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Archive for the ‘Money Laundering’ Category

I don’t particularly care how people vote, but I do care whether they believe in freedom.

That’s why I periodically share stories that should convince everyone to believe in the libertarian philosophy of small government, individual liberty, and personal responsibility.

The stories that get me most agitated are the ones that involve innocent people being robbed by bureaucrats.

And when I say robbed, I use that word deliberately.

Such as the case of an elderly couple who had their hotel stolen by government.

Such as the case of the family grocer who had his bank account stolen by government.

Such as when the government wanted to steal someone’s truck because a different person was arrested for drunk driving.

Such as when the government tried to steal the bond money a family collected to bail out a relative.

Such as when the government seized nearly $400,000 of a business owner’s money because it was in the possession of an armored car company suspected of wrongdoing.

Such as when the government sought to confiscate an office building from the owner because a tenant was legally selling medical marijuana.

Such as when the government killed a man as part of an anti-gambling investigation undertaken in hopes of using asset forfeiture to steal other people’s cash.

With all this background, you can probably guess I’m going to add to that list.

And you’re right. We have a report from the New York Times that has me frothing at the mouth. I can’t imagine any decent person not being outraged by this example of big government run amok.

For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000. The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

In other words, this is an example of two evil policies – asset forfeiture laws and money laundering laws – coming together in a vortex of we’ll-screw-you-over-even-if-you’re-law-abiding statism.

And you can forget about the Constitution’s presumption of innocence.

Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?” The federal government does. Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

Of course, much of tax code enforcement is based on the upside-down premise that taxpayers are guilty and have to prove themselves innocent.

But that still doesn’t make it right. And the IRS is just the tip of the iceberg. Stealing is now a common practice by all sorts of bureaucracies at all levels of government.

The practice has swept up dairy farmers in Maryland, an Army sergeant in Virginia saving for his children’s college education and Ms. Hinders, 67, who has borrowed money, strained her credit cards and taken out a second mortgage to keep her restaurant going. Their money was seized under an increasingly controversial area of law known as civil asset forfeiture, which allows law enforcement agents to take property they suspect of being tied to crime even if no criminal charges are filed. Law enforcement agencies get to keep a share of whatever is forfeited. Critics say this incentive has led to the creation of a law enforcement dragnet, with more than 100 multiagency task forces combing through bank reports, looking for accounts to seize.

Here’s just one horrifying example of how this process works.

 In one Long Island case, the police submitted almost a year’s worth of daily deposits by a business, ranging from $5,550 to $9,910. The officer wrote in his warrant affidavit that based on his training and experience, the pattern “is consistent with structuring.” The government seized $447,000 from the business, a cash-intensive candy and cigarette distributor that has been run by one family for 27 years. …the government seized $447,000, and the brothers have been unable to retrieve it. …Mr. Potashnik said he had spent that time trying, to no avail, to show that the brothers were innocent. They even paid a forensic accounting firm $25,000 to check the books. “I don’t think they’re really interested in anything,” Mr. Potashnik said of the prosecutors. “They just want the money.” …“We’re just hanging on as a family here,” Mr. Hirsch said. “We weren’t going to take a settlement, because I was not guilty.”

Still not convinced about the venality of big government? Here’s another nauseating example.

Army Sgt. Jeff Cortazzo of Arlington, Va., began saving for his daughters’ college costs during the financial crisis, when many banks were failing. He stored cash first in his basement and then in a safe-deposit box. All of the money came from paychecks, he said, but he worried that when he deposited it in a bank, he would be forced to pay taxes on the money again. So he asked the bank teller what to do. “She said: ‘Oh, that’s easy. You just have to deposit less than $10,000.’” The government seized $66,000; settling cost Sergeant Cortazzo $21,000. As a result, the eldest of his three daughters had to delay college by a year. “Why didn’t the teller tell me that was illegal?” he said. “I would have just plopped the whole thing in the account and been done with it.”

By the way, some of you may be thinking that these terrible examples are somehow justifiable because the government is stopping crime in other instances.

