I presume, has not complied in a way that they see as necessary. Oh, you're right in that The United States is at a very kind of unique position because of its role in the global financial system. But I think you're wrong about the bravado, and I think the bravado is a verbal one. Here's my opinion.
Sure.
Please. Trump was actually the one.
Mhmm. The United States had presidency over the financial action task force
when Trump was in office, and that's when they implemented
KYC
requirements for Bitcoin and digital assets.
Now
what happens if a country decides not to follow these requirements? Essentially, they get a negative rating. So the ratings follow a largely compliant,
compliant, noncompliant,
or partially compliant kind of rating system.
If you get a noncompliant or partially compliant, which are the two negative ratings, you know, will be assessed as a higher risk jurisdiction for antimony laundering depending on which requirement it is. So for example,
if it's about the transparency
of your legal entities in your jurisdiction,
if you get a partially complaint on that, it means your legal entities are very opaque, which is a very high risk
and could be very useful for criminals if they want to launder money. So that would be a serious negative rating.
When your country receives a negative rating,
typically, the FATF gives you a period to redress or gives you the option to say, well, do you wanna fix this?
While you're fixing it, you're put on a gray list. It's a it's a it's a period of observation. It's called a gray list. It's just a common term.
You'll have time then to fix the situation. Right? You'll be reassessed after that. And if you still don't do it properly, then the global financial
center
centers and the TradFi, the traditional financial system in the world, then that kicks in.
When you look at Moody's, when you look at countries a country's rating for for debt, when you look at correspondent and respondent banking relationships,
all of those are based on largely on the FATF's rating system. So
for The
US, being in its own kind of class
may not have that big of an impact because most worldwide jurisdictions have a correspondent relationship with The US. And so really, if The US doesn't follow it,
we we're still gonna maintain those relationships. Right. But if you're the multiverse
However,
it is The US
which has been the driving force behind the FATF.
And why do you why do you think or why do you know that to be the case?
Oh, I don't know that to be the case. I only know what I see. Right? And currently, The US and Europe are the two largest drivers behind the FATF
work. And let me rephrase, and that was not to challenge your knowledge. Happy to do that if that if that comes to it. But what I mean by that is
what is in it for The United States? What do you believe to be the incentives or the motivations
behind
taking the pole position, as it were, with FATA.
There's a large number of benefits for a country to have this kind of a framework in place. One is the ability to
ring fence or put some kind of limits on global financial
transfers.
Also, it gives you a certain is tax revenue?
Well, yes. Yeah. I was gonna get there. Yeah. Please go ahead. Having perfect information,
you know, we've talked about CBDCs
as a community.
I think people know what that is by now.
We know the dangers of that.
Well, essentially, if you use the traditional financial network through the main banks, if you use your bank account, you're already using something akin to a CDDC where the government has perfect information, is able to freeze your money without the process.
The travel rule is something that's being implemented and still being implemented. It's It's problematic, but that was actually put in place
while the SETF. Was under the United States presidency.
And this is good to know.
Right. So The US has been a driving force behind these KYC
global standards.
And
I think the number one reason is control and information.
What the point of that control, what the ultimate goal of that might be, that's subjective speculation.
But having perfect information on financial flows,
I think, is the number one reason. And being able to control them and to bypass due process. So the FATF and sorry. Financial the financial system KYC
requirements
are really a foot in the door
to erode
due process and erode our rights.
Searching
without a warrant used to be
illegal.
Now it's perfectly acceptable for The United States to do it, for the government to ask a bank for all of your transactions or to be able to place extra legal,
yeah, a toolkit. So all of that is actually
possible today because of the FETF and the requirements that it
requires countries to implement. For a different country, and I'm talking outside The United States, not following the FATF's requirements has immense consequences
because of their relationship
to The United States. The United States is essentially the main
stick
behind the FATF.
Most banks, if you're in Uzbekistan, you're in Uruguay, you wanna have a correspondent relationship with The US financial institution.
Could you quickly,
my background, I do appreciate and understand what a correspondent bank is and does. Could you could you give us a a quick primer on that and as to then why that is so important?
United States was a global
trade currency
and take Uruguay, for example. If a certain industry wants to buy equipment or sell their product,
it's not gonna be done in the local currency. It's gonna be done in the US dollar. So those businesses, those people need US dollars in order to trade internationally.
And the only way to obtain US dollars is through
a kind of clearing relationship
with The US banks of JP Morgan, etcetera.
So a local Uruguayan bank
will have a relationship with JPMorgan,
which will then allow the bank in Uruguay
to obtain US dollars. And once the Uruguayan bank has them, they're able to give them out to the local enterprises so they can trade, etcetera.
