As government attempts to track every purchase to increase their power, Australia is spearheading this war on cash by outlawing any purchases in cash over $10,000.
The post War On Cash Goes into Full Effect — Purchases Over $10,000 ILLEGAL in Australia appeared first on The Free Thought Project.
This report was originally published by Tyler Durden at Zero Hedge
The Department of Justice unsealed an 11-count indictment on Friday to a former DoD intelligence analyst-turned uranium transportation executive who stands accused of a bribery and money laundering scheme involving a Russian nuclear official connected to the Uranium One deal.
The indictment corroborates a November report by The Hill that an FBI mole deeply embedded in the Russian uranium industry had gathered extensive evidence of the scheme.
Mark Lambert, 54, of Mount Airy, Maryland, was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud, seven counts of violating the FCPA, two counts of wire fraud and one count of international promotion money laundering.
The charges stem from an alleged scheme to bribe Vadim Mikerin, a Russian official at JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation and the sole supplier and exporter of Russian Federation uranium and uranium enrichment services to nuclear power companies worldwide, in order to secure contracts with TENEX.
According to the indictment, beginning at least as early as 2009 and continuing until October 2014, Lambert conspired with others at “Transportation Corporation A” to make corrupt and fraudulent bribery and kickback payments to offshore bank accounts associated with shell companies, at the direction of, and for the benefit of, a Russian official, Vadim Mikerin, in order to secure improper business advantages and obtain and retain business with TENEX. –DOJ
While the indictment lists Lambert’s company as “Transportation Corporation A,” a simple search reveals that Lambert is the co-President of DAHER-TLI, “the leading front end freight forwarding company dedicated to Nuclear Cargo,” according to its website.
In 2012, the Nuclear Regulatory Commission sent a letter to Lambert with findings that TLI had exported plutonium “in excess of the maximum quantity and type applied for and licensed,” and “exported Australian obligated material, which was not authorized under license conditions.”
Prior to his 26 year tenure in the transportation industry – 20 of which have been with TLI, Mr. Lambert was an Arabic Linguist for the Navy for five years, and a Senior Intel Analyst for the Department of Defense (DoD) for three years.
Lambert also speaks fluent Arabic and Farsi (Persian), along with French and Italian.
The indictment against Lambert corroborates prior reporting by The Hill that an FBI mole buried deep within the Russian nuclear industry had gathered extensive evidence of a scheme involving bribes and kickbacks between Russian nuclear officials and TLI – which would have transported the U.S. uranium sold to Russia in the ’20 percent’ Uranium One deal.
“The Russians were compromising American contractors in the nuclear industry with kickbacks and extortion threats, all of which raised legitimate national security concerns. And none of that evidence got aired before the Obama administration made those decisions,” a person who worked on the case told The Hill, speaking on condition of anonymity for fear of retribution by U.S. or Russian officials.”
Based on what the FBI knew – including evidence which purportedly includes a video of Russians preparing briefcases of bribe money – the Uranium One deal never should have gone through. Moreover, both Robert Mueller and current deputy Attorney General Rod Rosenstein were directly involved – and current Attorney General Jeff Sessions and other Justice Department officials appear to be covering for them.
In short, the FBI had ample evidence of the Russian bribery plot before the Obama administration approved the Uranium One deal thanks to their embedded mole in the Russian nuclear industry.
The informant – outed as energy consultant William Campbell – was “threatened” by Obama admin AG Loretta Lynch to keep quiet with an iron-clad gag order, according to his attorney – former Reagan Justice Dept. official and former Chief Counsel to the Senate Intelligence Committee Victoria Toensing. After Senate Judiciary Committee Chairman Chuck Grassley (R-VA) demanded Campbell be allowed to testify in front of Congress, the gag order was lifted.