But that’s not true. Experts who have looking at money laundering laws have found that there’s no impact on genuine criminal activity. But lots of costs imposed on innocent people.

Which probably explains why the first two directors of the Justice Department’s Asset Forfeiture Office now say the laws should be repealed.

If you want more information, here’s my video on the government’s costly and failed war on money laundering.

Sigh.

By the way, the government also abuses people in ways that have nothing to do with money laundering or asset forfeiture.

And there are more examples where those came from.

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If you ask me about the most wasteful department in the federal government, I’ll state that there are lots of good choices, but if forced to identify the best candidate for elimination, I’ll go with the Department of Housing and Urban Development.

If you ask me about the entitlement program most in need of reform, I’m tempted to say all of them, but ultimately I’ll argue that we should first fix Medicaid by devolving it to the states, accompanied by block grants as a transitional funding mechanism.

But if you ask me to identify the most evil and despicable thing that government does, I have no hesitation in picking asset forfeiture, which is the horrifying practice of bureaucrats stealing private property simply because they think the owners may have some connection with criminal activity.

*Such as when the government wanted to steal someone’s truck because a different person was arrested for drunk driving.

*Such as when the government tried to steal the bond money a family has collected to bail out a relative.

*Such as when the government seized nearly $400,000 of a business owner’s money because it was in the possession of an armored car company suspected of wrongdoing.

*Such as when the government sought to confiscate an office building from the owner because a tenant was legally selling medical marijuana.

*Such as when the government killed a man as part of an anti-gambling investigation undertaken in hopes of using asset forfeiture to steal the gamblers’ cash.

*Such as when the government tried to steal $17,000 from a motorist even though they never charged him with a crime, much less convicted him of any offense.

If you click the links and read those disgusting examples of thieving government, you’ll agree that all decent and human people should be libertarians.

And if you need more evidence that asset forfeiture should be eliminated, John Yoder and Brad Cates, the first two directors of the Justice Department’s Asset Forfeiture Office, have a column in today’s Washington Post, and they unambiguously disown the bureaucracy they created and the evils it has spawned.

As two people who were heavily involved in the creation of the asset forfeiture initiative at the Justice Department in the 1980s, we find it particularly painful to watch as the heavy hand of government goes amok. …Asset forfeiture was conceived as a way to cut into the profit motive that fueled rampant drug trafficking by cartels and other criminal enterprises, in order to fight the social evils of drug dealing and abuse. Over time, however, the tactic has turned into an evil itself, with the corruption it engendered among government and law enforcement coming to clearly outweigh any benefits.

They then describe how the program metastasized.

The idea seemed so simple: Seize the ill-gotten gains of big-time drug dealers and remove the financial incentive for their criminality. After all, if a kingpin could earn $20 million and stash it away somewhere, even a decade in prison would have its rewards. Make that money disappear, and the calculus changes. Then, in 1986, the concept was expanded to include not only cash earned illegally but also purchases or investments made with that money, creating a whole scheme of new crimes that could be prosecuted as “money laundering.” The property eligible for seizure was further expanded to include “instrumentalities” in the trafficking of drugs, such as cars or even jewelry. Eventually, more than 200 crimes beyond drugs came to be included in the forfeiture scheme.

I’m especially glad they include the government’s foolish and costly anti-money laundering laws as they discuss government run amok.

A big problem is that these laws create perverse incentives for abusive behavior by bureaucracies.

This all may have been fine in theory, but in the real world it went badly astray.  …As time went on and states got into the forfeiture game, the uses became more personally rewarding for law enforcement. …Law enforcement agents and prosecutors began using seized cash and property to fund their operations, supplanting general tax revenue, and this led to the most extreme abuses: law enforcement efforts based upon what cash and property they could seize to fund themselves, rather than on an even-handed effort to enforce the law. …the old speed traps have all too often been replaced by forfeiture traps, where local police stop cars and seize cash and property to pay for local law enforcement efforts. This is a complete corruption of the process, and it unsurprisingly has led to widespread abuses.