So
that is the implementation of the stick, and it's basically The United States that enforces this
through their traditional
banking network. If we if we back up a bit, and I do I am curious about this. So coming from it sounds like commercial banking
prior to your role in in your government. How does one how did you not know what you were walking into? I mean, is it possible to operate in a bank
and not already be buried in,
compliance requirements including FADF and other? So, where where was sort of the disconnect between your role in commercial banking and then stepping in,
you know, to the hornet's nest in my view, in terms of the need now to be part of implementing
the standards and these regulatory regimes.
You can't see me smiling right now. Are you are you saying that, judgment? Is that it? No. Well, one might one might charitably assume that that, you know, there was there was,
maybe some some some hopeful naivete, but you tell me. Right. I'll I'll let you know what I saw from the banking side. If a new business wants to have a relationship with us, we needed to know who their owners were, who the directors were. We need to have KYC and all those people.
We, as a bank, have perfect information
on the accounts, the usage,
the balances,
the type of financial activity going on. We see through their financials, where they are, where they stand, etcetera. So a bank is used to receiving
all the information it wants, especially if there's a lending relationship.
So for me, that's what I saw, and I saw the justification for it. Now going to government,
that's when I realized
that the government
also obtains this information. And that's something I didn't know. I didn't know the extent
of the anti money laundering requirements and what happens behind the scenes.
And that's
really why I created this NIM
is so that I can speak out, speak freely,
and just alert people that this is happening. It's getting worse. You have the CARF system, which is coming in 2020. Crypto asset reporting framework. Mhmm. That's
spearheaded by the same organization that's responsible
for the FATF.
Okay. Okay.
You also have a global taxation framework that's being put in place for businesses,
and they're also talking about a pillar three,
which is a global
taxation system for wealthy individuals. So once
you kind of go behind the scene,
I've sat in discussions. I've sat in with meetings with the FATF, the team that assessed my country, my my jurisdiction.
I was part in defending my jurisdiction so we could get good ratings.
I've put in legislation.
I've assessed the requirements,
identified the gaps.
I've essentially delivered what my mandate is supposed to be,
but something
basically didn't sit right within me, and that's why I created this this new.
So looking at The entire system, it was a wake up call. It was a greater wake up call than what I lived
through when I was a commercial banker.
Much more worrisome for me, what I'm seeing now, than what I saw working for a bank.
So there was some optimism, maybe some naivete. However,
I'm glad I
actually
opted to choose because now,
hopefully, I can do something about it.
Absolutely. And it does make sense as you explained that that in commercial lending,
the required information is inbound, is volunteered. You're not in a position where you effectively need to hover above and surveil and collect. It is willingly given to you because I'm a business that wishes to obtain a loan from you. So that makes a great deal of sense.
So you are to sort of summarize and take this forward a bit, you're a civil servant implementing
local implementations
or or putting in place local implementations of global standards.
You've touched on this.
What are some of the key observations that you can share that have shaped your view on how much damage these policies do, how much trust they erode
between one's government and and the individual. And I'll add one thing. I I think there will be a percentage of the audience, and I've had previous conversations recorded on this with other guests,
who I think understandably
look at KYC, they look at the Bank Secrecy Act or equivalent,
and they
some would say naively, some would say, you know, in a good natured fashion, think, well, of course, You know, just like 2% inflation in The United States. Well, of course, that's the way it's done.
So in speaking to those individuals
who may not appreciate the gravity of these tools, these these
global bodies and their rules,
What have you seen
that is a wake up call as to how they are a net negative, assuming you believe they are?
I'll take an angled approach to answering your question, if you don't mind. Please.
By stating that
your ancestors and the DNA that allows you to live today, that comprises who you are as a as a person, as a human being,
that DNA comes from a long list of ancestors. You can go up back ten thousand years. Those ancestors have lived through
everything, war, famine,
viruses,
black death in medieval times.
One thing that is instrumental to you having the life you have to live today is your ancestors
fought for due process and a respect of rights, which used to be a kind of a foundational part of The United States.
Sacrosanct.
Right. So, you know, expression, the right to property. Right? Benefiting of safety, being safe,
and being respected and not having somebody know everything about you and not having somebody put you to jail for no reason without telling you first and allowing you the opportunity to defend yourself.
We take those for granted, but they didn't just arrive. It wasn't the government that gave those to us.
It was our ancestors who fought for them with their lives quite literally.
We all have ancestors
that fought,
at least in the Western world or even in Eastern world. We all have ancestors who fought for something they believed in, to implement
a foundation
of rights in order for their
children to have a better life.
If you look at AML and KYC today, it might be small. It might be acceptable.
However, it is an erosion
of those rights.
And the erosion, once that crack is is put in place,
it's never going away.
You know that you have to remove your shoes when you take an an airplane.
You have to go through that machine where you have to raise your hands because
of the state of emergency that started in 09/11. It's being renewed every year. Since. That's what allows that because
you have a right
to have somebody not search your bags.
