Capital flight is a peaceful signal to government authorities to “get your house in order.”

Thomas Jefferson:

 “When the government fears the people, there is liberty.

When the people fear the government, there is tyranny.”

The anti-money laundering statutes are a clear attempt to get the people to fear the government.

Why the War on Money Laundering Should be Aborted

If you hesitate while trying to come up with a definition, you have begun to understand part of the problem. Money laundering is hard to define because it is not a crime like murder, robbery, or rape, where the evil act is clear. It is a crime of motive rather than activity. In fact, two different people can engage in the exact same set of activities, and one can be guilty of money laundering while the other is not. In fact, money laundering has only been illegal in the US since 1986, and it is not illegal in all countries.

The most dubious reason often given by the advocates of anti-money laundering laws and regulations is that of trying to stop tax evasion. First, such advocates seem to have problems differentiating between tax evasion and tax avoidance––which is not only legal but also a right. Second, such advocates seem to be unable to differentiate between evading reasonable taxes imposed by honest democratic governments and unreasonable taxes imposed by dishonest and corrupt governments.  

Recently, the Organization for Economic Cooperation and Development (OECD), the club of 29 rich nations, has denounced and is threatening 35 mainly smaller and poorer nations for engaging in “unfair tax competition.” No nation has the right to tell another sovereign entity what its tax rates and financial privacy policies ought to be. To do so is nothing more than financial imperialism. 

Those governments and politicians who are unhappy about “tax havens” might do well to look in the mirror and ask themselves why so many of their own citizens are moving assets and income elsewhere.  

Given that governmental units are almost always monopolies and also control the police and justice functions, an abused taxpayer often only has the options of revolution or moving his or her assets. 

Capital flight is a peaceful signal to government authorities to “get your house in order.” 

To cut off this alternative under the guise of fighting money laundering is likely to lead to far worse consequences. 

During the last two decades(now four) a sizable anti-money laundering industry has emerged with many billions of dollars to spend, and that those whose jobs depend on such an industry––law enforcement officials, equipment purveyors, and assorted bureaucrats, etc.––are not going to take kindly to my comments, even if they cannot refute my arguments. 

Delivered at the Conference on Financial Cryptography, Grand Cayman, February 20, 2001.

DYI:  Since the year 2001 has anything changed?  Yes it is now worse!  Our government is spending money at a feverish pace and yet no one from either party has made any REAL attempt to reign in spending.  Time will tell if Trump is a fiscal conservative.  With a 20 Trillion dollar debt plus the insane on going budgets the Federal government will be tax hungry – so much so – draconian means will be put into place.  In other words more of the same and new abusive tactics as stated in the 2001 article.  Trump may postpone and temporary reverse these tactics but as long as our citizens and corporations demand handouts funding will always be a problem.  This is the reason why so many corporations, businessmen, and basic citizens have moved their assets offshore in order to avoid abusive tax rates.

If the Federal government were to downsize significantly; offshored money – American or foreign – would come into the U.S. at a fantastical rate soaking up our unemployed faster than a speeding bullet.  We can all dream.

DYI