Here’s the bottom line.

…civil forfeiture is fundamentally at odds with our judicial system and notions of fairness. It is unreformable. …our forfeiture laws turn our traditional concept of guilt upside down. Civil forfeiture laws presume someone’s personal property to be tainted, placing the burden of proving it “innocent” on the owner. What of the Fourth Amendment requirement that a warrant to seize or search requires the showing of probable cause of a specific violation? Defendants should be charged with the crimes they commit. Charge someone with drug dealing if it can be proved, but don’t invent a second offense of “money laundering” to use as a backup or a pretext to seize cash. …Civil asset forfeiture and money-laundering laws are gross perversions of the status of government amid a free citizenry. …it is unacceptable that a citizen should have to “prove” anything to the government. …if the government has proof beyond a reasonable doubt of guilt, let that guilt be proclaimed by 12 peers.

Amen. Our Founding Fathers gave us a Constitution to protect us against this kind of petty tyranny. Our presumption of innocence shouldn’t be eroded just because some bureaucrats are greedy to steal private property.

For more information, here’s a must-watch video on asset forfeiture from the Institute for Justice.

And here’s my video on intrusive and pointless anti-money laundering laws.

And there’s another video at this link if you want to see a horror story that combines asset forfeiture and anti-money laundering nonsense.

Moral of the story: These laws should be repealed as soon as possible.

P.S. A few days ago, I predicted the Scots would vote against independence by a 56-44 margin. The final results were 55.3-44.7 against independence. That’s almost as good as my prediction for the 2010 mid-term elections.

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Time for another great moment in red tape.

I wrote a couple of weeks ago that banks treat customers poorly in part because of bad laws and regulations from Washington.

Money laundering laws were adopted beginning about 30 years ago based on the theory that we could lower crime rates by making it more difficult for crooks to utilize the financial system. There’s nothing wrong with that approach, at least in theory. But these laws have become very expensive and intrusive, yet they’ve had no measurable impact on crime rates. …politicians and bureaucrats have decided to double down on failure and they’re making anti-money laundering laws more onerous, imposing ever-higher costs in hopes of having some sort of positive impact. This is bad for banks, bad for the poor, and bad for the economy.

You may think that only cranky libertarians are unhappy about this system.

But that’s not the case. Three professors with expertise in criminology, justice, sociology, and public policy wrote a detailed assessment of policies on anti-money laundering (AML) and combating the financing of terrorism (CFT).

Given the establishment pedigree of the authors, the finding of the report are rather shocking. The report’s introduction hints that the whole apparatus should be called into question.

To date there is no substantial effort by any international organization, including the IMF, to assess either the costs or benefits of an AML/CFT regime.  The FATF system has proceeded as if  it produces only public and private goods, not public or private “bads” or adverse by-products  against which the “goods” have to be weighed.   The Fund staff itself has raised questions about whether its substantial investment in the 3rd round has yielded adequate returns. It is not known what value that investment produced for the FATF or the Fund’s core objectives.  There needs to be more open acknowledgement of actual and potential financial costs of AML/CFT controls, their potential misuse by authoritarian rulers, and possible adverse effects on populations that rely on remittances and the informal economy, as well as potential negative impacts on NGOs and parts of civil society.

And when you dig into the details of the report, you find some surprisingly blunt language.

Basically, there’s no evidence that these policies work, and lots of evidence that they impose real harm.

Benefits of the FATF AML/CFT system have not been demonstrated. Although there may be benefits known to international organizations, governments, regulators, and intelligence agencies, no systematic efforts have been made by the FATF network of IOs or countries or institutions to demonstrate benefits. …Standards and Methodology proceed as if the implementation of an effective AML/CFT regime delivers only public and private goods and imposes no public or private “bads.” This study has learned of no significant effort by any of the standard-setting or assessor bodies to undertake a cost-benefit analysis… Little consideration has been given, they say, to the costs of implementing an AML/CFT regime, and little evidence has been adduced to demonstrate that the costs produce commensurate benefits in their own or indeed in any other jurisdiction. …Costs are substantial whether construed broadly or narrowly. …Moreover, an AML/CFT regime generates substantial costs on the financial sector in terms of money-laundering compliance staff and software procurement. Entire industries have grown around consulting and advising businesses and governments on AML/CFT compliance… Particularly strong views were expressed by bankers about excessive costs of misplaced demands upon the financial industry for surveillance of customers.