They need to have a warrant to do that, or they used to.
Never let any tragedy go to waste, as they say.
So so that crack is a an erosion of the rights that your ancestors fought for
that many people today
don't really value much because they take it for granted.
Yes.
And it's only when it's lost, of course, that you realize what you had. So the ability for you to transact, the ability for you to speak your own mind, the ability for you
to be able to buy things that you want, to say things that you want, to criticize the government,
all of those things are based on these rights that are being eroded today. The UK
has set up legislation that's criminalizing speech, Germany, even The US to some extent, Canada certainly.
And so,
really, to the people who look at KYC
and don't get angry, that's fine. I respect every single human being out there.
However,
there has to be some awareness of the erosion of the rights that were given to us by our ancestors
who fought for them, and we have to take that gift and
I very much appreciate that perspective, and I think it is very important to point that out that it was not always this way, and it was dramatically different. I mean, there are
films, novels,
chronicling of history in the not so distant past where we traveled without passports. We, you know, which would be a hot button issue certainly in The United States these days, but that we could conduct international commerce that,
God forbid, you had a Swiss bank account. Right? And, I know my perspective, my views on these things have evolved, but I think as you're as you're pointing out, this ultimately
comes down to our ability to think, speak, act,
transact freely,
and so much as we are not, you know, violating the rights and property of others. And, you know For for somebody who's new to this, I mean,
you know everything about a government. You have democracy,
and you have transparency.
But if the government knows everything about you,
you have a very high probability of tyranny.
Awesome. And and there's an
asymmetry
between how much the government knows about you and how much you know about the government.
Whereas the government has been putting in place powers and legislation through the FCTF and other, like, other organizations
in order to have that Information.
The the ability of citizens to know about the government
is relegated to some FOI laws that were done
dozens, you know, fifty
plus years ago in most jurisdictions.
So
those FOI laws need to
be revised. They need to be updated.
You know, if you ask me what an ideal FOI law is, is to have a law that says that everything that a government
civil servant elected representative
does has to be made public, and there's a timer.
So things that aren't highly critical
are made public right away. So people can look at their elected representative's email and say, alright. Well, what what has this person been saying, etcetera.
Everything that you send to an elected representative,
you have to know that it will be made public.
For things that are very sensitive, like this attack on Iran,
you don't want people to know that right away so you put a timer.
And the timer has to go through checks in order to be obtained.
Once it's obtained, you've proven that it's
a time sensitive critical issue that people can't know about,
then maybe it's released in five years,
but it will be released. Absolutely
nothing that government does should be kept a secret. Nothing.
And, ultimately, it's just a matter of time.
Because if you look at the JFK files, you look at
whatever investigation the FBI does, ultimately,
after fifty years, is it still critical,
time sensitive? And the answer is yes only if people acted wrongly because they wanna hide what they did. If people did
what they did and they followed the law and they did so in good conscience and there's no negative foul play involved,
they won't mind if it's made public.
In the end, it's just a matter of times. Those FOI laws really need to be updated.
Do I think it's gonna happen?
I see in my ministry, in my department,
I see an inherent
assumption
that the government has the right to know absolutely
everything about its citizens.
Right. It's not even something that's discussed. It's not it's not even brought up as should we.
It's, well, we need to know this. Let's do it. And and with that information
comes
immense liability
potential for for misuse.
Certainly. Breaches or or otherwise. Absa. We see this we see this every week, it seem.
Yeah.
And I think what's particularly
what the takeaway for me, and I hope our audience is for this, is the remark that in a true democracy, the government knows little about the people, the people know everything about the government, and the inverse is tyranny. And I think that is that's the call to arms to me is that we can observe,
I think, easily, readily
that we are in a panopticon. We as citizens, as individuals are in a complete and total panopticon as classically defined,
where the government fights for the minimal amount,
performative transparency.
So the question I think, you know, is what have you what have you seen
that has most ignited or informed
your perspective? I don't know if you care to add any any particular examples. Again, I know that can be touchy, but I think you have more than adequately addressed
at a macro level
why
the inaction,
or enacting of these of these rules and these bodies is is a tremendous problem.
I mean, there's a lot of different threads that I could pull here. Let's just pull on one, say, incentives. And there is one that I do wanna pull, and, you know, I will use the the opportunity
to speak with you to kind of release something that's been near and dear to me for for a while. Oh, yeah. But let's just start on incentives within government. For a civil servant like me. Right? Now some civil servants, most people are like, they're getting paid a lot of money. They have huge pensions. They have all these benefits for working within government.
Yes and no.
Most of the money is made when a civil servant goes back to private sector.
Sure. The revolving door. They'll use their experience, their connections within the government to sell themselves, and that's really where they make the money. Every civil servant knows this.
The career civil servants that are enrolled for ten plus years are very dedicated to their work, and those are my colleagues. They're very dedicated.
