I'm not so sure you can point the finger at the USA for this.

I ran an online porn website for almost 20 years. For 15 years it was my primary source of income.

I'm in Canada which, compared to the USA is extremely progressive.

In 2022, after a decade of doing business with a certain bank as this business, never having hidden anything about what we did, my wife and I received an urgent, signature required, overnighted letter from our bank informing us that they were terminating our accounts and that we had one month until we would no longer have access to any funds.

The way this played out was that we had an incoming wire transfer get flagged and they phoned us to ask us questions about the wire. We answered everything on the phone honestly and transparently. We were doing nothing wrong.

A few months later we get another phone call from our branch asking us to come in in person, urgently, and do an "extreme due diligence" check. During this process we had to answer an insane amount of questions about our business activities. They saw a credit card transaction from JetBrains, for example, and asked us to explain who JetBrains was and why we were doing business with them etc.

A couple of weeks later we were informed about the termination with a brief letter explaining that we fell outside of their "risk appetite."

We managed to get an extension on the closure, and for two months we tried in vain to find any banking in Canada that would take us... and we ultimately ended up shutting down a business that represented two decades of our lives.

During that time we reached out to industry insiders, some of which we happened to know were in Canada. They all told us that they bank in the USA.

One branch manager at a bank we met with was extremely empathetic but obviously couldn't put her own job on the line, and she explained exactly what was going on.

The issue is "Know Your Customer" regulations that are coming into effect that are meant to target things like money laundering. These regulations force banks to ask questions that they never really cared about before. This branch manager explained that a local strip club used to say they were a "banquet hall", and everyone at the branch knew exactly what they were but it was "don't ask / don't tell."

But once they start digging into these details because the government is forcing them to, then these things get to their compliance departments. And the policies exist because they're afraid of things like human trafficking and other things.

And our major banks have foreign investors from all around the world. Including from countries where porn is actually illegal.

While you point the finger at puritanism in the USA ... consider that in countries like Iceland, producing porn can land you in jail. Now consider MAJOR investments originating in countries like Saudi Arabia etc. and consider how that might impact your bottom line if they all pull out due to nonsense morality conflicts.

All this makes me think of war on drugs and other similar failed attempts at regulation, and of the article "the optimal amount of fraud is non-zero". The stronger the zeal to prevent porn the more expensive it gets to do so, and the more they cause legit companies like yours to close, the more profitable it gets to do it illegally. Just cranking on the symptoms without looking at the cause often has the opposite effect to the one desired, not that the people pushing for this probably care.

I'd suggest that foreign investors dictating domestic policy is a huge problem. For a core institution like banking there ought to be a law forbidding them from discriminating against otherwise legal activities except in the case that a different law permits or requires them to do so. That would also absolve them of any PR concerns because "everyone has to; legally speaking we don't have any choice".

What aggravates me the most about stories like yours is that banks are effectively public utilities. They are regulated as such, are broadly considered too big to fail (especially in Canada - believe it or not at a domestic scale, their banks are far more important than any US bank is to the American economy) and thus receive an implicit tax payer underwriting, yet are able to act like this when you're not doing any illegal activities.

I understand the risk tolerance aspect from a bank, they wouldn't want to give a massive loan to a property developer or oil driller going under water. But when it comes to basic deposit services where nobody is asking them to risk their own money, they should be forced to allow any customer who isn't breaking any laws, such as in your case.

Thank you for your story. I like to try to imagine what conversations happened behind the scenes. The fact that the suddenly hauled you into the branch, and still decided that you were too "risky" (clearly a made-up excuse) says a lot. Whatever force is behind this is powerful and it's not even remotely explained by a coalition of angry activists.

> we fell outside of their "risk appetite."

If you take that statement at face value (not sure if you should), it's fascinating to think that your business was able to operate for two decades with what I assume are the standard problems people in the porn industry face (e.g. chargebacks from customers unwilling to admit they subscribed in their SO's presence and so pretending it was a scam, etc.)

And yet seemingly none of the bank's risk heuristics based on actual transaction profiling ever went off.

Wouldn't that mean that, in practice, being in the porn industry isn't as high-risk as banks / payment processors think it is?

And would this not then suggest a gap in the market, for an (ideally vertically-integrated) bank + payment processor + card issuer + KYC provider, who is willing to

1. evaluate risk on a customer-by-customer basis (through e.g. continuous dynamic network analysis of transaction flow, with txs annotated with their KYC info) rather than by actuarial categorization; and

2. avoid seeking any investment (at any remove) by parties who would insist they avoid these types of customers?

While I'm not big on crypto. This is, in part, why Bitcoin exists and why it was created.

I'm not sure if Bitcoin is the right answer due to the 51% attack vulnerability. And a network of miners where everyone can join in principle sounds pretty yolo, but it seems the be the one of the few organizations that exist outside of government? At least, it does in principle, the fact that the whole crypto industry is a mix of scams and recreation of the actual finance industry isn't helping that case, but a part of it definitely still exists outside of it.

We need more digital systems that exist outside of governments. I'm not sure if it's feasible, but stuff like this is egregious.

I wonder what our view on all of this is in a 1000 years. People in the future probably look at us in disbelief with how we practiced our ethics.

Two things can be true at the same time, however. The US has a strong stance on freedom, which means that they'll allow most things even if they're against them. Specially when that thing generates income. But that doesn't mean they're not also a puritanical society. They just take more of a "shame you" approach than a "you're forbidden" one to force you not to do stuff.

I bet you that American organizations were involved in the societal pressure that led this Canadian organization to do this. They're just not as effective in their own country in comparison to places where it's not all about money, and values do matter.

I'm amazed that producing porn in Iceland can lead to gaol. Can you expand upon that further?