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Applied and bridge studies study record
Contracts, agency & organizationsWho Counts as a Customer?
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
Provides formal game-theoretic proof that threshold-based CDD is structurally flawed, with falsification conditions and empirical case studies.
WHAT'S NEW · Formalizes the Beneficial Ownership Invisibility Theorem and Disclosure Futility Theorem, novel application of MST to AML threshold design.
The paper applies the Missing System Theory to the US Customer Due Diligence Rule's 25% beneficial ownership threshold, proving it produces a structurally hollow equilibrium. The authors formalize the Beneficial Ownership Invisibility Theorem, showing any positive threshold creates an arbitrage class. Using FinCEN data, they document systematic clustering below 25% and estimate a $60 billion annual welfare loss. They propose replacing the threshold with continuous, threshold-free disclosure, citing Norway's successful registry.