Quietly and with little fanfare, governments throughout the world have constructed a pervasive network of technology and law to eliminate financial privacy worldwide.
There are many facets to this network:
- Money laundering laws that criminalize financial transactions based on the perceived motives of the individuals who conduct them;
- Civil forfeiture laws that permit the confiscation of laundered money without a criminal conviction;
- Tattletale laws that require citizens to report suspicious financial transactions to authorities;
- Government-funded organizations (such as the Financial Action Task Force) that set "minimum standards" for anti-laundering and asset forfeiture laws globally, and impose sanctions against non-compliant countries;
- A network of interconnected "financial intelligence units" (FIUs) in more than 100 countries (such as the U.S. Financial Crimes Enforcement Network), often funded with the proceeds of confiscated assets. These FIUs are largely unaccountable to any political process, because they are deemed to be conducting "intelligence" operations.
Originally justified to fight the "War on Drugs," this network took on a new purpose after the events of Sept. 11, 2001. Governments have successfully convinced their citizens that they must give up their privacy in order to achieve security.
Nor are governments merely concerned with tracking the movement of "dirty money." They now seek to insure that legitimate funds aren't used for illegitimate purposes. Naturally, governments define what "illegitimate" and "legitimate" means. And since hiding your lawfully earned, after-tax funds from the government is now a crime in most countries, this effort doesn't just affect terrorists. It affects all of us.
You've no doubt noticed that you must reveal much more information than you once did to carry out even the simplest financial transactions. Take opening a bank account, for instance. I opened my first bank account at age nine, in 1964. I walked into a bank near my home and told the teller I wanted to open an account. After completing a simple one-page form, I deposited the proceeds of my piggy bank—about $20—into my newly created account. The teller told me that one of my parents would need to sign off on another simple form before I could add to or draw on the account. And that was all.
If you've opened a bank or securities account recently, the process is far more difficult today. The bank must first verify your identity through a government-issued photo ID. It must also verify your residential address. In the United States, it must also make certain your name doesn't appear on a list of U.S. political enemies compiled by an obscure Treasury bureaucracy called the Office of Foreign Assets Control (OFAC).
Once you've opened the account, the bank must continuously monitor it for "suspicious transactions." Should you conduct a suspicious transaction--essentially, anything out of the ordinary--the bank will likely freeze the account, pending an investigation and perhaps placing your name on a list of suspected terrorists.
Even if this all-encompassing system actually helped to catch terrorists or other criminals, I'd still oppose it on civil liberties grounds. After all, the U.S. Bill of Rights—and comparable law in other countries—forbids searches and seizures without "probable cause" of wrongdoing. Unless we assume everyone carrying out any type of financial transaction is a criminal, this type of pervasive financial surveillance is a prima facie violation of our rights.
However, it turns out that this system isn't at all effective in catching terrorists or anyone else engaged in wrongdoing. Indeed, the main thing it accomplishes is inconveniencing legitimate account-owners who happen to do something unusual in their account, and flagging them as suspected terrorists.
In my next blog entry, I'll explain how this surveillance system has utterly failed at accomplishing its stated objective. I'll also explain what it has accomplished—and what I believe to be its actual objective: a global system of financial surveillance to be used against the political enemies of the governments that operate it.
Copyright © 2008 by Mark Nestmann
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