Thursday, November 4, 2004

The definition of slippery slope - "questionable money transactions"

In the wake of the September 11, 2001 attacks a questionable law was rushed through Congress. The PATRIOT act (so-called). Many have been worried about the effects this law will have, since it was rushed through before anybody in Congress could understand what they were voting for.

In a washingtonpost.com article we see "slippery slope" in action.


Money-Laundering Law to Be Extended



By Bill Arthur

Bloomberg News

Wednesday, November 3, 2004; Page E03

The article discusses the "money laundering" provisions of the PATRIOT act. Clearly loose money controls through certain industries allowed the "terrorists" to send their money around. We learned at that time of a traditional money passing system run by Muslims around the world, that supports money transfers under the radar of the normal banking system. While it's the Muslim equivalent to the Western Union Moneygram (and frequently used by Hispanics to send money home to their families in Mexico and elsewhere), it possibly was used by the al Qaeda financiers. Those organizations also received funding from Muslim Charities, by the way.

If one could cut off the avenues through which al Qaeda and other organizations can send their money around, then you can cut off the air supply (to borrow a phrase) of their operatives in the field. Clearly that's the intent of the law.

But, what does that mean? That means tighter control over the flow of money around the world. Tighter control just so we can stop "terrorists". This is the financial equivalent to how we all must take off our shoes while going through airports now. Just because one guy tried to set off a shoe bomb in an airplane, the officials are now determined to stop all future shoe bombs, and force us all to take off our shoes and have our shoes screened. Even though the chance of catching another shoe bomb is vanishingly small.

In the article they discuss how the law was originally applied to banks credit unions, casinos, securities broker-dealers and mutual funds. Now it is being extended to jewelers. Here's their theory:

...Enforcement officials want to prevent terrorists from using other cash-intensive businesses as alternatives after banks and casinos implemented the law.

"As you tighten control in the formal financial sector, banks for example, people will look to move elsewhere to try and integrate dirty money into the system," William D. Langford Jr., associate director for regulatory policy at the network, said in an interview Monday.

Insurance companies also would be required to file suspicious-activity reports to the government. "Both rules, I hope, will be out in the next month," Langford said.

The muddy slippery slope is right there in the words, obvious for all to see. The "network" in question is


The U.S. Treasury's Financial Crimes Enforcement Network (FinCen)

(web site: http://www.fincen.gov/ )

What of the personal privacy implications? In the article the people quoted do say stuff about "doing it right". Still, this is an deep intrusion into normal economic activity. Is there sufficient reason for the government to be tapping into this?