Today I received my fourth-quarter 2007 Anti-Money Laundering Training Program notice. After my "mandatory" compliance, I must agree with everything stated in the "training" through the Compliance Attestation System. Although the manner and frequency of this forced training has changed somewhat, it is still required or else, this since the passage of the USA PATRIOT Act. Every quarter, "new and improved" subject matter is presented, and many times "case studies" are a major part of the indoctrination. This quarter was no different.
The most recent mandatory training concerning "Terrorist Financing" began with this statement: "The United States passed the USA PATRIOT Act to ensure that combating the financing of terrorism and anti-money laundering were both given sufficient focus by financial institutions." I don't mean to quibble, but that statement is a bit misleading. Focus is one thing, but in this case, any individual not complying with the government mandates is threatened with fines, suspension, prison, or all of them. In other words, do as you are told and spy as you are told or else! To illustrate this point, allow me to list some of the things financial advisors must now know about their clients: Who they are; what they do; where they get their money; where they are sending their money; what their plans for the account, investment objectives, and funds transfer needs are.
As an advisor, I certainly would want to know my clients' objectives and who they are, but how they earned their money and where they got it is none of my business. I am told to monitor all client transactions and report any and everything that "doesn't add up or make sense immediately" to the AML officer. In many cases, I am also told to be suspicious of clients who have done nothing at all suspicious in the first place. Included here could be a 30-year-old depositing $100,000 into his account (I wonder how much money Bill Gates had at 30) or a grandmother who didn't invest right away after opening an account. This entire government regulatory fiasco is bordering on the ridiculous, and it seems to be getting worse as time passes.
"Red flags or potential warning signs to look out for" now include:
- Simple transactions performed with other countries where there might (emphasis added) be a terrorist link or terrorism problem.
- Transactions involving a Politically Exposed Person (PEP). This concept is often left open to interpretation; in any case it is unclear.
- Accounts that receive only periodic deposits withdrawn by means of the ATM over the course of several months but are dormant the rest of the time.
- Nonprofit or charitable organizations whose financial transactions appear to have no logical economic purpose or whose stated activity appears to have no logical economic link to the other parties in the transaction.
- Multiple accounts that collect funds that are then transferred to a smaller number of foreign beneficiaries.
- Fund transfers ordered in small amounts in an apparent effort to avoid triggering ID or reporting requirements.
- Funds sent or received by means of international transfers from or to high-risk locations.
In essence, I am to be not only suspicious but wary of virtually everyone with whom I do business. Obviously, the government's position is this: Everyone is a terrorist or terrorist supporter until proven innocent, and I am the government's conscripted agent. And if I don't accept this as fact, I am liable. Yes, this is as ludicrous as it sounds, but it is reality. This behavior is Orwellian and then some.
The paranoid drive within federal officials grew exponentially immediately following Sept. 11, 2001, and now is in full gear and advancing. At this time nothing is sacred, nothing is private. Natural rights are all but gone. The answer to all this lies in the hearts and souls of individuals. Instead of allowing our lives and property to be continuously monitored and restricted by government, we should instead reverse the trend and restore our rights and freedoms by restricting the powers of government. Since "eternal vigilance is the price of liberty," the government and its agents should be on our watch lists, not the other way around.
Gary D. Barnett is a Policy Advisor at The Future of Freedom Foundation (www.fff.org) and President of Barnett Financial Services, Inc., in Lewistown, Mont.