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The War on Cash and Privacy

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In the former Soviet Union, if the government wanted to apprehend and imprison someone who had committed no crime, they charged him with the catchall crime of “hooliganism.” In America, the catchall crime used against organized crime figures or other Americans has for years been RICO statutes or simply “conspiracy.” But in recent years the government has created a new catchall crime, punishable by imprisonment, confiscation of property, heavy fines, or all of them. It is called “money laundering.”

Most Americans suppose “money laundering” refers primarily to the hidden, laundered, movement of cash profits from drug deals. Wrong! It refers today to almost any “financial crime,” broken financial regulation, use of cash, avoidance of government cash-reporting laws, unreported foreign bank accounts, unreported transfer of funds, or virtually anything the government bureaucrats want it to mean. The definition is vague and ever expanding.

IRS agents are greatly accelerating money-laundering cases in situations where there is obviously no criminal intent, and certainly no involvement whatsoever with drugs or drug money. Remember, the IRS considers money laundering to be any effort you make to disguise your assets or avoid completing a federal currency transaction or border-crossing form.

If a tax case can be called “money laundering,” it is no longer civil, but criminal, with large potential criminal sentences and fines. The government’s growing and expanding money-laundering laws are becoming the basis for a total financial dictatorship in America — all under the guise of fighting the drug war. The first thing the Nazis did in the 1930s to establish control over their population was to establish “money crimes” that were punishable by forfeiture and imprisonment. Half a century later, the same thing is happening here. The war on drugs is a classic government power grab.

The Treasury Department has published a booklet entitled, “Money Laundering: A Banker’s Guide to Avoiding Problems,” which contains a list of suspicious activities that the Treasury Department says fit the profile of a “money launderer.” These activities include: 1) Paying off a delinquent loan all at once; 2) Changing currency from small to large denominations; 3) Buying cashier’s checks, money orders, or traveler’s checks for less than the reporting limit (i.e., under $10,000); 4) Acting nervous while making large transactions with cash or monetary instruments; 5) Opening an account and using it as collateral for a loan; 6) Presenting a transaction that involves a large number of $50 and $100 bills; and 7) Presenting a transaction without counting the cash first. . . .

“Structuring” is defined by the IRS as any effort to avoid reporting cash or other monetary transactions over $10,000 by breaking them down into smaller “related” transactions over any 12-month period (defined by USC 31, Sec. 5322-5324-Money Laundering Control Act of 1986, as amended). A structuring violation carries with it a criminal penalty with a mandatory prison term, heavy fines, and confiscation of structured funds and money “connected” to them. (A civil penalty of a $25,000 fine with confiscation of structured funds also exists.) Monetary instruments included in structuring are cash, cashier’s checks, money orders, and traveler’s checks.

“Structuring” is now defined as money laundering, and is a criminal offense. You can now go to jail for dealing in cash to protect your financial privacy, if the IRS thinks you’re trying to hide or structure your transactions or monetary instruments. Furthermore, it’s against the law for a bank or merchant to tell you that you might be violating the law. This can get him prosecuted as part of your structuring “conspiracy.” If they think your behavior is suspicious, they may fill out a form on you without telling you and file it with the IRS, which will promptly audit you, or begin a criminal investigation. . . .

The average person might say, “Well, the government would never come after anyone who was totally innocent.” But that’s not true — he misses the point. The IRS admits that 85% of the people accused of “structuring” committed no other crime than seeking to protect their privacy. The courts have upheld numerous criminal structuring convictions for violations that concealed no criminal activity. If the government wins the conviction, the judge must sentence the criminal “to a mandatory prison sentence.”

This gives the lie to the argument that money laundering/structuring laws are enforced to get drug dealers and fight the war on drugs. The fact is that it is far easier to convict an honest law-abiding citizen and confiscate his property than to go after a real drug dealer who has a battery of high-priced lawyers and accountants, and who might even shoot back. . . .

In conclusion, money laundering and “structuring” laws have little if anything to do with the war on drugs. That is simply the excuse. They are a legal way for the socialist government bureaucrats to plunder and confiscate the peoples’ assets (as in Nazi Germany or Russia); they are a way to enrich the government’s debt-ridden coffers; they are a way to drive us toward the cashless society, and they are a way to place Orwellian-type controls on the American people. . . .

This is an excerpt from the January 1993 issue of The McAlvany Intelligence Advisor. Reprinted by permission.

Editor’s note: According to an article in the January 12, 1994, issue of the Denver Post , in Ratzlaf vs. U.S. (decided January 11, 1994), the U.S. Supreme Court, by a five to four vote, held that the law requires proof that the staggered cash transactions were done “willfully” to defy the law. Writing for the majority, Justice Ruth Bader Ginsburg said prosecutors must show that the person knew of the reporting requirement and specifically intended to disobey the law.

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    Mr. McAlvany is the editor of The McAlvany Intelligence Advisor , an investment newsletter, P.O. Box 80904, Phoenix, AZ 85071.