Unforgiven
Bureaucracies don't outsource work to non-profits. They outsource accountability. The non-profits get rich. Everyone else gets friction.
There is a distinction that rarely gets made explicit, because making it explicit would embarrass too many people.
The distinction is between outsourcing work and outsourcing accountability.
When a government agency hires a contractor, it will tell you it is outsourcing work. When a bank delegates compliance screening to a vendor, it will tell you it is outsourcing work. When a tech company holds a series of meetings with a coalition of non-profits to determine who should be denied services, it will tell you it is seeking expert input.
What is actually happening, in each case, is that the principal is trying to reassign the moral and legal weight of a decision to someone else. The work is secondary. The accountability is the point.
This is the story of the Southern Poverty Law Center’s indictment for bank fraud. But more than that, it is the story of how accountability evaporates when it is passed from hand to hand, and how lavishly the handlers are compensated for holding it, briefly, before passing it on.
Closest Point of Approach is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
The original delegation
The Bank Secrecy Act, and the broader anti-money laundering and Know Your Customer apparatus that has accreted around it, is not primarily a law enforcement tool. It is a delegation.
Congress does not have the capacity to surveil every financial transaction in the United States. So it did what bureaucracies always do when faced with a task too large or too politically costly to perform directly. It passed the obligation to someone else.
Banks are now, as Patrick McKenzie at Bits About Money has put it, “an arm of the government.” They were conscripted into this role “other-than-willingly, through the ordinary operation of law and regulation.” They are required to hire armies of compliance analysts. They must file Suspicious Activity Reports. They must know their customer. They must monitor their transactions. They are, in functional terms, a forward-deployed law enforcement apparatus that also happens to issue checking accounts.
Congress is not accountable for what this apparatus catches or misses. The banks are. Or so it appears.