Attorney General Jeff Sessions originally tried to claim that there was no connection between Uranium One and the nuclear transport bribery case, however several congressional republicans pushed back:
“Attorney General Sessions seemed to say that the bribery, racketeering and money laundering offenses involving Tenex’s Vadim Mikerin occurred after the approval of the Uranium One deal by the Obama administration. But we know that the FBI’s confidential informant was actively compiling incriminating evidence as far back as 2009,” Rep. Ron DeSantis, (R-Fla.) told The Hill.
“It is hard to fathom how such a transaction could have been approved without the existence of the underlying corruption being disclosed. I hope AG Sessions gets briefed about the CI and gives the Uranium One case the scrutiny it deserves,” added DeSantis, whose House Oversight and Government Reform subcommittees is one of the investigating panels.
Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) sent a similar rebuke last week to Rosenstein, saying the deputy attorney general’s first response to the committee “largely missed the point” of the congressional investigations.
“The essential question is whether the Obama Justice Department provided notice of the criminal activity of certain officials before the CFIUS approval of the Uranium One deal and other government decisions that enabled the Russians to trade nuclear materials in the U.S,” Grassley scolded.”
Meanwhile, journalists John Solomon and journalist Sara Carter claim to have copies of the FBI informant’s evidence, while Carter issued an explosive report in late November laying out the players, the timeline, and the evidence at hand.
“By the time the sale of Uranium One was approved by the Obama Administration, the FBI’s investigators had already gathered substantial evidence and the bureau was also aware of Russia’s intentions to enter the U.S. energy market and its desire to purchase a stake in American uranium,” Carter writes.
Highlights:
“This is not just about bribery and kickbacks but about a U.S. company that was transporting yellow-cake for the Russians with our approval,” an unnamed U.S. Intelligence official told Carter, adding “This should raise serious questions. At the time everyone was concerned about Russia’s ties to Iran, we still are. And of course, Russia’s intentions and reach into the U.S. energy market.”
Given Friday’s unsealed indictment, however it looks like the DOJ may have changed their tune on Campbell. If so, perhaps that “briefcase full of bribe money” video will finally see the light of day.
Score one for the poetic irony pages.
Two months after JPMorgan CEO Jamie Dimon lashed out at bitcoin, calling it a "fraud" which is "worse than tulip bulbs, warning it won"t end well", will "blow up" and "someone is going to get killed" and threatened that "any trader trading bitcoin" will be "fired for being stupid" as it was merely a tool for money-laundering, today Swiss daily Handelszeitung reported that the Swiss subsidiary of JPMorgan was sanctioned by the Swiss regulator, FINMA, over money laundering and "seriously violating supervision laws."
As the newspaper adds, the Swiss sanctions relate to breaches of due diligence in connection with money laundering standards. In other words, JPMorgan was actively aiding and abeting criminal money laundering.
The report further notes, the Finma decision was issued on June 30 and should have been published the following week but JPMorganm tried to prevent the publication of the judgment. More recently, the Federal Administrative Court dismissed the appeal.
In response to money-laundering violation, JPM said that in support of safety and soundness of global monetary system, “we have made and continue to make significant enhancements to the firm’s AML program to ensure we are meeting regulatory expectations,” according to an emailed statement sent to Bloomberg.
Unfortunately, JPMorgan also said that it can’t, or rather won"t, provide further details since the Finma resolution from June 2017 isn’t public.
This means that anyone wondering if Jamie Dimon"s bank was using (and thus trading) bitcoin to circumvent Swiss anti-money laundering regulations, will just have to ask Jamie Dimon in person during his next public appearance.
In what some might call a desperate last minute distraction from WaPo"s real news about Clinton"s lies, WSJ reports that the Manhattan U.S. attorney’s office is pursuing an investigation into possible money laundering by Paul Manafort (the same as the state"s probe). In case you are confused, yes, WSJ admits this is in collaboration with the same federal money-laundering probe by special counsel Robert Mueller which has so far produced nothing.