They go to the training. They're told anti money laundering is a requirement
or else criminals will misuse
our banks, our real estate.
They'll do crooked things. Mhmm. We don't want that. And so they are really dedicated
to ensuring that their jurisdiction isn't used for money laundering and other things. They feel like they're fighting a good fight. I presume. They're fighting a good fight. And and a lot of them are not getting paid that much compared to the private sector.
And so No. That's the default in The United States. It well, you know, when you when you open that up, I'll just say that in The US, I think, unless you're at the absolute top tiers, it is the backroom dealings and the and the second career where you make your money.
The the incentive then is to build relationship with the private sectors.
It's to build relationship with the people you're meant to Regulate, to limit.
You have these big companies that come in and they want something. They'll lobby for something. As a civil servant,
you're gonna meet somebody up for supper at a conference.
Really, what's going on behind your mind is, how can I sell myself to get that big contract from this person in front of me?
And so the incentive for a civil servant,
other things as well. For example, being sent to
Hawaii or
Paris for a conference,
going to a five star hotel while you're at that conference, getting all your meals paid.
Those things are what incentivize
civil servants. And so that's wrong if you ask me because people will act in their own best self interest.
And in this particular case, it doesn't align with the interests of the citizens if you ask me, in my opinion.
And so that's the incentive system. If you ask me what a good incentive system should be, well, I think all civil servants should get a bonus
Yes. GDP per capita in a jurisdiction window.
And it should be directly proportionate
with the increase in the wealth of citizens.
And you could do this you could do this on a gross or net, you know, after inflation,
doesn't matter. That that's But you anyone I would just say anyone who's worked in sales as I as I have and do, you know, that's that's a team bonus. And, generally, it's an individual bonus, but in the case of being unable to measure individual contributions, you can at least measure the contributions of the team to the goal, and you get a proportionate
participation in that. So once again, you know, private sector, obvious, government, it sounds like it would be quite novel. It would be novel and it makes complete sense for a civil servant to get a bonus if the people
are impacted by the laws that the civil servant puts in place or creates or the policies that it suggests.
If the population's doing well, if the businesses are doing well, that should bring about a bonus, but there's no such incentive program in government.
And so
the first thing that that's one of the things that I realized.
Right? The incentives are all wrong. And I saw the incentives in the banking, my banking career. Right? There's all those sales. It's all about doesn't matter what the business should have in terms of leverage.
Increase that loan to the maximum.
Right?
So
in
But there is something else that I've realized
that really weighs heavy, and I haven't spoken about this in any of my other presentations,
is
I think having
a government that is trustworthy
requires
the involvement of its citizens.
And that,
I find, is probably
my perspective from within the government,
looking back at a population
that delegates
political power,
the only thing they'll do other than discussing it with their neighbor or friends is go to a voting block, tick up one of the names there, and put that ballot
in.
And that's, for most people,
the extent of their involvement
in the political world. At least the extent of their involvement that has any impact,
however little that is. And that's something that I see. Now I've created legislation.
I've created
legislation. I didn't like what I was creating,
but we have to consult on it.
So I sent the legislation. I did the consultation process. Nobody
commented. Nobody raised their voices. They probably read it as a lawyer, as an accountant, whatever your
profession that person was, they read it. They're like, oh, I need to adjust this and this and this. My business plan needs to change for this new law. So they they took it if I hear you, they took it as,
a settled matter, and I'm now going to react to it as opposed to attempt to affect or change it.
Exactly.
What I really wish would've happened
is for the calculation
of my jurisdiction
to look at that law and go, wait a second. What's this? And I've spoken to people on the side saying, well, you know, have a look at this consultation. I've pushed them. You know? The little that I can, I've pushed them.
But they still don't speak up.
And they don't speak up because of an inherent fear of speaking up or just the belief that they don't know political things or legal things or
laziness.
And I have to admit, sadly, that there is a lot of laziness
Absolutely.
The general population. And
let's just admit it. It's easier to watch Netflix
than it is to look at a consultation.
Yeah. Laziness or fatigue. And so a a related question, if I may, I you know, I'm thinking about my own sort of relationship
to that. I think,
for me, certainly, I presume for a lot of my fellow Americans,
there is a sense that it is screaming into the void,
you know, that sure the FCC may post on some terribly designed fcc.gov
site, for commentary, but, you know, it'll get lost in the void
or it is just so cumbersome which can be written off to laziness. So the question I have,
do you do you believe there is something particular to your
jurisdiction
where they are better at or more attuned
to listening
Or are are you perhaps advocating more broadly that we just as citizens need to need to take that opportunity because it is under under Application of global standards.
For example, the BSA.
Say you want
to start a campaign to abolish the BSA.
Look at Let's do it. Adele. Let's do it. I'm looking at Adele right now. Absolutely.
