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A story breaking today concerns $2 Trillion of suspicious financial activity*reported by banks to the US treasury between 2011 and 2017. Google "FinCen Files".
Deutsche Bank [Moderator edit] accounts for 65% $1.3T of the total.
Currently, banks that report suspicious activity are not required to terminate business with those they suspect of illegal activity.*Treasury officials say 2m reports are filed every year, and they can't keep up, which gets to the issue of State Capacity. What to do about a gummint that is unable to enforce its laws,
or unable/unwilling to raise sufficient taxes to support its policies?
Any thoughts?
Last edited by Rachel NewYork; 09-20-2020 at 05:58 PM..
A story breaking today concerns $2 Trillion of suspicious financial activity*reported by banks to the US treasury between 2011 and 2017. Google "FinCen Files".
Deutsche Bank [Moderator edit] accounts for 65% $1.3T of the total.
Currently, banks that report suspicious activity are not required to terminate business with those they suspect of illegal activity.*Treasury officials say 2m reports are filed every year, and they can't keep up, which gets to the issue of State Capacity. What to do about a gummint that is unable to enforce its laws,
or unable/unwilling to raise sufficient taxes to support its policies?
Any thoughts?
[Moderator edit]
In the interests of national safety there are a series of reporting requirements all vendors must do. If you acquire a vehicle in cash, the amount will likely be above the reporting requirement and you will be reported. You simply bought a car. That triggers the government to try and figure out where exactly you got that money from. This is why in escrow for a property sale, you must always wire the cash in from another institution. That money is clean. You cannot show up with a suitcase of cash. They have recently lowered the reporting requirements for people acquiring gold.
If I want to give money to a family member, I have to be careful on how I do it in order to not cause a gift tax requirement.
At the same time, I've seen quite clearly how foreign money can pour into the country. These transactions are complex. They are crafty. It would take a person of talent to correctly understand what was occurring. It is unlikely to be unwound by passive reporting.
Now, you give the Feds and army of slots to fill, who are they going to go after? The government has overextended itself into all in an attempt to build a huge net of information. What's the point?
Last edited by Rachel NewYork; 09-20-2020 at 05:58 PM..
This could be an interesting, informative topic for discussion/debate. Here are a couple of ground rules which I wish I didn't have to state.
1. No personal attacks on politicians or others. This is one of the rules for the Great Debates forum established by the Administrator. Please read the rules for Great Debates.
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3. If you disagree with a moderator's action on the forum, please take it to private message with the moderator. Any kind of discussion on the forum involving moderation is strictly prohibited by the TOS.
As has been stated, innocuous transactions can be reported on a Suspicious Activity Report. The banks' have software that flags events according to algorithms and Compliance Officers that review transactions.
Entrepreneurs that have several business move money between and among their business frequently. Almost every transaction will trigger a SAR.
To protect themselves, banks report even a hint of suspicious activity. More government will not improve the financial system or the legitimacy of financial transactions.
"“It does not make sense that the basis for media allegations that banks knowingly hid illegal activity consisted solely of Suspicious Activity Reports that those banks filed alerting law enforcement to that very activity. Clearly, there is more to this story, but unfortunately the reporting failed to unearth it, and the banks are legally prohibited from telling their side. In some cases, if the past is any guide, that story likely includes law enforcement asking a bank to keep open an account it has identified as suspicious so that law enforcement can track where the money is going and gather further evidence to support an arrest and conviction.” CLIFF LAM, DIRECTOR RESPONSIBLE FOR INVESTIGATION AND COMPLIANCE, ALIXPARTNERS, HONG KONG"
Last edited by Lillie767; 09-22-2020 at 08:18 AM..
As has been stated, innocuous transactions can be reported on a Suspicious Activity Report. The banks' have software that flags events according to algorithms and Compliance Officers that review transactions.
Entrepreneurs that have several business move money between and among their business frequently. Almost every transaction will trigger a SAR.
To protect themselves, banks report even a hint of suspicious activity. More government will not improve the financial system or the legitimacy of financial transactions.
