The Government's War on Money Laundering

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As a provider
of financial services, once again I am required to attest (i.e.,
declare to be correct and true or genuine), by using the Compliance
Attestation System, that I have read and understand and agree to
the third-quarter anti–money-laundering training information.
I have no effective choice. I can’t disagree. I am to attest
or be out of compliance with finance regulations. I am required
to do this quarterly or else. This is not new, but I thought it
worth revisiting, owing to this quarter’s subject matter: “Foreign

The opening
statement, which concerns foreign clients, reads, “Opening
accounts for foreign clients presents various AML [anti–money-laundering]
concerns.” So immediately if one is from a foreign country
and chooses to open an account with me, I am to be suspicious. He
may have to be referred to the firm’s AML officer (who reports
directly to the FBI) so that additional due diligence can be performed
and documented. The questions that I may or will have to ask are

  • How did
    you meet the client?
  • Was he
    a referral from an established relationship? If yes, from whom?
    (Report thy neighbor.)
  • Where did
    you meet him? In the United States or in his country of origin?
  • If he will
    spend a good portion of his time in his own country then what
    is the communication plan? Does the client speak English or do
    you speak his language?
  • What is
    his business or line of work?
  • Is he a
    politically exposed person (PEP), a senior foreign political figure,
    or an immediate family member of someone who is?
  • What is
    his source of funds and his anticipated account activity?
  • Do you
    have reason to believe he will be making significant transfers
    of funds to and from his home country?

Also required
will be a passport, a U.S. 10-year visa, or a U.S.-issued green
card for identification purposes. (Remember, the client is not moving
here; he is just opening an account.)

Many may think
all this information legitimate and necessary, but is it really?
Obviously when I work for a client, I want to know things about
him so that I may do a proper job of advising him concerning his
investments. This is understood and expected. But there is much
more to this process than meets the eye.

One of the
fundamental goals (so-called) of the USA PATRIOT Act was to protect
access to the U.S. financial system by requiring records and due-diligence
programs for foreign-correspondent accounts. This was never a problem
in the past, but now, at least according to our rulers in Washington,
it is needed because of the 9/11 terrorist attacks. U.S. Senate
investigative reports state that foreign-correspondent accounts
are the gateway to the U.S. financial system. Foreign financial
institutions maintain and always have maintained accounts with U.S.
banks and broker dealers. Obviously that allows them to gain access
to services and products that may not be available to them otherwise.
This is no different from what U.S. banks and broker dealers do
in other countries. With the passage of the USA PATRIOT Act, however,
specifically in Sections 312, 313, and 319, certain types
of correspondent accounts may be prohibited. Included are accounts
held by foreign “shell” banks and banks that do not have
the required “regulatory” due diligence necessary to satisfy
U.S. officials. From there things get more complicated and restrictive,
and one obvious component of current U.S. policy is that of unlimited
information-gathering and total control over all business dealings
between U.S. citizens and financial institutions on the one hand,
and all foreign individuals or entities on the other.

What is desired
here is full knowledge by U.S. government officials of all business
conducted between any foreigner and any foreign entity or any U.S.
citizen or U.S. entity, including mandatory divulging of the names
of all owners of securities. No bearer shares (shares owned by anyone
holding the security) are allowed and any language allowing that
type of ownership in any foreign articles of incorporation has to
be changed. In addition, all foreign entities doing business in
the United States have to prepare and sign a separate statement
attesting (there’s that word again) to these facts.
All original articles of incorporation, any amendment, and the separate
statement are copied and kept on file forever.