The report notes that poor people are among the biggest victims.

AML laws and regulations may adversely affect access of marginal groups whom FATF documents describe as subject to “financial exclusion” from the formal financial system. The more onerous the burdens placed on individuals, companies, and NPOs in countries where there is a substantial informal and cash economy, the more likely they are to opt out of the formal economy for reasons of cost. …Money laundering and counter-terrorism measures can reduce the volume of overseas remittances to the most vulnerable populations in the poorest countries. …Administrative and financial costs imposed on voluntary associations, most of which are very small and poorly funded, can threaten the survival of small associations

By the way, the World Bank also has acknowledged that these counterproductive laws are very bad for poor people, oftentimes disenfranchising them from the banking system

Last but not least, kudos to the authors for making the very relevant point that the destruction of financial privacy is a boon for authoritarian governments.

Numbers of experienced assessors have observed that a fully functioning AML/CFT regime in some countries has provided tools for authoritarian rulers to repress their political opponents by denying them banking or other facilities, increasing surveillance over their accounts, and prosecuting or penally taxing them for  non-disclosure, in addition to opening up more opportunities for illegal extortion for private gain. This weapon can be applied against persons/organizations already in the formal financial system.

It’s worth pointing out that this also explains why it’s so dangerous to have governments collecting and sharing tax information.

But let’s stick to the issue of money laundering. Now let’s look at two case studies to get a sense of how these laws impose real-world harm.

We’ll begin with an article in The Economist, which looks at how Western Union’s ability to provide financial services has been hampered by heavy-handed (yet ineffective) laws and regulation.

It seems like this is a company providing a very valuable service, particularly to the less fortunate.

Western Union’s services are essential for people who do not have bank accounts or are working far from home. …Western Union helps to bolster trade and disperse the world’s wealth.

But the statists don’t care.

Someone, somewhere, may want to transfer money for a nefarious purpose. And rather than the government do its job and investigate actual crimes, politicians and bureaucrats have decided that it’s easier to make Western Union spy on all customers.

…these laudable activities conflict with another pressing goal: impeding money laundering. Rules to that end require financial institutions to know who their customers are and how they obtained their money. These requirements transform the virtues of Western Union’s model—the openness and breadth of its network and its willingness to process vast numbers of small transactions—into liabilities.

And the heavy boot of government came down on the company, forcing Western Union to incur heavy expenses that make the system far more expensive for consumers.

Western Union struck a far-reaching compliance agreement with Arizona’s attorney-general in 2010. It agreed to adopt 73 changes to its systems and procedures, to install an external monitor to keep tabs on its conduct and to fund the creation of a new enforcement entity, the Southwest Border Anti-Money Laundering Alliance. Many of the recommendations were highly detailed. Western Union has, for example, set up a system to monitor transactions that takes into account factors such as the seasonality of marijuana harvests and illegal immigration. It is conducting background checks on agents and their families. Such efforts have turned out to be difficult and expensive. …Western Union’s shares have been jolted several times. Earlier this month Western Union said it would be subject to independent monitoring for an extra four years. It faces big fines and criminal prosecutions if it fails to meet the stipulations in the compliance agreement.

Let’s look at another real-world consequence of the AML/CFT regime.

You’ve heard of “driving while black,” which describes the suspicion and hostility that blacks sometimes experience, particularly when driving in ritzy neighborhoods.

Well, DWB has a cousin. It’s BWR, otherwise know as “banking while Russian.” And the stereotype has unpleasant consequences for innocent people.

Here are some passages from a story in the New York Times.