But
assuming you wanna do that,
you're gonna send letters. You're gonna
lobby.
You're gonna talk to representatives.
Let's say you talk to senator Lummis. Senator Lummis is
this is a great idea. Let's do it. And senator Lummis
is able to convince magically everybody,
everybody around her, all of her other life.
Just a miracle. She's able to do that. Indeed.
Now In order to affect that change, the jurisdiction has to look at the consequence
of abolishing the DSA
with respect
to the global
standard setting bodies and the requirements on the standards that they put in place.
So now The US has to say, what do we lose by doing this?
Well, we lose something that we fought
to implement
for the last fifty years, since 1991.
Not only that,
we're also harming our banks
who won't have access to all the anti money laundering beneficial ownership information,
which is a huge honeypot
for banks. Let's be honest.
Sure. And we lose information
on taxable
activities
that our citizens are doing. And even if they get through all of those and they say, we're willing to assume the risk,
then the decision has to be made. Well, do we remain in this global standard setting body like the FATF?
Or do we leave it? If they choose to remain,
which
I think is really whether to remain or leave is really a decision that The US has. No other country in the world has that option. Now if they choose to leave, great. I mean, fantastic. But then they'll have there'll be severe consequences.
Most jurisdictions don't have that option, so they they stay.
Okay.
Unelected bureaucrat
like me
goes to an FETF plenary
and then has to raise their hand
has to raise their hand.
And go, well well, actually, my government has this opinion now. We shouldn't be
doing
KYC. We shouldn't be doing this or that or that.
There's 40 other countries
in the FATF
membership
that you have to convince
at that level
in order to remove that requirement. So not only is it a miracle
for Lummis to have convinced everybody
in The US.
Multiply that by 40. Right. All that effort
times 40.
Because now you have to to convince a majority of these well, 20. You have to convince a majority of those other jurisdictions
to remove that requirement.
So this is a centralization
of policy making and development,
and that centralization
essentially removes
your ability
to have an impact or say on what you have to
what what governs you.
This global
these global standard setting bodies, there are global standard setting bodies for all consequential
policy in the world. Doesn't matter what it is. Even fruit
the OECD has a fruit standard on how banana should look.
Of course.
It's important.
You don't want a banana to have less than two and a half fingers with so that the you know, to be able to peel it.
There's global standards Central planning. Central planning. Global standards
for everything
of consequence.
So
that's the process that a country has to go through if it wants to abolish the DSA. So I look
at those initiatives
and really
The US leaving the FATF,
which I never believe it will do because it's the linchpin,
the strongest
pillar. It's the foundation
of the essence, but it has to be either all the other countries leaving or a majority of them leaving or The US leave. And if The US leaves, I don't even know if that will be sufficient
to Interesting. The world. Yep.
Just like the the World Health Organization,
US leaving, not sending funding,
somebody else comes up. It's the Hydra. There's another head.
And so how do we get rid of this?
That is my next question. If I knew,
I would lobby for it. Right. Right. Because because I think, you know, as as as we're going through this conversation, and we have wonderfully touched on many of of the questions I had made note of, you know, there are, in my mind, the perspective of can you change it from within, and I think you're making,
a sound argument
as to the high improbability
of that even if The US was to flick that first domino. And, you know, American exceptionalism, guilty,
but I might have assumed that you were going I was hoping that you were going toward if The US went, if if senator Lummis, pulled off that miracle, it's the single miracle that could bring down the Jenga, but it sounds like no. And so we're left in my mind. This is where I'd love to spend the next bit of the conversation. What else, if anything, can be done? You are inside.
Presumably, you're working, you know, toward toward the the effect that you can have, or must we
necessarily exit through Bitcoin or other means? So let's let's sort of move into that. What what can be done
other than complete exit? What can be done other than complete exit?
I look at the cypherpunks, and I look at the creation of Bitcoin
and other technology. The Internet's a big one. It's bigger than Bitcoin.
Mhmm. Internet
originally,
companies lobbied to ring
you wanted a ContiServer, an AOL, or they they they logged in and worked really, really hard
to make the Internet something that's very controlled.
The original walled gardens.
The walled gardens. Now
in the battle for the Internet, we won. In terms of being able to access information,
now you have Internet service providers all over the world.
But there's also a centralizing
trend with Internet service providers now.
Taking as an example, Starlink.
Starlink is now responsible for a sizable
contribution
or access point to the Internet, and that's a centralizing
force.
When Musk goes away and the next CEO comes about and says, well, I don't wanna give this country or that country or this person access to the Internet.
So the Internet now is and we look at big companies. The Internet is essentially Google and Facebook and a few
countries
it's not countries, organizations,
companies. And
the Internet is centralizing
little by little. So
the Internet is a good example
of what we could do financially.
We created Bitcoin
as a protocol. We're able to transact.