While The Wall Street Journal manages to repeat the salacious headlines in its first two brief paragraphs, the rest of the story is padding, history, and filler about Mr. Kushner"s various investigations (of which there is no new news).
The Manhattan U.S. attorney’s office is pursuing an investigation into possible money laundering by Paul Manafort, said three people familiar with the matter, adding to the federal and state probes concerning the former Trump campaign chairman.
The investigation by the U.S. attorney for the Southern District of New York is being conducted in collaboration with a probe by special counsel Robert Mueller into Mr. Manafort and possible money laundering, according to two of these people.
A spokesman for Mr. Manafort declined to comment. Mr. Manafort has previously said he did nothing wrong.
So in an effort to clarify...
New York Attorney General Eric Schneiderman’s office is undertaking the state’s own money-laundering probe concerning Mr. Manafort.
Special Counsel Robert Mueller is communicating with Schneiderman and investigating possible federal money-laundering by Mr. Manafort (acording to two sources).
Mr. Manafort has previously said he did nothing wrong.
And now, according to three people familiar with the matter, the Manhattan U.S. attorney’s office is pursuing an investigation into possible money laundering by Mr. Manafort.
All we can say is - that"s a lot of probes and a lot of lawyers and will be a lot of embarassment if they are unable to get anything to stick to Mr.Manafort.
Several members of the US Congress are drafting legislation that is intended to recognize certain digital currencies and "protect" them against interference from the federal government. The question is - does the "protection"
CoinTelegraph reports that the bill, which will provide protection to cryptocurrencies that comply with certain minimum requirements to prevent them from being used by those engaged in illegal business practices like drug traffickers and terrorists, is expected to be filed in September 2017, according to DailyCaller.
Based on a reliable source, at least one Republican senator and two Republican congressmen are working on the draft legislation.
The legislators, however, have requested that should not be identified due to the sensitivity of the issue and the complexity of the proposed solution.
A source close to the effort told TheDC,
“the center piece of the plan is to mainstream digital currency so it can be treated just like the American dollar.
First, there is a new entity that is considering issuing a brand new digital currency that is compliant with anti-money laundering laws unlike any other in circulation.”
Although cash has some of the same problems being used to pay for illegal activities, the perception that digital currencies are being used for illegal activities is seen as the primary roadblock to wholesale acceptance by the American public.
The source told TheDC the new model is going to follow federal laws that prevent money laundering. This is a break through and could lead to the use of digital currencies replacing the dollar for many transactions. The legislation is expected to be introduced in early September.
The source asked the members of Congress involved in drafting the bill not be identified yet, explaining, “this is a very complicated issue and staff are working through some issues that have in the past stopped alternative currencies from being launched.”
They continued that:
“...the law needs to be changed to protect digital currencies from federal government harassment to make sure that a complaint currency can be backed by value, the currency cannot be treated like a security or investment, and that transfers are protected against taxation.
The bottom line is that Congress needs to remove all the obstacles to a vibrant digital currency that has voluntarily taken the initiative to keep the bad guys from using it.”
What is perhaps most ironic here is that government lawmakers are attempting to codify rules to stop government lawmakers interfering with the free and open exchange of a decentralized currency... by setting rules that potentially interfere with the free exchange of said currency.
Bitcoin and other digital currencies are seemingly tailor-made for use by organized crime groups, given that they’re widely used and allow for a level of anonymity. But a study by the European Union exploring financing options used by organized crime and terror groups claims that the technological barriers associated with using bitcoin and other digital currencies have so far prevented widespread adoption.
The use of cryptocurrencies by criminal groups – other than hackers - is fairly rare.
In its conclusion, the report claims that:
“few investigations have been conducted on virtual currencies which seem to be rarely used by criminal organizations. While they may have a high intent to use due to VCs characteristics (anonymity in particular), the level of capability is lower due to high technology required.”