We had sold our apartment in Moscow, jumped through an assortment of Russian tax hoops and transferred the proceeds to the United States, where we now lived. It made me nervous to have all that money sitting in one virtual clump in the bank — but not nearly as nervous as having the card connected to it not work. The experience was also humiliating. In one moment, I had gone from being a Citigold client to a deadbeat immigrant who couldn’t pay for her son’s diapers. I called Citibank as soon as I got home. …”Who closed it?” I was working hard not to sound belligerent. “And where is my money?” …It was Citibank. “I see that because your transactions indicated there may be an attempt to avoid complying with currency regulations, Citibank has closed your account,” the woman informed me. …“Why wasn’t I notified?” “The cashier’s check will serve as your notice.” Citibank had fired me as a client.

Why would a bank not want customers?

Because the government makes some clients too costly and too risky, even though there’s no suggestion of wrongdoing.

Other than ethnicity.

I wasn’t entirely surprised. This had happened to other Russian-Americans I know, including one of my closest friends and my father. My friend had opened her account at a local bank in the United States when she got her first job, at age 13. Her accounts were summarily closed in 2008, while she was working in Russia. The bank, which had been bought by Sovereign in the meantime, would not state a reason for firing a client of 27 years. My father, who immigrated to the United States in 1981, had his accounts closed by BankBoston in 2000, when he was a partner in a Moscow-based business. His lawyers pressed the bank on the issue and were eventually told that because Russians had been known to launder money, the bank applied “heightened scrutiny” to accounts that had a Russia connection. It had closed “many” accounts because of what it considered suspicious activity. Like other kinds of ethnic profiling, these policies of weeding out Russian-Americans who have money are hardly efficient.

But the main thing to understand is that the entire system is inefficient.

Laws were adopted with the promise they would reduce crime. But just like you don’t stop crime by having cops hang out at Dunkin’s Donuts, you also don’t stop crime by creating haystacks of financial data and then expecting to make it easier to find needles.

For more information, here’s my video on the government’s failed money laundering policies.

P.S. This map shows you the countries considered most at risk of dirty money, which should make you wonder why anyone is foolish enough to think that higher costs on American banks will make a difference.

P.P.S. You probably didn’t realize there was such a thing as money laundering humor, but you’ll enjoy this joke featuring President Obama.

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People are getting increasingly agitated about being spied on by government.

The snoops at the National Security Agency have gotten the most attention, and those bureaucrats are in the challenging position of trying to justify massive invasions of our privacy when they can’t show any evidence that this voyeurism has stopped a single terrorist attack.

And let’s not forget that some politicians and bureaucrats want to track our driving habits with GPS devices. Their immediate goal is taxing us (gee, what a surprise), but does anyone doubt that the next step would be a database of our movements?

But the worst example of government spying may be the web of laws and regulations that require banks to monitor our bank accounts and to share millions of reports about our financial transactions with the Treasury Department’s Financial Crimes Enforcement Network.

Money laundering laws were adopted beginning about 30 years ago based on the theory that we could lower crime rates by making it more difficult for crooks to utilize the financial system.

There’s nothing wrong with that approach, at least in theory. But these laws have become very expensive and intrusive, yet they’ve had no measurable impact on crime rates.

As you might expect, politicians and bureaucrats have decided to double down on failure and they’re making anti-money laundering laws more onerous, imposing ever-higher costs in hopes of having some sort of positive impact. This is bad for banks, bad for the poor, and bad for the economy.

And it’s encouraging banks to treat customers like crap. Check out this ridiculous example included in a BBC report.

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem. But this time it was different, as he told Money Box: “When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved.” Mr Cotton says the staff refused to tell him how much he could have: “So I wrote out a few slips. I said, ‘Can I have £5,000?’ They said no. I said, ‘Can I have £4,000?’ They said no. And then I wrote one out for £3,000 and they said, ‘OK, we’ll give you that.’ ” He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

Here’s another absurd story.

