From: Black Unicorn <unicorn@schloss.li>
Date: Thu, 25 Apr 1996 13:55:02 -0700 (PDT)
To: Cypherpunks <cypherpunks@toad.com>
Subject: US law - World Law - Secret Banking
In-Reply-To: <199604251135.NAA07136@utopia.hacktic.nl>
Message-ID: <Pine.SUN.3.93.960425165304.2700D-100000@polaris.mindport.net>
MIME-Version: 1.0
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On Thu, 25 Apr 1996, Anonymous wrote:

>    Financial Times, April 23, 1996, p. 8.
>    Long arm of US law threatens business
>    By Clay Harris
> 
>    The extra-territorial reach of US law poses a growing
>    threat to non-US companies doing business, even indirectly,
>    with that country, an expert on money laundering said
>    yesterday.

It amazes me that this is new news.  I've been watching this since the mid
80s.

>    Mr Rowan Bosworth-Davies, senior consultant at London
>    solicitors Titmuss Sainer Dechert, told a conference in
>    Lisbon that US courts had been "consistent in concluding
>    that US law enforcement interests outweigh a foreign
>    nation's interests in preserving the confidentiality of its
>    banking or its business records".

The earliest of these decisions dates back to the 60s.  Good morning
reporters.  Have a nice nap?

[...]

>    The due diligence required was "truly awesome," Mr
>    Bosworth-Davies said. "Any new proposed business client who
>    is a US citizen, who proposes to do business on US
>    exchanges, buy US property, transfer money from a US
>    institution, pass money through a US institution or return
>    money to a US institution must become subject to a level of
>    investigation not hitherto contemplated."

What has consistently alarmed me is the United States trend of extending
her own moral and ethical standards world wide.  Granted the United States
is the foremost world economic power, but the power to control markets and
the political power to invade the sovereignty of other states are two
distinct issues.  The United States is, in one form or another, attempting
to homogonize the legal systems of the world to comply with her own
concept of what is "right" or "fair."  This is disturbing.

I will not go so far as to propose that this is some grand conspiracy or
some "one world government" plot.  I will comment, however, that what
started with concepts of anti-trust, and progressed into the field of
securities regulation, has (publically) become an issue of banking
secrecy and cryptography.

By no means are the states of the world united on the meaning of
anti-trust, the appropriate levels of regulation therein, or the manner in
which to enforce these segments of the law.  That the United States should
seek to impose her own will and concepts on foreign states strikes me as
the antithesis of this once noble power's call, indeed the central focus
of her foreign policy, for the self determination of all nation states.

One sees a larger trend.  The dream of European unification, many
times attempted attempted militarily (France, Napoleon, Germany), then
politico-economically (The European Union) has become a global legal
financial reform effort led by the United States.

While from the prespective of the United States, the position seems
rational, what is constantly ignored is the imposition on foreign states,
particularly those with a long culture of independent and unintrusive
legal regimes.  (Switzerland, Austria, Sweden have all felt the pressure
from the United States of late).

Perhaps unwittingly, under the guise of protecting her shores from 'Money
Laundering,' 'Narco-Terrorism,' Terrorism and any number of international
criminal problems, the United States appears to be a united front for
worldwide financial legal reform.

It is my prediction that this policy, which ignores the international
comity between nations, will severely disadvantage the country in the
years and decades to come.

Mr. May (I believe) on this list predicted the inevitable clash between
strong cryptography and the technologies and capacities it creates and
statist trends.  I join in his assesment.

Private banking in cyberspace is in its infancy.  At the moment
institutions are identified, have a geographical base, and depend on the
graces of a single host state to exist.  Many or most institutions hold
significant assets within the borders of the United States, and still
others derive a large portion of their income from U.S. branches.  These
days will not last forever.

