Cambridge International Symposium on Economic Crime, Banking on
panel "Privacy, Confidentiality and Privilege – things of the past?" 6 Sep 2008
by Anton Keller, Secretary, Swiss Investors Protection Association, url: www.solami.com/glasnost.htm
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Foreseeably, my predecessors on this panel have almost pre-empted what can and needs to be said on the future of privacy, confidentiality and privilege in financial matters. As last speaker, Barry may thus have given me the sad task of hammering a final nail into the coffin of time-tested but no longer politically correct banking practices. Or he may have wanted to pull my leg and thus definitely get rid of this unrepentant perennial troublemaker as I seem to have angered many symposium sponsors with apparently outdated "dangerous" ideas. True, over the past seven years, I have persistently run against the grain and have thus somewhat been the odd man out in this charming setting. Happy to say then, I hope I will disappoint everybody in either case.
"Banking on Trouble" - alas, not "Banking
Trouble" - is this year's main symposium theme. Of course, all of you
probably agree that "Banking in Trouble" would indeed be quite fitting
to what's currently going on in the world of financial wizzardry, where
apprentice sorcerers, greed gurus and other adepts of financial
mobiles run roughshod. But with all due respect to each one
of you: who has ever seriously questioned his or her contributing role
in the runup to this alarming state of affairs? Trouble is now engulfing
all of us from many corners. But if not you, as pillars of the lawmaking
and the law-enforcing community, who then is not also "Banking on Trouble",
is not also in some way a direct beneficiary from, even depending and feeding
on, and thus contributing to society's and the economy's current woes?
In Goethe's turned-around words, you could say:
I am the force which
always wants to do good but often causes the opposite!
I recognize only a few on this rostrum and in the audience who share the analysis, that on many fronts we have reached - if not already surpassed - the apogee of the Rider curve which, like the Laffer curve in taxation, indicates limits, diminishing returns and even counter-productive effects of penalising laws and practices. To give you a current example, I may draw your attention to the ardent petition efforts to legalise drugs by our long-time symposium alumnus and former Chief Constable, Tom Lloyd. Other brilliant testimonies on older examples have been given notably by Brooklyn Law School professor Henry Mark Holzer who wrote up the hilarious story on "How [back in the thirties] Americans Lost Their Right To Own Gold And Became Criminals in the Process".
But - as Richard Rahn, Hans Geiger and other comrades-in-arms have pointed out before - instead of drawing lessons and inspiration from the Prohibition and similar costly social, economic and political failures, we think up new Prohibitions, Gulags and anti-liberty, anti-privacy and anti-sovereignty Orwellian schemes. Carnivore's & Echelon's global surveillance of telecommunications reportedly is being complemented by an even more all-penetrating and all-embracing electronic recording system right here in England. And the New York Times reported recently that the Pentagon is preparing for future, irregular wars, involving also "information operations and computer net-ops and then begin to expand into threat finance, economic development, criminalization and international law enforcement.”
In contrast to the advertised goal of promoting democracy - i.e. the form of self-government which, if you think of it, is illusionary without truly free, informed & responsible citizens -, we see bureaucratic lawmaking gaining the upper hand everywhere. We see an ever-growing array of artificially blown up external & internal threats to serve as excuses for ever more political manipulations, with State powers ammassed at the expense of the rights & responsibilities of citizens. And we see the institutions originally created to protect and serve the citizens to turn the latter into obedient zombies and servants of the self-serving and all-powerful State. For those who forgot or missed it: Glasnost was the political program for giving the citizen a transparent State, and not the other way around. But that, of course, was before the Berlin Wall fell. And though it fell in our direction if I remember correctly, I wonder why it is that some of our key Western institutions, such as the OECD and the no-future EU, look like the last remnants of discredited Kremlin policies. Or have I missed something here?
Actually, after all my past philippics against OECD, FATF, UN and other anti-citizen bodies, Barry wanted me to report to you on a super-macchiavellian scheme which provides for the collection of a Mafia-type protection fee of 31% for funds which were placed abroad anonymously for eventual reinvestment in the US market. Even US persons can use this channel - at 31% not of interest but of principal, mind you! This scheme carries the name of Qualified Intermediary or QI Agreement. Designed and operated by the US tax authority IRS, it is in fact the world's biggest money-laundering machine, turning a big chunk - some estimate exceed $500 bn/y - of the globally and annually accruing some $2 trillion of black funds into IRS-protected "cleaned money". Bruce Zagaris, others and I have tried to kill this monster in the bud, i.e. even before it came into force on January 1, 2001. Not surprisingly, we encountered the most ferocious opposition from some of the scheme's biggest co-beneficiaries, i.e. the involved some 7000 accredited - and fee-collecting - fiduciaries and QI banks from all over the globe.
Apparently, the IRS smelled the rat and refused to comply with my information requests. So I cannot now report to you more precise official figures. Not surprising either, as we've become accustomed to sanitized US inflation & unemployment figures. And as we let ourselves be blinded, since 2006, on the crucial US M3 money supply. But you may now understand why I can't take seriously any of the hogwash about alleged petty money laundering. And why I call into question the justifications given for any related liberty, privacy and privilege constraint. For they are not only threatening time-tested, efficient and reliable money transfer systems, but are hamstringing legitimate businesses and international trade and commerce. Things are not made any better by the fact that these constraints are peddled and even pushed down the throat of sovereign authorities by a nude Emperor, i.e. the purely self-serving bureaucratic organization FATF which is devoid of any legal basis.
My nutshell answer to the panel question is thus: The world financial system is unmoored. Regulatory make-ups won't wash. Confidence is key. Some gold link may help. Most importantly, the sovereign, the re-responsibilized free citizen must again be recognized. Lex americana universalis must be thrown out - in line with what the Magna Carta king pledged in 1215: "We will not appoint justices, ... sheriffs, or bailiffs, except of such as know the law of the kingdom and are of a mind to keep it well."Applied to today's Switzerland, lex helvetica is called for - i.e. Swiss officials must again know & heed Swiss interests, rights & laws. Beyond that, your actions & inactions will determine whether the above-outlined charade & hugely damaging global hypocricy is to be continued. Whether you can look into your mirror & in your childrens' eyes and admit that you, too are part of the problem - as a precondition that you can become part of the solution. To that effect, be reminded of the American Revolutionary Samuel Adams' riot act. And be invited to ponder Martin Niemöller's "poem" as your own guidepost.