But now
we're seeing the Bitcoin
sector
being integrated within traditional finance,
and that's being done through legislation
that many people in the Bitcoin economy are are lauding. They're very, very happy that Absolutely. No question. Their their their JPMorgan bank in custody Bitcoin is amazing, and they're clapping their hands.
That,
to me, is worrisome
because it's the same
effect as Google
having more centralized power within the and at one point, I'm not saying right away, but at one point, through legislation, through lobbying, through criminalizing
certain activities,
having self custody Bitcoin
may be seen as something that could lead to money laundering and therefore should
be controlled. Had we had a different outcome in our last presidential election, undoubtedly, we would be there or close to it, and we we may still.
I've the last five years, I've seen unhosted wallets as a term coming up more and more Absolutely. Within the FETF discussion.
Unhosted wallets. And so the FETF functions in a very odd way.
They can't dictate directly. They can't say, well,
this is what you should do. They can't say that.
What they'll do is they'll send questionnaires. They'll send questionnaires, and this is one that I've seen, for example. It sent a questionnaire.
The questionnaire asks about the risks that we've assessed within our jurisdiction
related to cryptocurrencies,
virtual asset services, which is the term they use. And they'll ask a question. They'll say,
we've assessed
the ability to hold cryptocurrencies and unhosted wallets as high risk. How
is your jurisdiction
mitigating?
Presumption of guilt.
That that was a verbatim
question that I saw. And now my jurisdiction was put in a situation
where they had not only to assume that there was a high level of risk
and acknowledge it,
but also
think about how
those risks were gonna be mitigated.
And that's how the FATF works.
Right. So they seeded they seeded the idea of the unhosted wallet, which is this ridiculous misnomer to begin with, and they follow it up with, well, naturally, we know that this is unsavory, and so how are you going to solve for this problem that we just created?
So I'm gonna answer your question, how we can best effect change, either from within or by accident.
And I'm going back to really the two fundamental principles that are needed
for a government
that is I'm not gonna say trustworthy because I never think you should trust a government.
But that would make an a government accountable,
increasing the transparency
of what happens within that government. So revising the freedom of information
laws, fixing the incentives, and for the population to be
and that is the only way from within, quote, unquote,
that government will improve and where we will be able to regain
the freedoms
that we value, if we value them as a society. Because is an excellent it's very fair to point that conditional out if we value them. And so those are the things that I would do from within.
But I look at the cipherpunk,
And if Cypherpunks created Bitcoin
They won't. Real disruptors.
They didn't disrupt the financial the TradFi, the traditional finance from within.
They disrupted it by creating something.
And I think that is a key to effecting change
in our society.
It's not to try and work from within.
Working from within may achieve
some ends or goals or objectives.
We will ultimately
create real change by creating
something
better that
completely
negates the old system.
And this is something that is possible
for a government.
I wrote a fairly large paper about a decentralized regulatory framework.
Yes. I'll be sure to link to that. It's based on game theory.
It's based on leveraging the self interest
of the regulated
entity in order to create
incentive
to remain within certain regulatory
requirements.
That's also possible for government.
We don't need to have a top down stick gun to your face boot
on the boot on the head,
approach to regulation and supervision, and governance in
we are at a point where
we have the technology. We have the ability
to create tools, any new governance system
will create
a government that is completely transparent.
If you look at two hundred and forty years ago
when the US revolution happened,
The constitution
created this
amazing framework that worked at the time.
It guided a population
that had similar values,
similar desires, and it created a foundation
that enshrined
those values and those desires.
And because
you didn't have telephones,
you had to communicate through couriers.
It was very localized.
It didn't make sense to have everything done in Washington because it would take weeks or months to get there. And as the technology for communication
improved,
so too did centralizing
government functions. It doesn't make sense to have five people in every state doing a function where you can have 10
in Washington doing the work of hundreds. And so Although although in practice, they get both. Now they get both. They get to have the employees at the state level in the fed, but I take your point, but I take your point. Cynicism. You know, you're you're welcome, too. Yeah. It is. And so when by this change in communication,
we've had a centralizing
force, and we've also had a polarizing
of society.
I don't even know today if The US citizenry and I'm talking about The US because it's a I assume people people will be watching this or or from there.
I don't even know that The US society has a common ground
set of foundational
beliefs and values that can unite the entire country.
When it comes to immigration question right now. If you look at immigration,
if you
increase
immigration,
you satisfy 50% and anger the other 50. If you restrict immigration,
vice versa.
If you allow guns, you satisfy 50%.
If you allow drugs, marijuana. You you and so Decriminalize.
And you can't have
I mean, libertarians
are all about central localizing
governance. However, think about it. If you have immigration policies or gun policies
where one state allows guns and another state completely bans them,
you need suddenly to have
a a frontier, a barrier between them, and you need to search all the vehicles going back and forth to make sure the guns are not going from one to the other.
