In late May, Senators Charles Grassley, Dianne Feinstein, and Sheldon Whitehouse introduced the Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017 (Senate Bill 1241). The bill is currently in a Senate committee, but if it’s enacted in its current form, you can kiss what’s left of your financial privacy goodbye.
The proposed law would authorize the Feds to seize just about everything you own if you fail to properly fill out an obscure reporting form when you cross a US border. And they could imprison you for 10 years.
Under current law, if you transport cash or other monetary instruments, such as money orders or bearer bonds, with a value of more than $10,000 across a US border, you must file a reporting form (Form 105). You file the form with a secretive Treasury bureau called the Financial Crimes Enforcement Network (FinCEN). A transfer of funds through a bank need not be reported – only the physical transport of currency or monetary instruments.
S.B.1241 expands the definition of monetary instruments to include any prepaid access device:
“…[A]n electronic device or vehicle, such as a card, plate, code, number, electronic serial number, mobile identification number, personal identification number, or other instrument, that provides a portal to funds or the value of funds that have been paid in advance and can be retrievable and transferable at some point in the future.”
This means you’ll need to add up the value of prepaid debit cards, gift cards, prepaid phones, and prepaid coupons before you cross the border. Not to mention accounts in any crypto-currency, such as Bitcoin. If the aggregate value exceeds $10,000, you will need to report your holdings to the Feds.
If you’re arrested for failing to comply with the new rules, the proposal would allow the government to file a secret motion with a federal judge for a restraining order that would freeze any account you own. Even your safe deposit box could be cleaned out. The restraining order could be extended indefinitely.
The intent of this procedure is to:
“…prevent the removal of the funds in the account by the person arrested or charged, or by other persons associated with that person, during the time needed by the Government to conduct such investigation as may be necessary to establish whether there is probable cause to believe that the funds in the accounts are subject to forfeiture in connection with the commission of any criminal offense.”
And while the restraining order is in effect, the government could wiretap your phone and monitor your e-mail and web browsing records.
Under the ridiculously loose rules that govern current federal civil forfeiture laws, investigators need only probable cause that you violated a state or federal law in order to freeze your assets. A judge may consider hearsay evidence, which is otherwise inadmissible in court, in deciding whether probable cause exists. Federal agents – or local cops – can seize your property on the spot. If the cops want to seize the cash you’re carrying, you can do nothing to stop them.
In other words, you can lose your property without being tried, convicted, or even arrested for a crime. And if you are prosecuted and found innocent, you won’t necessarily get your property back. In most cases, you’ll have to file a lawsuit, at your expense, against the seizing agency, which will fight you tooth and nail. That’s why the vast majority of civil forfeiture victims never get their property back.
The new proposal is civil forfeiture on steroids: the feds can freeze your assets without needing even probable cause. Your accounts would remain frozen while investigators sift through your financial records looking for evidence against you.
If this bill passes, prosecutors will be able to make deals with defendants who want their frozen assets returned to them. Ever since the first money laundering laws were enacted in 1986, this has been a favored strategy of federal prosecutors. It’s a shakedown, pure and simple – a strategy that the Mafia understands very well.
Federal law already requires businesses classified as financial institutions to notify FinCEN of suspicious transactions made by their customers. You have no right to sue any business that files a Suspicious Activities Report (SAR) about you, even if the suspicions are false, fabricated, or made in bad faith.
SAR requirements were once restricted to banks and credit unions but have now been extended to many other businesses. Broker-dealers, casinos, and money services businesses (including the US Postal Service) must also file them.
Banks and other businesses subject to SAR requirements must watch for dozens of behavioral patterns by their customers, patterns that involve legal transactions but that may indicate criminal activity. Since businesses don’t know which customers, if any, are engaged in illegal activity, all customers are subjected to pervasive, systematic, and continuous surveillance.
The proposed bill would massively expand these requirements by forcing any business that issues or redeems any type of prepaid product to file SARs. For instance, Wal-Mart (which sells pre-paid gift cards, debit cards, etc.) would need to file them. Any company offering crypto-currency accounts would need to register as a money services business and would be subject to these rules as well.
S.B. 1241 has bipartisan support, and there’s a decent chance it will eventually become law. If it does, it will massively change the legal landscape for anyone holding crypto-currencies. And it will massively curtail research and development of the revolutionary blockchain technology that underpins crypto-currencies.
On the other hand, the occasional terrorist who uses Bitcoin won’t be affected. They’ll simply cross the border without filing the form. They’re willing to die for their cause. Why worry about a stupid reporting form the “Great Satan” has imposed on its people?
Welcome to America, where your property is only safe until Uncle Sam seizes it, financial privacy has been eradicated, and everything you do is monitored.
Second passport, anyone?
Protecting your assets (and yourself) against any threat – from the government, the IRS or a frivolous lawsuit – is something The Nestmann Group has helped more than 15,000 Americans do over the last 30 years.
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