The introduction of a geographically diverse, multi-jurisdiction, crypto
and secret sharing institution with completely blinded assets assured and
accountable merely through blind digital signatures is around the corner.
Such an institution will be impervious to the whims of the United States
or any other power.  She may even hold stock secretly in U.S.
institutions, offer mutual funds investing in U.S. stocks, and yet remain
beyond the reach of the legal systems and intelligence apperatus of the
western world.

It is my vision to create such a system.

>    A former legal adviser to the UK intelligence agencies MI5
>    and MI6, meanwhile, told the conference that organised
>    criminals should be declared "illegal international
>    organisations" (IIOs) and made subject to administrative
>    sanctions similar to those applying to "rogue states".

Any individual understanding the jargon of intelligence will appreciate
the meaning of this statement.  What is being called for here is the 
application of the full brunt of intelligence assets and even covert
actions to enforce that which cannot be enforced by law alone.

>    Mr David Bickford, deputy chairman of Strategy
>    International UK, said organised criminals planned their
>    crimes to take advantage of different national legal
>    systems and mutual legal assistance treaties.

As do tax attornies, multi-national corporations, wealthy individuals, and
import-export traders.  The United States has become expert in the process
of criminalizing the act of being a criminal.

>    A solution, he said, was to treat them as organisations,
>    not individuals. Once they were identified as IIOs, assets
>    would be subject to seizure and forfeiture.
>
>    The system would require strict oversight and a forum to
>    determine complaints and claims. Revenue provided by
>    forfeited assets could be applied to the cost of
>    investigation and to the parties which lost revenue as a
>    result.

A dangerous, frightening concept.  Akin to worldwide application of the
RICO act.

>    Financial Times, April 24, 1996, p. 8.
>    US prosecutor attacks bank secrecy laws
>    By Clay Harris

>    Mr Moscow, who since 1989 has been assigned to prosecute
>    cases related to Bank of Credit and Commerce International
>    said: "In the BCCI case, we had $3bn going from Egypt,
>    through New York, to Nassau in the Bahamas and back. I
>    don't suppose that there has been $3bn in trade between
>    Egypt and the Bahamas in all recorded history. A prudent
>    banker would have asked what business his customers were
>    in."

And that prudent banker might have been told by the CIA to shut up or take
a walk.

BCCIs problem was that the prosecutors in Miami and the Federal system
never bothered to do any work until the Iran Contra scandal.  This despite
constant allegations and indications of major frauds.

BCCI is a poor example because it involved corrupt bankers who formed the
bank with the intent of defrauding depositors and investors, not a bank
which was merely annoying to the tax authorities of the United States.

>    In a strong attack on bank secrecy laws, he said: "The
>    ancient concept that bank secrecy must be preserved to keep
>    a gentleman's financial affairs confidential -- dating back
>    to the days when only gentlemen had cheque accounts, and
>    their servants did not -- must give way to the current
>    reality.

Which reality?  That the United States wants access to the financial
records of anyone and everyone on the planet?

>    "Bank secrecy statutes in international finance are used by
>    crooks, tax evaders, securities fraudsters, and capital
>    flight fellows; they are used by narcotics dealers. But
>    they are not needed by honest folks engaged in honest
>    transactions."

Neither are walls, envelopes, whispers or any other manner of secret
keeping.  Correct?  Haven't we seen this before?

If prosecutors would do their job and concentrate on the crimes themselves
as opposed to reforming the entire international financial system to make
their work a bit easier, noone would be concerned.

Financial investigations are a crutch for poor prosecutors.

>    He added: "There is no reason why the people in Vanuatu
>    cannot have rigid bank secrecy laws. I do not care what
>    they do among themselves, so long as they are consenting
>    adults. I do care, however, if they try to merchant their
>    sovereign status and impose their sovereignty on New York
>    (along with rest of the civilised world), to protect the
>    narco dollars from detection... As we see it, if the money
>    goes through Manhattan, we may well have jurisdiction."

Jurisdiction over the Manhattan bank, fine.  What are you going to do?
Invade Vanatu?


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---
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