Is that
so you can't really localize.
And it used to be something that the entire
population, I assume, or a large part of it, agreed with. Citizens have the right to bear arms. Mhmm. And it worked.
However,
society's norms and values have changed,
and there's a polarization
of
values and and opinions. And so I don't even know now if there's a common ground sufficient common ground
to reestablish
some kind of federal government without
alienating
50% of the population.
Yes. No. It's a great point. There is a there is a political cartoon, I believe, from The New Yorker that I often post, and it was
it was printed just
just after 09/11.
Janek is the fellow's last name, and it it,
uncle Sam is at a table, and the person behind the table is getting ready to wrap a gift, presumably. And behind him
is
stop terrorism and protect the children. And the gift in question,
from the perspective of uncle Sam is a corporate control of free speech or Internet speech. And so the point being, how would you like this wrapped? And so to your point, I think that is where we are largely in The US is everything is a poll. One of my prior guests, my first guest,
John Raab, writes a lot about tribes
and swarms as it as he calls them, political swarms, the red swarm, the blue swarm. And so it is an excellent point that to arrive at consensus will be very difficult here, but let's take it here. Where, if anywhere, be it looking to your, your paper and your proposed approach, or otherwise, have you seen
bright lights? Are there jurisdictions
where you're seeing
them move toward the kinds of
transparency,
the kinds of accountability
that you see as being a viable option, again, other than just individuals exiting by way of Bitcoin or otherwise?
Well, the financial action task force global standards have to be implemented. I think it's a 127
different jurisdictions.
And so I may just point to one of the jurisdictions
that isn't
implementing those standards, but they're
not places that you wanna live.
North Korea and whatnot.
I wouldn't take that trade. On a on an anti money laundering front,
all jurisdictions
are complying.
You look at El Salvador. I was in a a meeting with other financial action task force. It's actually part
of a different portion. So I was sitting on that particular meeting. It's called The Caribbean.
They were actually
lauding
El Salvador for their efforts to prevent anti money laundering and financing of terrorism and increasing transparency,
which basically means
gathering more information and holding it,
the government.
So El Salvador is complying.
It's just their digital,
digital asset committee, I believe it is. I've done a bit of work with a couple of entities there, is complying harder to to put it one way.
There was one shining light that I really loved, and few people know about it, and that's Taiwan.
If you look at the Taiwanese
minister of, I think it's innovation,
it's it's an ex hacker
that got elected.
And she really had some amazing ideas to make government more transparent. It was beautiful.
I think there was opposition.
However, that opposition would have been moot
if the population had embraced and participated.
Mhmm. And I don't think that her programs got the participation she was hoping for, and so the programs
got let down. You should really, really know.
Look. Chang Tam,
Theresa Tam. I I I forget the name.
Yeah. Get them in the show notes.
Now if you if you look at what her IDs were, she had the idea of using an online polling platform called Polis,
p o l I s, to put every single consequential
decision
and to create a communal
type of discussion
for policymaking.
Beautiful. Wonderful. I don't think it got the traction
that it needed
to move forward. And that's
the biggest disappointment
working from within the government.
That's what I've seen is that the population
don't get involved.
The government might wanna do something, and they don't know in the case of Taiwan. I'll admit I don't live there. This is one place I'll admit to not living. However,
I don't know what the reasons were, but the people didn't really participate.
And that's a shame because
countries that are doing the right steps
should
be encouraged, lauded, and applauded.
And I see so very few. I certainly don't see any in Europe.
I I can't say that I see any in Central America or North America.
And, you know, I'm not that familiar with African countries, but I assume they want global capital investment money. And so they're complying harder than anyone else.
And so don't know that there are any lights out there, but I do
know that by being involved in government,
it's the only way to light that torch.
People watching this, don't get up.
Send freedom of information requests, push back, complain, criticize,
question, doubt
their government, their elected representative
in an active fashion. If they can get away
with catering to lobbyists,
that torch isn't gonna be lit. And, really, the key
to maintaining
our freedoms is that participation.
I'm seeing very, very little of it.
Well, I'm assuming you're you're, you know, you're wearing that hat for a reason. So I I take your point, which is clearly there is no silver bullet. There is no magic pill. What I take away is that Fadif is the playground
bully who leads others to give the beat down anytime anyone gets out of out of line, and so
the ability to escape that is is
minimal.
But I think if I understand you correctly,
that it is creating, forcing more transparency
through freedoms of information act and other means. It is citizenry
participating
and voicing and and adding pressure.
Advising the freedom of information loss is that.
Odell or if anybody wants to really
make a change within government
to really open things up for more transparency because transparency kills
criminal activity.
Cockroaches love to hide from the light.
So with more transparency, you fix everything.
You really fix everything.