Peter from Wiltshire, who wanted his surname withheld, had a similar experience. He wanted to take out £10 000 cash from HSBC, some to pay to his sons and some to fund his long-haul travel plans. Peter phoned up the day before to give HSBC notice and everything seemed to be fine. The next day he got a call from his local branch asking him to pay his sons via a bank payment and to provide booking receipts for his holidays. Peter did not have any booking receipts to show.

And another.

Belinda Bell is another customer who was initially denied her cash, in her case to pay her builder. She told Money Box she had to provide the builder’s quote.

Why is the bank treating customers like dirt? Well, because they’re pressured to act that way thanks to anti-money laundering laws, which basically require them to act as if unusual transactions are criminal. In other words, customers are guilty until they prove themselves innocent.

HSBC has said…”We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for.” “The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime…” Money Box asked other banks what their policy is on large cash withdrawals. They all said they reserved the right to ask questions about large cash withdrawals.

They’ve “reserved the right”?!? I think Mr. Cotton was spot on when he groused, “You shouldn’t have to explain to your bank why you want that money. It’s not theirs, it’s yours.”

A few politicians also are unhappy about pointless government-mandated spying.

Douglas Carswell, the Conservative MP for Clacton, is alarmed… “All these regulations which have been imposed on banks…infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent.”

Not let’s look at an example of how anti-money laundering laws lead to foolish intervention in the United States.

We’ll start with a feel-good story from Wired about an entrepreneur coming up with a service that’s desired by consumers.

Mike Caldwell spent years turning digital currency into physical coins. That may sound like a paradox. But it’s true. He takes bitcoins — the world’s most popular digital currency — and then he mints them here in the physical world. …by moving the digital currency into the physical realm, he also prevents hackers from stealing the stuff via an online attack. …You send him bitcoins via the internet, and he sends you back metal coins via the U.S. Postal Service. To spend bitcoins, you need a secret digital key — a string of numbers and letters — and when Caldwell makes the coins, he hides this key behind a tamper-resistant strip. …Caldwell takes a fee of about $50 on each coin he mints.

But our silver cloud has a dark lining.

…he received a letter from the Financial Crimes Enforcement Network, or FINCEN, the arm of the Treasury Department that dictates how the nation’s anti-money-laundering and financial crime regulations are interpreted. According to FINCEN, Caldwell needs to rethink his business. “They considered my activity to be money transmitting,” Caldwell says. And if you want to transmit money, you must first jump through a lot of state and federal regulatory hoops Caldwell hasn’t jumped through.

And since the hoops are very expensive, we have yet another example of foolish red tape killing a business.

Running afoul of FINCEN is a risky proposition. In the spring, the Department of Homeland Security seized two bank accounts belonging to Mt. Gox. The reasoning behind the $5 million seizure: Mt. Gox, like Caldwell, hadn’t registered itself as a money transmission business. …Because he runs a bitcoin-only business, Caldwell says there’s no Casascius bank account for authorities to seize. But he adds that he has no desire to anger the feds, whether he agrees with them or not. So he’s cranking out his last few orders.

I’m not saying, by the way, that bitcoins are necessarily a good way to hold wealth.

But I do believe that it’s good to see the evolution of private forms of money as a hedge against bad government policy. As I wrote back in 2011, “I have no way of knowing how well this system will work and how insulated it will be from government interference, but I very much hope it will be successful. Governments will never behave if they think people have no escape options.”

Unfortunately, politicians and bureaucrats are in the process of trying to shut down that escape option.

P.S. Switching to a different topic, I don’t know if there are any big policy implications, but I was fascinated to find this map in my twitter feed. It shows the first word that pops up when you ask why a country is so ____?

Europe Google Results

Here are my observations, for what it’s worth. Luxembourg and Switzerland are tax havens, so it’s no surprise that they are rich. Other nations should mimic their successful policies.

Norway, meanwhile, is rich because of oil.

I had no idea the Italians were supposed to be racist, though obviously this map merely shows what Google users are searching for, not what’s actually true.

I’m mystified that Macedonia is “important,” though I suspect Greece was similarly labeled because it is the first domino of the European debt crisis. Hardly something to be proud of.