However, the EU said the money laundering threat posed by these currencies is “moderately significant,” given their ability to transfer money more or less anonymously.
“The assessment of the [money laundering] threat related to virtual currencies shows that organised crime organisations may use virtual currencies to have access to "clean cash" (both cash in/out). When used, virtual currencies allow organised crime groups to access cash anonymously and hide the transaction trail. They may acquire private keys of the e-wallets or obtain some cash from ATM. However, cases are quite rare at this stage and few investigations have been undertaken concerning this risk scenario. One of the reasons is that the reliance on virtual currencies to launder proceeds of crime requires some technical expertise. According to LEAs, the amounts of money laundered via virtual currencies are quite low, which tends to demonstrate that criminals" intent to use them is rather limited because this modus operandi is not considered as attractive enough (in particular because of the volatility of the virtual currencies" market). From a technical point, virtual currencies present some commonalities with e-money but the IT expertise at stake for virtual currencies means that organised crime would have lower capability to use them than e-money which is more widely accepted.”
Terrorist groups, the report concludes, may have “some interest” in using VCs to finance their activities, but the number of cases that have been reported are limited.
In its description of virtual currencies, the EU says they can be traded on the internet, are generally characterized by non-face-to-face customer relationships, and may permit anonymous funding or purchase. They may also permit anonymous transfers, if sender and recipient are not adequately identified.
But although virtual currencies have been grabbing headlines lately, the criminal economy is still overwhelmingly cash based. According to the report, this means that, whether they like it or not, perpetrators selling some form of illicit product are likely to be paid in cash. The more successful the perpetrators are and the more of the commodity they sell, the more cash they will generate. This is one of the reasons why the supply of cash - particularly high-value denominations - continues to rise beyond the pace of inflation, despite the advent of digital payment options.
While some may have called it a conspiracy theory at one point, a new report is shedding light on how United States Intelligence services and their cozy relationship to the nation’s central banking structure and how they collaborate to spy on foreign banks.
Confidential accounts within the Federal Reserve have been used by the U.S. Treasury and other departments “several times a year to analyze the asset holdings of the central banks of Russia, China, Iraq, Turkey, Yemen, Libya and others,” according to a report from Reuters that cites more than a dozen current and former senior U.S. officials.
“The U.S. central bank keeps a tight lid on information contained in these accounts. But according to the officials interviewed by Reuters, U.S. authorities regularly use a ‘need to know’ confidentiality exception in the Fed’s service contracts with foreign central banks.”
The report claimed that the exception was used by U.S. federal officials “to glean information about the movement of funds in and out of the accounts.” That information was then used to help the U.S. “monitor economic sanctions, fight terror financing and money laundering, or get a fuller picture of market hot spots around the world.”
The Federal Reserve was established in 1913, and the current headquarters in New York houses around $3.3 trillion in assets from around 250 foreign central banks—which adds up to about half of the world’s dollar reserves.
“In all, the people interviewed by Reuters identified seven instances in the last 15 years in which the accounts gave U.S. authorities insights into the actions of foreign counterparts or market movements, at times leading to a specific U.S. response.”
The report cited a case from March 2014, in which U.S. intelligence used the Federal Reserve loophole to monitor Russia after its invasion of Crimea. As a result, when the Obama administration responded by placing economic sanctions on Russia, and the foreign holdings at the New York Fed dropped by $115 billion, the U.S. automatically knew that Russia’s central bank had pulled its funds.
READ MORE: BREAKING: Senate Passes Bill Allowing 9/11 Victims" Families to Seek Justice Against Saudi Govt
The Federal Reserve acknowledged the practice of disclosing account intelligence, but attempted to downplay it, by claiming it was only used on “rare occasions.”
“While our account agreement does provide for the sharing of information with the U.S. government in limited circumstances, we require a clearly demonstrated need for the information and a commitment that the information will be treated confidentially,” a New York Fed spokeswoman told Reuters. “This exception has been used on rare occasions and on a limited basis for such issues as compliance with sanctions requirements and anti-money laundering principles.”
