Chris Lowe – Bill Bonner’s Diary (United States) –
Already, as an American, you are not free to spend your money as you see fit. (For a full breakdown, see “Bank Secrecy Act Regulations Explained” below.)
JPMorgan Chase – the country’s biggest bank – has banned cash payments for credit card debt, mortgages, and car loans. It has also banned the storage of “any cash or coins” in safe deposit boxes.
And all U.S. banks now view large cash withdrawals as suspicious.
Bank Secrecy Act Regulations Explained
BY BONNER & PARTNERS ANALYST JOE WITHROW
The Bank Secrecy Act (BSA) requires U.S. financial institutions to help prevent money laundering.
Banks must keep records of all their financial activity… including filing a Suspicious Activity Report (SAR) if customers make transactions a bank deems strange.
The BSA also requires banks to file other types of reports, including:
Currency Transaction Report (CTR): A bank must file this report anytime someone withdraws or deposits more than $10,000. It also must file a report if a person makes multiple combined transactions over $10,000.
Report of International Transportation of Currency or Monetary Instruments (CMIR): If you send or receive more than $10,000 from outside of the United States, banks must file a CMIR.
Report of Foreign Bank and Financial Accounts (FBAR): If you have a financial account in another country, banks must file this report if your accounts exceed $10,000 in a calendar year.
There are also plenty of regulations about opening a bank account in the U.S.…
Form W-9 Request for Taxpayer Identification Number and Certification: If you don’t provide a valid taxpayer ID – or fail to pay income taxes – the bank must withhold your funds.
Identification Requirements: You must provide your name, address, taxpayer ID, and date of birth. You also must submit a valid driver’s license, state ID, or passport.
Office of Assets Control (OFAC) Compliance: This rule prohibits you from opening an account if you have conducted business with the governments of Cuba, Burma, Myanmar, Iran, and Sudan – or individuals in those countries.
Unlawful Transactions: You must certify that your accounts won’t be used for internet gambling or any other illegal activity.
Under the Bank Secrecy Act, if you withdraw $10,000 or more in a day, your bank is required to file something called a Currency Transaction Report with the Financial Crimes Enforcement Network (FinCEN). This is a special bureau within the Department of the Treasury that’s tasked with combatting money laundering, terrorist financing, and other financial crimes.
And your bank is required to file something called a Suspicious Activity Report with FinCEN if it believes you are trying to avoid triggering a Currency Transaction Report by withdrawing smaller cash amounts. This puts all cash withdrawals under the microscope.
And taking out cash from the bank isn’t the only activity the government deems suspicious.
Other actions that will trigger a report being filed with the feds include: depositing $10,000 or more in cash with your bank… a foreign exchange transaction worth $10,000 or more… taking more than $10,000 in cash into or out of the U.S… receiving more than $10,000 in cash in a single payment as a business… or having more than $10,000 in accounts outside the U.S. during a calendar year.
And even if you manage to get your cash out of your bank, having it on your person also makes you a target of the authorities.
Under civil asset forfeiture laws, police and federal agents can confiscate any cash you might have on you if they merely suspect it was involved in a crime. They don’t need to bring criminal charges against you or prove any wrongdoing. And they can keep any seized cash for themselves.
According to The Washington Post, since 2007, the DEA alone has seized more $3.2 billion in cash from Americans in cases where no civil or criminal charges were brought against the owners of the cash.
And forget about opening up a bank account offshore to diversify your risk of these kinds of clampdowns.
The Foreign Account Tax Compliance Act, or FATCA, became law in 2010. It imposes a lot of red tape on foreign banks with U.S. clients. And the costs of complying with all this red tape means opening up bank accounts for Americans no longer justifies the benefits of overseas banks.
As a result, it’s now extremely difficult for Americans to open accounts overseas. It’s de facto capital control, even if the government won’t admit it.
Editor at Large, Bonner & Partners