I’m also surprised that Lithuanians are perceived as suicidal. Isn’t that a Swedish stereotype?

Croatia is beautiful, I’ll agree, at least along the coast.

The neglected people from Montenegro don’t even get a word! Heck, even the Kosovars and Moldovans have Google words.

I won’t comment on the stereotype about France, other than to say that the nation did get in the top-10 on a poll for attractiveness.

P.P.S. Since we’re discussing European stereotypes, here’s some politically incorrect terrorism humor from a British friend.

P.P.P.S. Speaking of stereotypes, here’s some polling data on how the Europeans see each other. I’m not sure how to interpret these results, other than to say that trustworthy people apparently are arrogant and lack compassion.

P.P.P.P.S. It goes without saying that I can’t resist the temptation to share these satirical maps on how the Greeks and Brits view their European neighbors.

P.P.P.P.P.S. Since the main topic of this post is money laundering, let’s end with a joke about how President Obama dealt with these foolish laws.

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I realize we’re in the middle of a government shutdown and there’s a debt limit deadline rapidly approaching, but I’m not going to write about fiscal policy today.

Instead, I’m going to share a story about evil and stupid government policy. I guess you could say this is part of my why-decent-people-should-be-libertarian series. Previous editions – all of which highlight examples of innocent people having their lives turned upside down by the state – include these horror stories.

Now watch this powerful video from the Institute for Justice and see whether it’s also an example of heartless and oppressive government.

The answer – if you believe in fairness, decency, and the rule of law – is that this definitely belongs on that list. What the federal government has done to the Dehko family is utterly despicable and a horrifying episode of thievery.

Just as other examples of bureaucratic theft should get us upset.

In the case of the Dehko family, they got in trouble (notwithstanding the fact that they did nothing wrong) because of so-called anti-money laundering laws.

These laws were instituted beginning about 30 years ago based on the theory that we could lower crime rates by making it more difficult for crooks to utilize the financial system.

There’s nothing wrong with that approach, at least in theory. But as I explain in this video, these laws have become very expensive and intrusive, yet they’ve had no measurable impact on crime rates.

As you might expect, politicians and bureaucrats have decided to double down on failure and they’re making anti-money laundering laws more onerous, imposing ever-higher costs in hopes of having some sort of positive impact. This is bad for banks, bad for the poor, and bad for the economy.

So we’ll see more people victimized, like the Dehko family.

Which brings us back to the beginning of this piece. At what point do well-meaning people connect the dots and conclude that government is a danger to liberty?

And when you draw this obvious conclusion, isn’t it time to become a libertarian?

This doesn’t mean you have to be a pot-smoking, Rand-quoting stereotype. Instead, it simply means that you have a healthy distrust of unlimited state power and you think individuals should have both the freedom and responsibility to manage their own lives.

To see where you stand, here are a couple of quizzes.

A just-for-the-fun-of-it quiz I put together involving pot, police cars, and a tractor.

A thorough quiz on libertarian purity.

Last but not least, if you decide to be a libertarian, I hope you can figure out how to make our cause more popular.

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A reader wants to know if I think the American people are becoming more statist over time.

I’m conflicted. More and more people get lured into some form of government dependency every year, and this suggests Americans eventually will adopt a  European-style moocher mentality.

This worries me.

On the other hand, I periodically see polls suggesting that the American people have very libertarian views on key issues.

These are encouraging numbers. And here’s another bit of good news. A recent poll by Fox News found that a plurality of Americans would not give up personal freedoms to reduce the threat of terrorism. What’s especially remarkable is that this poll took place immediately following the bombing of the Boston Marathon by the welfare-sponging Tsarnaev brothers.

Terrorism Freedom Tradeoff

Interestingly, I had a conversation with a left-leaning friend who said this poll showed that Americans were a bunch of “paranoid nuts” because this poll showed that they viewed their government with suspicion.

But perhaps people are simply rational. I had an intern look up data on the probability of getting killed by a terrorist. He found an article from Reason that reported.

