From: pmetzger@shearson.com (Perry E. Metzger)
Date: Mon, 30 Nov 92 12:38:24 PST
To: hughes@soda.berkeley.edu
Subject: thoughts on digital cash
In-Reply-To: <9211301743.AA17881@soda.berkeley.edu>
Message-ID: <9211301957.AA10429@newsu.shearson.com>
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>From: Eric Hughes <hughes@soda.berkeley.edu>

>>>** Legality of starting our own anonymous electronic bank: what do the
>>>laws say, anyway?

>Perry write:

>>The law is a slippery thing -- however, anonymous bank accounts, no
>>matter what you call them, are almost certainly illegal in the United
>>States. 

>OK, Perry, time to quote sources.  Exactly what laws _do_ prohibit
>such bank accounts?

I know securities law much better than commercial banking law -- I
can't quote commercial banking law or the UCC for the most part, so
I've got no idea precisely where in the codes such accounts are
prohibited.  However, I'm so certain that the law in the U.S. requires
that the bank have full information on the holders of all accounts
that I'm willing to bet $150 right now with anyone who believes
otherwise. The law not only requires that the bank know who you are,
but may even require that ID be presented when you open an account (I
know that this is now routine practice, although its possible that its
only implied from the standards used to determine non-compliance
rather than directly required by the law.) I don't have any incentive
to find the precise place in the books where it says you can't have an
anonymous account in the US, but for a few hundred bucks in easy money
I'd find it fairly quickly. If you don't believe me, well, have fun.

>>Most computer people don't seem to understand that the law is
>>interpreted not by a computer but by humans -- and they won't care
>>what "hacks" you use. If it smells like a bank, they will
>>likely convict you if it comes to that point.

>Most political dissidents don't seem to understand that the law is
>interpreted accurately, for the most part.  There exist clear
>statutory definitions on what a bank is.  If you don't meet those
>criteria, you're not a bank.

If you take deposits and allow people to write drafts against those
deposits you are going to fall under the commercial banking or
securities laws no matter what you do, Eric. I'm sorry that you don't
like this, but its the truth. The best you can hope for is to be
classified as a mutual fund or the like and not as a commercial bank
-- in which case the reporting requirements are just as tight and you
fall under the even more restrictive securities laws. The securities
laws are EXTRAORDINARILY tight when it comes to reporting. Other than
brokerages holding securities in street name, nominee and other
anonymous arangements of any sort are not merely prohibited under the
securities laws but actual criminal offenses.

Perry