In my two most recent blog entries, I described how the United States and other governments have quietly erected a network of technology and law to eliminate financial privacy worldwide. The most visible manifestation of this network are “financial intelligence units” (FIUs) such as the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), now linked to more than 100 similar FIUs worldwide.
I also described how this surveillance system has utterly failed at accomplishing its stated objective: to unearth terrorist financing and other financial crimes.
If FinCEN and other FIUs are useless to meet their stated objectives, what's their actual purpose? I believe that purpose has nothing to do with unearthing illegal activity, although it may sometimes do so. Instead, one unacknowledged objective of this network is to permit governments worldwide to conduct politically motivated surveillance. Another is to identify assets for confiscation, thus creating a self-funding network of global surveillance.
Consider, for instance, how FinCEN could retaliate against an uncooperative congressional leader. Has that individual ever made a financial transaction that exposed an embarrassing preference or illegal activity? FinCEN and the global FIU network provides an ideal mechanism for blackmailing politically exposed persons—and anyone else.
There’s also no doubt that a global network of FIUs funded with forfeited assets creates the same conflict of interest that plagues U.S. civil forfeiture laws: the development of a worldwide bounty-hunter mentality.
Seizures of narcotics, gambling equipment, nuclear materials, child pornography and other illegal commodities generate no revenues for law enforcement. But seizing agencies keep up to 100% of the seized proceeds of the sale of such items, along with all property "involved in" such transactions. Some of this bounty is now shared with FIUs. Strong incentives thus exist for police to maximize property seizures by delaying arrests of persons engaged in illicit sales of narcotics or other illegal merchandise until they have sold all or most of their supply.
It’s inconceivable that a global network of FIUs operating under these incentives will not be misused for political purposes or private gain. Far from ending money laundering, the network will facilitate it.
This is already occurring in other "secure" government databases. Columbian drug cartels have penetrated databases operated by the U.S. Drug Enforcement Administration. The U.S. wiretapping system has been similarly compromised.
Why should anyone expect FinCEN and its affiliate FIUs to be different? Certainly, terrorists and drug kingpins would pay dearly for access to FIU databases. Knowing what information FIUs have on their assets and laundering techniques, not to mention those of their competitors, would be extremely valuable.
These concerns aren't merely theoretical. In 2002, the Chief Justice of the Cayman Islands accused the head of the island's FIU of wiretapping his telephone and destroying evidence that may have proven the innocence of a bank accused of money laundering. Since FIUs are expected to generate revenues beyond their operating costs, corruption in the Cayman FIU may be only the first of many similar scandals to come. The only reason why we haven’t learned of similar scandals in other countries is that FIUs are considered “intelligence agencies” with all operations shrouded in secrecy.
Even if you’re not a criminal, muckraking politician, or other person of interest to the global network of FIUs, worldwide surveillance of virtually all financial transactions may place you at risk merely through the routine exercise of your business or profession. In my final installment of this series, I’ll outline some of the ways you can protect yourself from what can only be described as “global surveillance run amok.”
Copyright © 2008 by Mark Nestmann
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