In the first three segments of this series, I demonstrated how the global surveillance network of inter-connected “financial intelligence units” (FIUs) have utterly failed to meet their objectives of unearthing terrorist financing and other financial crimes. I also showed that the real purpose of this network is much more likely to facilitate asset forfeiture and politically motivated surveillance. It has very little to do with uncovering criminal activity, although it may occasionally do so.
Financial intelligence agencies such as the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) place many persons at risk merely through the routine exercise of their business or profession. If you or your business conducts foreign transactions, you face a higher likelihood of investigation, asset confiscation, etc. That’s because foreign financial flows are of greatest interest to global FIUs.
If you conduct business with designated political enemies (e.g., persons or entities on "terrorist" or other watch lists), you face the highest risk of all. Even if the transactions are perfectly legal, should you conduct them with political enemies of the United States or other powerful governments, you face draconian sanctions.
The United States has by far the world’s most sophisticated system of financial surveillance. To avoid pervasive U.S. financial surveillance, I highly recommend offshore investments and relationships:
- Place a portion of your assets outside the United States. The most private—but also the riskiest—investments are contracts with unregulated persons, not with financial institutions or trustees. An example would be an agreement with a private individual in another country to manage an investment for you, in that person’s name. While such relationships may be reportable and taxable, they’re the least likely to show up on the financial "radar screen." You can also purchase some regulated contracts, such as insurance policies, in relative privacy. If you open a bank account, settle a trust, or form a company in your own name, you’ll be subject to greater surveillance.
- Transfer funds outside the U.S. dollar. It’s still possible to legally transfer funds from the United States, into alternative currencies. Now may be an excellent time to do so as the dollar has appreciated sharply in recent months.
- Use attorney-client privilege. Many countries (including EU members) now require attorneys to report "suspicious transactions" to their domestic FIU. Keeping this requirement in mind, you can achieve considerable privacy by conducting business and financial transactions through an attorney. However, in virtually all jurisdictions, attorneys can’t provide advice that would result in or encourage the commission of a crime.
- Evaluate non-reportable offshore investments. Depending on where you live, certain offshore relationships or assets may not be legally reportable. U.S. persons need not report assets held in a non-U.S. safety deposit box, where no foreign financial institution has legal custody of those assets. Other non-reportable offshore investments for U.S. persons include real estate, yachts, vehicles and other assets not considered a "foreign bank, investment or other financial account."
- Use cash. Despite the global crackdown on cash, you can still achieve significant privacy by using cash instead of debit/credit cards or checks. This is particularly true outside the United States. However, cash transactions (over US$10,000) are subject to substantial surveillance. An increasing number of countries also require that you declare substantial sums of cash when crossing domestic frontiers. Finally, most countries now require banks and other financial institutions to report suspicious cash transactions to the domestic FIU.
Copyright © 2008 by Mark Nestmann
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