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P R O C E E D I N G S
for Trade Policy Studies here at Cato. Our goal at the Trade
protectionism.
think that there may be reason to believe that the people being
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criminals are real. They are out there. And they do sometimes
must also concede that not all financial crimes are tied to
even when that means that sometimes people will get away with
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financial privacy.
right to know how, when and how much of that information is being
used, and you should have the right to see it yourself to know if
it is accurate."
principles.
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and other OECD countries are simply bullying them into lowering
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country preferences.
competition. For example, H.R. 3886 would punish not only those
remarks.
look at.
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Day; and finally, Bill Tucker, the former Section Chief of the
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Service and selected by the Directors of the FBI and CIA to lead
by those agencies.
justice from the George Washington University and a J.D. from the
MR. TUCKER: Thank you very much, Aaron. Thank you for
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times to see things in a balanced way when you are that close to
optic.
Congress has established through the Bank Secrecy Act and other
legislation.
Institute's Web site for the first time when I got word that I
FBI, I, too, would agree that it was time to disband the DEA, but
(Laughter.)
upset when we see the United States Congress acting more like a
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only exists where there is order. Liberty does not exist where
defense for it, I would rather speak to you about my views, not
Washington, D.C., in fact, not very far from this building -- and
this was in 1972 -- I received a call from the editor of the then
published.
and my partner went up there. We were met not only by the editor
that his son had a large amount of money, and he knew his son
bag. I was amazed at that much money. I had never seen that
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Charge, it was not uncommon for the agents working for me to walk
into the office with $500,000 per week. Houston was awash in
drug money. And it was that drug money which made things
operate.
Company, not because U-Haul was doing anything wrong, but U-Haul
boxes were the strongest boxes known to man. The drug dealers
would go to U-Haul and buy their boxes. So, if you saw some
automobile and walking out with a lot of boxes, that was a clue.
through the east coast of Texas and across the Mexican border,
squad seized $12 million in a van. They found out that the night
before that an additional $6 million had been taken off and sent
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unheard of.
will buy the money from the drug dealers. Their job is to get
the money into the U.S. banking system. And then they turn
Tuesday, August 29th, and I will read a portion for those of you
of which came from the buyer. It was all money that had been
spread around the United States and the brokers were funneling
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were great, great things for freedom and democracy. They also
world.
see how well organized, how these criminals have taken advantage
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year.
correct, Ambassador?
The Bank of New York case, which was really the genesis
bank easily corrupted. In that case, it was two wives who were
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people who wanted to come here, and are just turning them back.
I guess the program is best described as visa denial or, the flip
their back, and they are turning people away. Hopefully the
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over.
(Applause.)
failed FDIC "Know Your Customer" rule, and has been actively
year.
(Applause.)
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bankers.
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work, that the bankers have complained that there is very little
feedback that any of the information that they are giving to law
of our district.
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for all of the burden that he has gotten and for all of the work
bank was a more onerous requirement for his community bank than
called Dallas, because one is regulated by the FDIC and the other
discrepancy. And in fact, if you call FinCen they will tell you
that the law is the same and it applies to all of the financial
in D.C. believe.
opinion between the Dallas Regional Branch and the D.C. branches,
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that all of us here that believe in the free market like, the
privacy issue.
the effects of, because obviously there are other parts of the
economy that are doing well and the banks are offering great
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benefit for the banks, and even less benefit, I would argue, for
customers and also to protect the financial system. They use the
that it had arrived yet. They ran up over $8,000 in charges over
eight days. And I got a call from the Visa company saying, we
any of that, and it was to the benefit of me that they were able
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Secrecy Act, which the compliance manual of the Fed for the Bank
expected transactions."
with these.
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the numbers since he has already done them, but what it boiled
investigation.
this means is that 99.999 percent of the forms that are filed by
have been tracking the number of forms and how useful they are.
less and less utility for law enforcement. There is a new bill
out. We have dubbed it the Global Know Your Customer Bill, H.R.
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exchange and free markets, are not well served by this approach.
good indications that a lot of the money that was laundered was
from the IMF. What we need here is "Know Your Customer" for
they were notified by the FBI that these accounts were under
investigation.
enforcement. The FBI did not initiate its investigation into the
Bank of New York until they were asked to do so, and there was a
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for the United States Government, who was on the take for the
Ames.
they found that you didn't have a right to your 4th Amendment
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protections for the records that the banks kept on you, even if
they were mandated by the government. And these were done by two
which the Supreme Court rules they had not had previously. So,
Thanks.
(Applause.)
we will hear a little bit about that from our next speaker. But,
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Jordan during the late 1970's, and at the U.N. in the early
1980's.
Punha University in India, his M.A. from the New School of Social
Research in New York, and his Ph.D. from the State University of
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AMBASSADOR OF BAHRAIN
Aaron Lucas and the Cato Institute for giving me this valuable
transnational, and now, heading into the 21st Century, the world
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more and more difficult for governments to cope with this new
which global money has gone beyond the control of any individual
face demise. It has been clear for some time that the
and political thinker, Jean Bodin, who lived in the 16th Century,
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financial crimes.
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money-laundering.
collectively.
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effort.
country which has made itself a financial hub for the region, and
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freest country in the Middle East and the fourth freest economy
in the world.
instance, Bahrain was one of the first countries outside the G-10
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others.
international effort?
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(Applause.)
United States, who has made a name for himself searching for
subject.
and publishes his own premier fax and e-mail service, Adrian
Association.
(Applause.)
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most of these topics. But I realize most people in this room are
restrictions.