OFAC, the
Office of Foreign Assets Control is a part of the U.S. Department
of the Treasury. It “administers and enforces economic trade
sanctions [protectionism and acts of war] based on U.S. foreign
policy and national security goals against targeted [emphasis
mine] foreign countries, terrorists, international narcotics traffickers,
and those engaged in activities related to the proliferation of
weapons of mass destruction.” OFAC has the power to impose
controls on transactions and freeze assets under U.S. jurisdiction.
This is nothing less than the power of the U.S. government to steal
any foreign assets it chooses and for any reason it sees fit. Every
new account, every check and wire, and all stock receipts are compared
with an OFAC master list of prohibited names, and all that information
is captured. There is no privacy whatever here. OFAC also maintains
many sanction programs, including:

  • Specially
    Designated Nationals List (SDN List). This lists individuals and
    organizations with whom U.S. citizens and residents are prohibited
    from doing business.
  • Anti-Terrorism
    Sanctions. This executive order blocks property and prohibits
    transactions with persons who commit, threaten to commit, or support
    terrorist activities.
  • Non-Proliferation
    Sanctions. These are designed to combat the proliferation of weapons
    of mass destructions.
  • Diamond
    Mining Sanctions. These are obviously a way for OFAC to monitor
    and control diamond imports and they, along with other countries,
    launched the Kimberly Process Certification Scheme (KPCS) as the
    enforcement arm. (I can’t make this stuff up – the wording
    is accurate.)
  • Narcotics
    Sanctions. These block property and interests in property subject
    to U.S. jurisdiction owned and controlled by significant foreign
    narcotics traffickers, as identified by the president.
  • Cuban Sanctions.
    These have been in effect since July 8, 1963.

Those are
broad and sweeping powers indeed, but in addition to all this invasive
action against foreigners and their financial transactions, OFAC
also maintains sanctions against the Balkans, Belarus, Cote d’Ivoire
(Ivory Coast), Democratic Republic of the Congo, Iran, Iraq, The
Former Liberian Regime of Charles Taylor, North Korea, Sudan, Syria,
and Zimbabwe. Fines for violation of sanctions are substantial and
bordering on the ridiculous. Criminal penalty fines can range $50,000
to $10,000,000, with prison time ranging from 10 to 30 years.

Along with
OFAC there is FinCen (Financial Crimes Enforcement Network). FinCen
is also a part of the U.S. Department of the Treasury. Its mission
is to
the financial system from the abuses of financial crime, including
terrorist financing, money laundering, and other [emphasis
mine] illicit activity. FinCen administers the Bank Secrecy Act,
supports law enforcement, intelligence and regulatory agencies by
sharing and analysis of financial intelligence, builds global cooperation
with counterpart financial intelligence agencies and networks, people,
ideas and information.
Effectively, this
means that FinCen monitors everything financial, including standard
day-to-day transactions made by all of us. They have a license to
snoop that is open-ended and all-encompassing. All Suspicious Activity
Reports (SARS) are filed through FinCen. More than 6,000 users representing
1,500 organizations actively access the information through this network.
Nothing is private; nothing is sacred. Any and all financial information
in this country, whether reported as suspicious or not, is captured
and data-based. If reported as suspicious, the information is put
on an expansive network for all users to see. That may not bother
those who worship the state and expect it to protect them at all costs
to liberty, but this invasion should raise the ire in all of us.

With respect
to money laundering, terrorist financing, and other financial-crime
investigations, SARS filings through FinCen have led to many indictments
and guilty pleas. They involve investment fraud, insurance fraud,
bank fraud, drug smuggling, tax fraud, identity theft, and Ponzi

In this article,
I am addressing only one aspect of the belligerent and invasive
behavior perpetrated by government. I’m discussing only the
finance industry and foreign transactions, along with their domestic
counterparts, and how those business dealings are manipulated, monitored,
and controlled by Leviathan owing to language allowing it in the
very corrupt and dangerous USA PATRIOT Act.

much more sinister activity is constantly taking place. Murderous,
immoral, and unconstitutional wars, imperialistic expansion, thievery,
property and civil-rights destruction, torture, and more go on every
day while the mainstream American citizen goes about his business
as if everything is hunky-dory. While I will never understand the
complacency and apathy of most Americans concerning their own freedom
and liberty, I still must always point out tyranny whenever I possibly
can, and hope that this small bit of information arouses readers
to outrage and indignation.

5, 2008

D. Barnett [send
him mail
] is president of Barnett Financial Services, Inc.,
in Lewistown, Montana.

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