Monday, June 05, 2006

Where'd You Get That Money? Uncle Sam Wants to Know

I work at a Very Large Financial Institution (VLFI), and so I had to complete an "anti-money laundering" training course. I am an IT professional, but I don't actually go near any customer information or account transaction data (those reading who know me personally might be exclaiming, "Whew!" and wiping their brow about now). Nonetheless, I was required to take this training, as it is a corporation-wide requirement. While this requirement seems a bit excessive given my job responsibilities, the course was not overly long and burdensome, and I understand the company has this blanket policy to ensure unambiguous compliance with any and all regulatory requirements. And there is the culprit! I have no quarrel with my employer (in this instance); while my workplace is not exactly free of Dilbertian nonsense and jargon, this particular bit of silliness is unambiguously the result of government pressure, and that is the point of this post.

Apparently having money is inherently suspicious. OK, perhaps not quite, but it's pretty darn close. The guidelines in our training indicate that if a new customer setting up an account has a "large" sum of money, it is the duty of the VLFI employee to ascertain the source of the funds. That is, when you walk into, say, a bank as a high-net-worth individual, you must apparently be prepared to justify your wealth, and so while having money isn't necessarily actually suspicious per se, it's only a half-step away. If you are reluctant or unwilling to explain where your money comes from, THAT is suspicious. Frankly, this seems awfully intrusive to me. It hasn't come up with me personally (drat!) but the idea doesn't sit well with me. Am I alone?

Let's be clear: if someone comes into a bank driving a car riddled with bullet holes and wants to deposit bags full of cash tinted with some sort of white powder, then OK, a reasonable, law-abiding person probably has cause to flag this person as suspicious. (Never mind, for now, that I personally oppose the drug war, I won't challenge that here.) There are already reporting requirements for large cash transactions; these are known to banks and other VLFI's as Currency Transaction Reports or CTR's (last time I looked). While it certainly could be argued that CTR requirements might be burdensome as well, let's grant that perhaps there is at least some reasonable state interest in watching large cash transactions. It is worth noting that some customers who establish ongoing relationships with a bank and are expected to be dealing with large amounts of cash on a regular basis (e.g. retailers who take in lots of cash) can be exempted from CTR's. But the anti-money laundering standards from our training course go well beyond any reasonable suspicion of cash. Cash doesn't have to enter into it. The source of funds can be check or electronic transfer, which already produces an audit trail. If you have a lot of money, your banker apparently expects you to explain yourself.

Now, I don't know if this is written specifically into law anywhere, I rather doubt it. My employer is likely being overly cautious and proactive about this "source of wealth" requirement. But rest assured, profitable companies don't just throw money around without some root cause. There can be no doubt that government regulators, in this post-Enron/WorldCom/9-11/Sarbanes Oxley world are breathing down the neck of VLFI's everywhere, to ensure that we aren't enabling terrorists, or drug-dealers, or tax-dodgers, or whatever (don't conflate all these together, as our leaders often do, that's part of the problem!). I think, in this instance, things have gone too far. It should not be the place of your bank, or broker, or insurer, to make you explain your money. Neither free markets nor the public at large benefits, generally, from converting the people you do business with into cops and/or government spies. That's what law enforcement is for. If we need more cops, then we should hire them. Pressing regular working stiffs like me into service as government snoops is only yet more creeping statism.

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