Reuters noted that the requests from information through the Federal Reserve “became more frequent after the passage of the 2001 U.S. Patriot Act, mostly from the Office of Foreign Assets Control, a Treasury division enforcing sanctions and targeting terrorist financing, money laundering, and weapons and drugs trafficking.”
The Free Thought Project has reported on multiple instances of the failure of the Federal Reserve. In June 2016, former Federal Reserve Chairman Alan Greenspan even warned that the world is in “the worst period” he has ever seen.
“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it exited prior to 1913, we’d be fine,” Greenspan said. “Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?”
Even Donald Trump called for an audit of the Federal Reserve. However, like most of his promises, this one will most likely be broken too — just as Ron Paul predicted last year.
It is so important to audit The Federal Reserve, and yet Ted Cruz missed the vote on the bill that would allow this to be done.
— Donald J. Trump (@realDonaldTrump) February 22, 2016
There have also been multiple versions of legislation seeking to “Audit The Fed,” in order to gain insight into how the world’s most powerful financial institution conducts its business. The latest version was sponsored by Kentucky Sen. Rand Paul, and was approved by the Republican-controlled Committee on Oversight and Government Reform in March.
READ MORE: 5 Stories Americans Missed While Media Obsessed Over the Inauguration
While the report does serve as a reminder of the capabilities of U.S. intelligence, it shouldn’t come as a surprise. Countries such as Iraq, Libya and Syria have all felt the wrath of the United States after their respective leaders chose to drop the U.S. dollar—and each invasion should serve as a reminder of the power of coercion between the government and the media to push an agenda that furthers the U.S. central banking system.
A new bill seeks to track your money and assets incessantly, will enjoin any business with government ties to act as a de facto arm of DHS, and would steal all of your assets — including Bitcoin and other cryptocurrencies — should you fail to report funds when traveling with over $10,000.
Under the guise of combating money laundering, Senate Bill 1241, “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017,” ramps up regulation of digital currency and other autocratic financial controls in an attempt to ensure none of your assets can escape one of the State’s most nefarious, despised powers: civil asset forfeiture.
All of this under the farcically broad umbrella of fighting terrorism.
Civil forfeiture grants the government robbery writ large: your cash, property, and assets can be stolen completely sans due process, your guilt — frequently pertaining to drug ‘crimes’ — matters not.
A court verdict of not guilty doesn’t even guarantee the return of State-thefted property.
In fact, the government can seize virtually whatever it wants if it so much as suspects some of your assets might have been acquired through or used in the commission of even lesser crimes.
For some time, a war on cash has been brewing behind the closed doors of government, and — although officials prefer to claim counterfeiting, terrorism, and money laundering as the impetus for asset tracking — in actuality, physical currency facilitates black market and untaxed transactions, and, most imperatively to the U.S., cannot be thefted under civil asset forfeiture laws as easily as money exchanged digitally.
Characterized as an effort to “to improve the prohibitions on money laundering, and for other purposes,” the bill severely curtails the right to travel freely, without undue hindrance, as travelers with more than $10,000 in assets — including those held digitally, like Bitcoin — must file a report with the U.S. government.
Noncompliance with the tyrannical law — including failing to fill out the aforementioned form — would incur penalties befitting a fascist dictatorship: an individual could find the entirety of their assets seized, not just those unreported, and could be locked in a prison cage for up to ten years.
READ MORE: Minnesota Man Arrested, Sentenced to 6-Months in Jail for Having a Windmill On His Property
To be clear, the State wants to write a permission slip to seize all of your assets — bank accounts, including, specifically, “safety deposit boxes,” prepaid cards, gift cards, prepaid phones, prepaid coupons, cryptocurrencies, all of it — even for being remiss in reporting what you’re traveling with.
Considering one’s digital assets veritably follow wherever that travel takes them, a cryptocurrency portfolio would theoretically have to be reported each time that person travels outside the confines of the U.S.
Of course, the legislation in actuality just amends laws pertaining to assets and travel already considered dictatorial — right now, failure to fill out the form carries not just the penalty of seizure, but a sentence of up to five years behind bars.
“And if that weren’t enough, this bill also gives them with new authority to engage in surveillance and wiretapping (including phone, email, etc.) if they have even a hint of suspicion that you might be transporting excess ‘monetary instruments,’” Simon Black of SovereignMan.com reports.
“Usually wiretapping authority is reserved for major crimes like kidnapping, human trafficking, felony fraud, etc.
“Now we can add cash to that list.”
But it wouldn’t just be the government hawkishly surveilling your every transaction, as, essentially, all retailers would be roped into becoming State spies — any business selling gift or prepaid cards would be required to report those, too.
Worse — and in defiance of current structures pertaining to digital currency — the government wishes to somehow require issuers of cryptocurrencies into its abhorrent, ostensive money-laundering police spy ring.
According to the legislation, reports Smaulgold.com, the Secretary of Homeland Security and the Commissioner of U.S. Customs and Border Protection must, within 18 months of the legislation’s passage, devise a “border protection strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States, including an assessment of infrastructure needed [emphasis added] to carry out the strategy […]
“The obligation to declare amounts in any form over $10,000 exists, irrespective of whether custom officials have a way of detecting such holdings. Since digital currencies technically travel with the holder [wherever] the holder goes, one would have to declare one’s entire crypto portfolio each time the holder entered the U.S.”
Travelers possessing assets, precious metals, and accounts in excess of $10,000 held outside the United States, however, would not be required to declare those to the government — perhaps leaving an albeit sketchy option for those wary of unscrupulous authorities.
While the government insists ‘If you’ve got nothing to hide, you’ve got nothing to fear,’ the Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017 proves you might not be able to hide anything from its greedy clutches — and if you try, you could wind up thrown in a cage for a decade, penniless upon release.
Welcome to America, where your assets are literally the government’s business, and freedom is anything but free.
Authored by Simon Black via SovereignMan.com,
This one is almost too ridiculous to believe.
Recently a new bill was introduced on the floor of the US Senate entitled, pleasantly,
“Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.”
You can probably already guess its contents.
Cash is evil.
Bitcoin is evil.
Now they’ve gone so far to include prepaid mobile phones, retail gift vouchers, or even electronic coupons. Evil, evil, and evil.
These people are certifiably insane.
Among the bill’s sweeping provisions, the government aims to greatly extend its authority to seize your assets through “Civil Asset Forfeiture”.
Civil Asset Forfeiture rules allow the government to take whatever they want from you, without a trial or any due process.
This new bill adds a laundry list of offenses for which they can legally seize your assets… all of which pertain to money laundering and other financial crimes.
Here’s the thing, though: they’ve also vastly expanded on the definition of such ‘financial crimes’, including failure to fill out a form if you happen to be transporting more than $10,000 worth of ‘monetary instruments’.
Have too much cash? You’d better tell the government.
If not, they’re authorizing themselves in this bill to seize not just the money you didn’t report, but ALL of your assets and bank accounts.
They even go so far as to specifically name “safety deposit boxes” among the various assets that they can seize if you don’t fill out the form.
(Yet another reason to consider storing cash, gold, and silver in an overseas safety deposit box.)
This is unbelievable on so many levels.
It’s crazy to begin with that these people are so consumed by the fact that someone has $10,000 in cash.
But it’s even crazier that they’re threatening to take EVERYTHING that you own merely for not filling out a piece of paper, without any due process whatsoever.
Oh, and on top of civil asset forfeiture penalties, there are also criminal penalties.
Right now according to current law they can imprison you for up to FIVE YEARS for not filling out the form. Five years.