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backfire. They don't solve the problem. They don't achieve the
other countries. And they frequently force more money into the
black economy.
I may. The infamous exit tax on U.S. persons who wanted to leave
It is morally wrong. But let's not focus on the morality for the
time being.
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be criminal or nefarious.
Hong Kong person -- not a single Hong Kong person -- faced with
the threat of China taking over Hong Kong and all the concerns
involved.
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annuities because they were concerned about the dollar, but also
have options. And I can assure you that the vast majority of
people who put their money into foreign annuities would report
and did report the income and pay tax when they annuitized it.
won't get into this -- but apparently tax the buildup in the
investment?
ignore the new tax. But having made that decision, which last
year was legal and this year apparently is heinous, having made
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permanently black.
offshore jurisdictions.
many U.S. people had secret Swiss bank accounts, Austrian bank
accounts and so on. They used to declare the income and pay
the result was not the one desired. It was less income to the
black economy.
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havens, and I will just run through them. In my mind, there are
criminals, and nor indeed are the tax havens themselves, in most
more a war, if you like, on mom and pop tax evaders and
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their citizens can put their money in tax havens in order to earn
income tax free and maintain their privacy. But the truth is
this has nothing to do with drug lords and kidnappers and so on.
For many years, most tax havens have had very clear rules
Government.
and two-tier tax regimes -- one tax for locals and one tax for
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are very upset about Europe, about the rest of Europe and the
European Community.
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intermediary and the client has completed forms that show that
banks. And I can tell you that most people are refusing to sign
their privacy. Some are signing the new forms and some are not.
And those who are not are deciding not to invest in U.S.
securities anymore.
bank account; they want to maintain their privacy. But the net
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their main priority. But once again, the U.S. is driving more
they are carried out by small, weak jurisdictions, but they are
powers.
of hypocrisy about this: the OECD and the IMF, which are
recently said that his country is not in the world tax collection
business."
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When you think about it, when these countries are attacked by the
Law crimes. Yet, they have received no reward from the U.S. for
doing so.
The Bahamas is perhaps a good case of that. And now the U.S. is
Thank you.
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(Applause.)
Mr. Tucker has to leave in a moment. Do you have time for a few
questions?
coming around. Just raise your hand and, when the mike comes to
reaction to some of the things that Mr. Day and the others have
well?
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you know, is the other branch of U.S. law enforcement and has
Agents and a like number of support personnel. And not only the
FBI, but other law enforcement agencies have to pick and choose.
far more concerned with the regulations that have been mentioned
here.
Customs Service, they are after the major criminals, those who
are doing the most damage. As far as the individuals who may
where they can get the best return on the investment of their
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cases of Aldrich Ames and other cases, the Bank of New York case,
only been recently that the SAR's, the form 8300's, the CMIR's,
and the CTR's, those are the four, I think, major resources they
use. The CTR's are those which are filed when a financial
international crime.
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that this individual was a drug dealer. Nothing had been done
he could use the phone to call his lawyer. In filling out the
The odd part of the story is that the two checks that
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was trying to get out of the drug business. So, you can run
are both trying to uphold the rule of law, but we come to very
chaos and how the rules that are being promoted here actually
undermine the rule of law, where you have civil asset forfeiture.
this is the example that you are citing to uphold the rule of
law.
willfully blind.
court and they can, if they have probable cause, they can follow
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the rule of law and do what you want to do. And I agree with
that.
That means if law enforcement has probable cause, they can get a
warrant, and banks should comply, just the same as every other
public confidence.
have a small cartel of rich welfare states setting the rules and
people here.
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that this is not a Federal issue. And in fact, before the Bank
Secrecy Act, many States had laws that were more tailored to
the same laws. Not only that, the laws are enforced
banks than they are the larger institutions. And this is what we
find in practice.
can enlighten us on that and which one you see as a better model.
(Laughter.)
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my own views of the IRS and its rather very complicated scheme
The IRS has obviously been the subject of very severe criticism
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or the States in the United States are free to impose good or bad
regulations and tax policy produce benefits, then they are better
taxes, why should I have any obligation under the moral rules to
let you and then you can go ahead and take off.
And we have heard some of them here from the panelists, wherein
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the wealthy nations are imposing their will on nations with less
clout. But when you read an article like this which appeared in
There are some estimates now that over $500 billion has
you. I would like to stay a little longer, but I've got to go.
(Applause.)
Smith's question?
(No response.)
here in front.
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you like, a more moral and libertarian system, where taxes were
get on with business. The same with drugs. I won't go into the
friction?
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lot of taxes like some other countries do. And this is one of
investment.
said, if you bring your money to Bahrain, you also must be free
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I have been practicing for the last 13 years outside the United
note.
laws. Who in the audience 10 years ago would have stood up and
said, "No way; we don't want anything to combat drug money and we
trades."
But look where we have gone from there. Now we are all
the way into all serious crimes. And as His Excellency, I think
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wrong, but the question is, did we know what we were getting into
countries, who would have ever thought they would be put in the
it to be when we began?
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to these foreign banks and they are told to sign them. It is not
your typical foreign banker and ask them to read the agreement
and all the intricacies and all the citations to the United
within that agreement that says that they have jurisdiction over
the bank in the United States and the United States laws will
control.
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question.
were getting into when these regulations were being sold to the
public?
reaction against it now. When the New York Times reported on the
that. And that was the reason for many people voting no.
tell you, one of the most astonishing questions that was ever
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could have almost fallen on the floor. But now that I've been in
America --
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