Government-Mandated Spying on Bank Customers Undermines both Privacy and Law Enforcement
I recently publicized an interesting map showing that so-called tax havens are not hotbeds of dirty money. A more fundamental question is whether anti-money laundering laws are an effective way of fighting crime — particularly since they substantially undermine privacy.
In this new six-minute video, I ask whether it’s time to radically rethink a system that costs billions of dollars each year, forces banks to snoop on their customers, and misallocates law enforcement resources.
Filed under: Finance, Banking & Monetary Policy; Law and Civil Liberties; Regulatory Studies; Tax and Budget Policy
Tax Havens Are Not Money Laundering Centers
Demagogues such as Sen. Carl Levin (D-MI), as well as many other politicians and journalists, often assert that low-tax jurisdictions are havens for dirty money and terrorist financing. From a theoretical perspective, this does not make sense. So-called tax havens have a big incentive to avoid scandal since they are much more vulnerable to reputational risk. Just imagine what would have happened, after all, if the 9-11 terrorists had used a bank in the Bahamas instead of a bank in Florida. Critics of low-tax jurisdictions automatically would have assumed that the bank was complicit and the entire financial services industry in the Bahamas would have been crippled — or even destroyed. But because the terrorists used American banks (as well as banks in high-tax European nations and the Middle East), there was no knee-jerk reaction. People understood that the bank tellers and managers had no way of knowing that the flight school students were actually lunatics.
But this does not stop the anti-tax haven smear campaign. Low-tax jurisdictions are viewed as a threat by politicians since it is much harder to impose bad tax policy in a world where tax competition is allowed to flourish. This is why tax havens are attacked whenever something bad happens. If there is a terrorist attack, blame tax havens. If there is a financial crisis, blame tax havens.
With this in mind, a new report from the University of Basel’s Institute of Governance did some real research and came up with a list of nations where there actually is a high risk of money laundering and terrorist financing. As the map below indicates, only one so-called tax haven is among the 28 countries listed, and that nation was in the lowest-risk category.
Filed under: Finance, Banking & Monetary Policy; International Economics and Development; Political Philosophy; Tax and Budget Policy
America Threatened as Never Before
The Justice Department is on the job. Perceiving a dire threat against the American republic, they have acted to keep America safe. As my colleague Sallie James noted yesterday, they are stealing confiscating the money of Internet gamblers.
Reports Richard Morrison of our friends at the Competitive Enterprise Institute:
Just when it seemed that those in power had begun to think about Internet poker in a positive light, the Department of Justice throws us back into the digital dark ages by seizing $34 million in funds rightfully owned by around 27,000 online poker players. The government is alleging that the funds are associated with illegal online gambling and money laundering.
In a letter sent to Alliance Bank, the prosecutor said accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, assistant U.S. attorney for the Southern District of New York.
Knowing that the federal government is busy violating our privacy and grabbing our money to save us from ourselves just makes one feel great to be an American
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets
