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Because you just never know what stupid rule tomorrow will bring…

March 2, 2012
Santiago, Chile

When I was a kid, I remember watching that Schoolhouse Rock cartoon about how a bill becomes a law. That single cartoon probably brainwashed three generations of children into believing in the checks and balances fantasy of the US federal government.

The reality is what we see everywhere today– self-regulating, self-legislating executive agencies with nearly unlimited scope and authority. Even the most mundane offices within the Fish and Wildlife Service can confiscate people’s private property without any judicial oversight.

These agencies can also conjure new rules out of thin air, all on their own, that have the same weight and effect as laws. In fact, Regulations.gov shows that there have been nearly 500 newly posted regulations or proposals just in the last week… and roughly 6,000 over the past 90-days. Truly mind-numbing.

One of these new proposals has come from our friendly neighborhood regulators at the Financial Crimes Enforcement Network (FinCEN).

As you’re probably aware, FinCEN is a bureau of the Treasury Department that overseas the ridiculous post-9/11 regulatory environment; there are oodles of regulations that have obliged bankers to nitpick every last detail of new customers’ lives when someone wants to open an account.

These requirements are called “KYC” or “Know Your Customer” rules… but in actuality, they have nothing to do with knowing your customer. Knowing your customer is sitting down and having a chat… talking about their families, their kids, their life experiences. The same sort of stuff you’d do if you were getting to know anyone in general.

KYC policies, on the other hand, are nothing more than burying customers under mountains of paperwork and forcing them to jump through ridiculous administrative hoops for the sake of “the folks upstairs in the compliance department.”

The net effect is that it’s more difficult to open any form of financial account, just about everywhere in the world. Naturally, they claim it’s all for the benefit of ‘fighting terrorism,’ but this is total nonsense.

Making bank customers submit to reams of paperwork ‘fights terrorism’ about as much as fondling little old ladies at the airport… or authorizing the military detention of US citizens on US soil.

Yet in a 37-page draft released only days ago, FinCEN spelled out new requirements that it intends to implement in order to ‘fight terrorism’. The agency attacked everything from financial intermediaries to nominee managers and shareholders, to the use of shelf companies.

FinCEN’s proposed changes would increase the burden, not only to financial institutions, but also to customers opening new accounts.

For example, FinCEN wants all new customers to explicitly forecast what the monthly inflows and outflows will be when opening an account. Any deviation from this forecast will require the banker to submit a Suspicious Activity Report (SAR).

Now, anyone who has ever started a business knows that forecasts are for finance wonks. It’s extraordinarily difficult for entrepreneurs (or investors, for that matter) to make accurate predictions, especially for startups. There’s simply too much uncertainty.

Needless to say, it’s unlikely that anyone at FinCEN making up these rules has ever run a business before. In their bubble reality, everyone should be able to accurately forecast bank balances, and anything to the contrary is ‘suspicious’.

The really crazy part about all of this is that FinCEN has the authority to implement these rules all on its own. There will be no Congressional Debate, no Presidential signature… simply a short waiting period until the final version is published in the Federal Register and becomes part of the Code.

Afterwards, they’ll push the same rules down the throats of every major banking jurisdiction around the world, making it much more onerous to open a bank account anywhere.

Opening a foreign bank account is perhaps the single most important first step in international diversification. It moves a portion of your savings abroad to a jurisdicition overseas that your thieving home government does not control. It can diversify your money out of a failing currency… and most importantly, the foreign bank might actually be solvent!

FinCEN is taking steps to make it much more difficult.

The sheer volume of so many new regulations, and the velocity with which they are spawned, should be a stark reminder that the time to take action is now. Tomorrow may bring yet another stupid rule that will make it more difficult, or impossible, to do what you’ve been putting off today.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • greenlander

    That Singapore passport is looking better every day…

    • $10039200

      If you think the U.S. government is nannyish, wait until you try Singapore. In addition, the Straights Times is a propaganda organ not unlike the China Daily, and will bore you silly.

    • Chris

      There’s plenty of good second passports which don’t require you to send your sons off to serve in a tin-pot army to be brainwashed by Lee Kuan Yew & Son.

  • http://pulse.yahoo.com/_RCNHW5YFFKVRCOVZNHGMQ3XTOE C.B. (Cool Breeze)

    Speaking of regulations nuttiness, a retail plastic AND paper bag ban in Austin, Texas starting next year – 

  • M2asbiz

    I beg to differ, with the recent rash or “private banks” in Switzerland etc caving to US reporting requirements how does opening a foreign bank account achieve this? Yes it’s in another jurisdiction, but obviously still reachable by the US (whether it’s the IRS, FinCen etc). 
    We saw this with Switzerland recently in these very own posts. 
    What would make someone think smaller less powerful banks wouldn’t cave to this?
    These very own posts describe how the US is increasing its reach to regulate foreign accounts at even check cashing businesses. Sure the theory sounds good, but what if FinCen just labels you a money launderer? or terrorist? How would any of this help you?

    • http://www.bzemic.com/impossibleInstinct/ steve ward

      yes i have been wondering that too 

    • jjo2

      You have a valid point, but it is that of solvency of foreign banks that is a key advantage, and yes switzerland did cave, but I bet you a bank in Hong Kong or Singapore WILL NOT.  The point is, even if they can reach it, it will be harder.

  • http://www.bzemic.com/impossibleInstinct/ steve ward

    Something to think about, there no way fincen can reg so follow me now if they can not regulate it, they can not enforce it.

    IF they can not enforce it what is the chance that your money will even be flagged? A good example while not this is with the mortgage deal, how many people flat out lied about how much they make?

    Or what about mortgage companies how many of them lied about all of it. So banks will do the same and people will do the same. What most of these people seem to forget is that people see a law that they feel is evil (threats them etc) they will not follow it.

  • World Source
  • American_Sharecropper

    Since the assumption is that we are all terrorist/criminals until we prove otherwise, and the trend is forever raising the bar to prove our honest intent, at what point does a moral man give up and just become the “criminal” our government assumes us to be?

    Peaceful non-compliance is now a crime, free thinking critical analysis is not tolerated by the statists when it leads one to stray from the herd.  Your crime, citizen, is in your unwillingness to submit to the increasingly bizarre whims of the kleptoparasitic plutocrats, denial of the charge is considered proof of your crimes! 

    We truly live in interesting times.

  • Jessvamp

    @Crusader79: In Sing I’ve been in the bank line in back of a guy who looked like a gangster who pulled out hundreds of thousands of dollars from his oversized jacket and plopped it down at the cashier to be deposited and no one blinked. Yes, Sing is controlled but it ain’t balanced. I can walk into my bank and pull out 50K and walk down the street and blow it on hookers without breaking any laws….

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