"“It does not make sense that the basis for media allegations that banks knowingly hid illegal activity consisted solely of Suspicious Activity Reports that those banks filed alerting law enforcement to that very activity. Clearly, there is more to this story, but unfortunately the reporting failed to unearth it, and the banks are legally prohibited from telling their side. In some cases, if the past is any guide, that story likely includes law enforcement asking a bank to keep open an account it has identified as suspicious so that law enforcement can track where the money is going and gather further evidence to support an arrest and conviction.” CLIFF LAM, DIRECTOR RESPONSIBLE FOR INVESTIGATION AND COMPLIANCE, ALIXPARTNERS, HONG KONG"
I think you, and for that matter Cliff Lam, are missing the larger point I made about state capacity to enforce the existing law. Irrespective*of anyone's views on whether current regs are too strict or lenient, the fact remains that the gummint has passed regulatory laws, but not budgeted for the implementation of said laws, maybe due to lobbying by the regulated. It's not just in FinReg, it's all across the spectrum, but FinReg is by far the most lucrative area for financial gain so it should get first and most attention.
I would say it fits the mold of police traffic enforcement. You get onto the highway, and most cars are already exceeding the speed limit by 15-20mph (at least in NJ where I live), however as you pass by the cop everyone slows down near the speed-limit and the outlying offenders get tickets.
I would say it fits the mold of police traffic enforcement. You get onto the highway, and most cars are already exceeding the speed limit by 15-20mph (at least in NJ where I live), however as you pass by the cop everyone slows down near the speed-limit and the outlying offenders get tickets.
That's a good analogy, as far as it goes, but drivers are not required to report their speed limit breaking to law enforcement. The SAR's are like saying, here's the video footage and license plate of the offender. More like installing a speed camera and then not issuing tickets.
Most areas of government (that is how it is spelled) regulations are subject to selective enforcement. Everything in life is subject to the basic law of economics: the allocation of scarce resources. Not every crime gets prosecuted; not every tax evader goes to jail; not every speeder gets a ticket. People drive 5 miles over the posted speed limit: I'm safe. People barter services and don't report the imputed income: I'm small fry, I'm safe. Crime detection and punishment are subject to a cost/benefit analysis. You don't spend $100 to catch a $10 theft.
The SAR is merely a suspicion that a crime may have occurred. The analogy to speeders isn't apt. The SAR doesn't say that the entity being reported definitely has broken a law, but merely that this transaction doesn't fit the usual mode of transactions and may signify an illegal act. The bank files the SAR and it's up to the OCC to follow up, investigate, and pursue if deemed credible. Crime detection and punishment are subject to a cost/benefit analysis. You don't spend $10,000 to catch a $1000 theft.
Most areas of government (that is how it is spelled) regulations are subject to selective enforcement. Everything in life is subject to the basic law of economics: the allocation of scarce resources. Not every crime gets prosecuted; not every tax evader goes to jail; not every speeder gets a ticket. People drive 5 miles over the posted speed limit: I'm safe. People barter services and don't report the imputed income: I'm small fry, I'm safe. Crime detection and punishment are subject to a cost/benefit analysis. You don't spend $100 to catch a $10 theft.
The SAR is merely a suspicion that a crime may have occurred. The analogy to speeders isn't apt. The SAR doesn't say that the entity being reported definitely has broken a law, but merely that this transaction doesn't fit the usual mode of transactions and may signify an illegal act. The bank files the SAR and it's up to the OCC to follow up, investigate, and pursue if deemed credible. Crime detection and punishment are subject to a cost/benefit analysis. You don't spend $10,000 to catch a $1000 theft.
Thanks for the spellcheck!
Best I can tell, the amount quoted was $2T over 6 years. That's $3.3B a year. Assume 10% are valid, and fines are 10% of the amount involved, instead of seizure of 100%.
That's $30M in fines a year to support a compliance infrastructure. That's a different league than your examples of $10, $100, $1,000, and $10,000.
Assume $30 million in fines to investigate 2 million reports. That's $15 available to investigate each report. As of Sep 17, 2020, the average annual pay for a Financial Investigator in the United States is $64,490 a year.
Working 2080 hours a year, that's $31 an hour. So an investigator can spend about 30 minutes investigating each of the 2 million reports. I don't think that works. Especially if the transactions are complex.
That's why selective enforcement is utilized.
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