And those freedom of information laws are antiquated,
and they haven't been looked at. And very few people, first of all, send freedom of infra of information requests. It's free. You can.
If you wanna see where your
congressman was last month, you can get their calendar. Every single email I write
when I'm at work is a flyable. There's a huge amount of information that's obtainable by citizenry, but it requires time. You have to read it all. It's it's it's just that involvement that's necessary. But now with AI, we can have scanning of a whole database.
So, really, there are opportunities,
but that legislative
change, I really think
the freedom of information request legislation around the world
has to be updated.
The fact they're there is great,
but the government right now knows so much more about us, and we know so little about it. It's a great point. I'm reminded I'm not on Twitter x anymore, but I I see, you know, I get a link now and then, and there's an individual who goes by data republican,
lowercase r, as she says, I believe, who is a data scientist and
is, I think, using open source intelligent largely, open source intelligence. I don't know that she's conducting FOIA's, but I believe in my mind is a great example to your point of applying modern tooling
to being able to rebalance what would otherwise be overwhelming in in the case of the data you would receive from a FOIA. And I will, I'll be sure. I know you're watching this, Odell. So here here's a shout out to him. So,
you know, might have thought that you were moving toward
a place where
you're doing what you can, but your expectations
are low. I don't now believe that's the case. I'll get you to correct me, you know. So you're not gonna you're not gonna be in Madeira at Sovereign Engineering, walking away from you from your government job in the near future, or or are you? So so let's let's wrap up on these two points. What is your
best case expectation of your work in your current role?
And then for those of us concerned,
I hope more and more about maintaining our privacy,
our autonomy, what are some of the most effective steps that we can take
to
protect ourselves, to
have a bit more agency in light of everything we've discussed so far. So what is a great outcome for you,
and what is a reasonable expectation and steps we can take as individuals in your view? I have to have a problem. If you take a candle
and you bring it outside at daytime,
that candle will have a very
small amount of light. You won't you won't notice the candle.
If you take the candle in a dark room, that candle can shine.
That's
really my moral justification
for the work that I'm doing.
I've done presentations
on
for ministries and departments within my government, and I see
look looks from people who aren't willing to speak out but think the same way I do. When I make a reference to something,
when I say a particular word
that implies
something
on freedom, privacy.
And I I see those looks,
and that's those are the torches that I'm looking at lighting with my small little candle.
It's very rewarding
to hear
someone else in my department echo something that I've said multiple, multiple things.
So that's that's for me.
That's the work I'm trying to do. As far as you
or anybody who's dissatisfied
with their government, the most
the easiest thing you can do,
say your
elected representative
did something, purchased something, or took a certain action that you disagree with, send an
FYI requesting all of the emails that pertain
to that particular purchase or action. Say it's buying spending money for a new
building or a new program
or a vote
that your elected representative took
that you disagree with,
say, well, I want all of your emails over the last year
with this keyword. It's gonna scare the bejesus out of your civil servants and not just from your elected representative.
Ask it for all
civil servants within this particular department.
Within all All the government.
It would scare the bejesus out of me if somebody f lied me, and I've seen this happen.
By
knowing. And it's it's something that civil servants forget
when they send an email, when they get an email.
That's public information.
It's just not disclosed, and so few people ask for it.
They don't know all the emails that they've written over the last year, what they've said, what they haven't said.
So when you send that FOI, you might not get what you're looking for.
But just the fact that you sent it,
the the department everybody in the department
and your representative
will know you sent it.
And even if they find a way not to send the information to you,
you scared them.
Try them in a light. Use and believe me, it works. Next time
somebody needs to take an action,
write it at that email, sign that contract,
go to a particular meeting, conference, they'll think twice about it because they know.
They can come back and bite them. Send freedom of information
requests.
It's free. It's easy. It's a form. It's an email.
Excellent. And I think it is you know, I'm as guilty as anyone of perhaps assuming that the guidance would be
use this VPN,
transact in Bitcoin more. But I think it's an excellent takeaway, which is it is unavoidable
that in in order to push back and enact change that, to your point, we have to remind them, you know, of of ways in which they can be held accountable. So I think that's excellent,
and I am just as guilty and will take your advice to heart.
Just tell me what I'm doing. Okay? Wouldn't know where to send it, so that's great. Open state, thank you. I am grateful for your time, grateful for your contributions.
I appreciate that what you're doing is not without risk, personal and otherwise, so thank you for that.
And
I will be sure that we get links to your Nastro profile, to the paper you referenced. Anything else that you'd like to point people to that would be useful to learn more about your work or the tools or the techniques that you've talked about?
Send you the link to the Taiwanese
minister that I referred to. Terrific. People if if people are interested in in seeing what positive changes of change could look like, she's a good example.
Yeah. A firefly is is sometimes all we need. Fantastic. Thanks again, OpenState. All the best. Talk to you soon.
Cheers.