…a rough calculation suggests that in the last five years, your chances of being killed by a terrorist are about one in 20 million. This compares annual risk of dying in a car accident of 1 in 19,000; drowning in a bathtub at 1 in 800,000; dying in a building fire at 1 in 99,000; or being struck by lightning at 1 in 5,500,000.

In other words, the odds of being killed by a terrorist are very low. And with the risk so low, why give up liberty? Particularly when it’s highly unlikely that sacrificing more of your freedom will actually reduce the already-low threat of terrorism.

This reminds me of the money laundering issue. Just a few decades ago, there was no such thing as anti-money laundering laws. Then politicians decided we need these laws to reduce crime.

These laws, we were told, would give law enforcement more tools to catch bad guys and also reduce the incentive to commit crimes since it would be harder for criminals to enjoy their ill-gotten gains.

That sounds good, but the evidence shows that these laws have become very expensive and intrusive, yet they’ve had no measurable impact on crime rates.

So how did politicians respond? In a stereotypical display of Mitchell’s Law, they decided to make anti-money laundering laws more onerous, imposing ever-higher costs in hopes of having some sort of positive impact.

This is bad for banks, bad for the poor, and bad for the economy.

So when I see polls showing the American people are skeptical about surrendering freedom to the government, I don’t think they are being “paranoid.” I think they’re being very rational.

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Why do words like “snitch” and “narc” have distasteful connotations?

And why don’t we hold “tattle tales” and “stool pigeons” in high regard?

Is it because we think people should be able to do bad things and get away with it? Do we like misbehavior to go unpunished?

I think the answer to these last two questions is an emphatic NO. Close to 100 percent of people would want the authorities to know if any of us overheard a terrorist plot. Or somehow found out about a murder. Or knew about some dirtbag who had raped someone.

SnitchYet we still don’t like “narcs” and “stool pigeons,” probably because we know that some rules are bad, misguided, or foolish. For all intents and purposes, most Americans have libertarian sensibilities about victimless crimes.

So while we approve of “tattle tales” if it means we catch genuine criminals who violate the rights of others, we look down on the “snitch” who rats out the guy smoking a joint, the jerk who informs the IRS on a small business owner hiding income, and the weasel who tells the local planning gestapo that someone is remodeling their basement without government approval.

I’ve previously shared nauseating stories about Soviet-style tax informant programs in both Chicago and the United Kingdom (where they’re actually encouraging kids to turn in their parents!).

The state of New York is engaging in the same reprehensible tactics, only this time the target is guns rather than money.

Here are some of the nauseating details from a story in the Daily Caller.

For more than a year, New York state has maintained a tip line allowing people to report illegal gun owners and collect a $500 reward. …A February 2012 press release from Gov. Andrew M. Cuomo’s office first publicly announced the tip line, saying it was designed to “encourage citizens to report illegal firearm possession.” …On the Facebook page for The Record’s story, several users criticized the tip line for apparently encouraging New Yorkers to spy on each other.

Of course, sometimes the government actually requires us to spy on each other, as is the case with money laundering laws that criminalize innocent behaviors in a costly, intrusive, and ineffective effort to reduce crime.

Not surprisingly, the government is defending this campaign to turn people into stool pigeons for illegitimate reasons.

…a spokesperson for the New York State Division of Criminal Justice Services defended the program. “This program has been in place for more than a year and is aimed only at getting illegal crime guns off the streets: a goal that every New Yorker can agree with,” wrote Janine Kava, director of public information at NYS DCJS.

What the government should be doing, needless to say, it getting people who do bad things off the street. And that means investigating, arresting, prosecuting, and punishing those who abridge the rights of other people.

It does not mean arbitrarily criminalizing inanimate objects such as guns.

And as this young lady says, the government should only get the guns of law-abiding people under very particular circumstances.

P.S. Andrew Cuomo also happens to be a former Secretary of Housing and Urban Development, where he infamously was in charge of imposing so-called affordable lending requirements that helped start the bad Fannie Mae/Freddie Mac policies that eventually led to the housing bubble and financial crisis.

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