But apparently that doesn’t go far enough to protect us against evil men in caves.
So this bill aims to double the criminal penalty to TEN years in prison.
And if that weren’t enough, this bill also gives them with new authority to engage in surveillance and wiretapping (including phone, email, etc.) if they have even a hint of suspicion that you might be transporting excess ‘monetary instruments’.
Usually wiretapping authority is reserved for major crimes like kidnapping, human trafficking, felony fraud, etc.
Now we can add cash to that list.
It’s not just government spy agencies to worry about, either.
Banks in the US are already unpaid government spies, required by law to fill out suspicious activity reports on their customers.
Then Congress started expanding those requirements to include other businesses and industries that might come into contact with cash.
Stock brokers. Casinos. Currency exchanges. Precious metals dealers. Pawnbrokers. The Post Office.
According to the law (section 5312 of US Code Title 31), those industries are also required to spy on their customers for the government.
But under this new bill, they want to forcibly recruit even more unpaid spies, including any business which issues or redeems ANYTHING that’s prepaid.
Prepaid credit cards. Prepaid phones. Prepaid retail gift cards. Prepaid coupons.
So, Amazon.com, which issues and redeems prepaid gift cards, will be required under this bill to file reports to the government.
For that matter, TGI Fridays and Chuckee Cheese will also become unpaid government spies since they both issue and redeem prepaid vouchers.
Truly these Senators have figured out how to strike at the heart of ISIS.
Further, their bill wants to pull any business which “issues” cryptocurrency under the anti-money laundering regulatory umbrella.
Here’s where these people demonstrate that they have no idea what they’re talking about.
No one “issues” Bitcoin. There’s no Bitcoin central bank. There’s no Chairman of Bitcoin who decides on a whim to increase the supply.
Bitcoin is created automatically amounts that are pre-determined by its code. It’s software.
So the Senate is essentially trying to force the Bitcoin core software to comply with money laundering regulations.
How pathetically clueless.
The bill also attempts to drop a major bomb on Bitcoin by including it in the list of monetary instruments that must be reported when entering or leaving the US.
As Smaulgold.com"s Louis Cammarosano explains, the bill contains a provision that would require the Secretary of Homeland Security and the Commissioner of U.S. Customs and Border Protection to devise a “border protection strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States, including an assessment of infrastructure needed [emphasis added] to carry out the strategy.”
The respective Secretary and Commissioner would present their findings to Congress no later than 18 months after passage of the bill.
The obligation to declare amounts in any form over $10,000 exists, irrespective of whether custom officials have a way of detecting such holdings. Since digital currencies technically travel with the holder where ever the holder goes, one would have to declare one’s entire crypto portfolio each time the holder entered the U.S.
Such a declaration is not required for travelers who may happen to have bank accounts or precious metals worth more than $10,000 stored outside the United States.
The type of infrastructure required to detect foreign holdings may come in the form of (i) expanding Foreign Account Tax Compliance Act to currently unregulated foreign crypto currency exchanges and to non U.S. citizens. FATCA currently only applies to U.S account holders of certain foreign financial and non financial institutions; (ii) some type of global monitoring of blockchain activity; or (iii) extreme vetting at the border and penalties for non disclosure that would encourage full disclosure.
As you can see, this bill criminalizes or delegitimizes the most mundane and harmless financial activities, all under the guise of keeping us safe.
Of course nothing in this bill is about keeping people safe.
ISIS couldn’t care less about forms and penalties.
This bill is nothing more than another weapon in their ongoing War on Cash… and now cryptocurrency too.
The stringent capital controls adopted by Chinese authorities on Jan. 1, some of which were specifically designed to curb foreign real-estate purchases, appear to have had their desired effect. To wit: First-quarter property sales plummeted 58% to $4.3 billion, compared with a year earlier, Bloomberg reported, citing data from real-estate brokerage Cushman & Wakefield Inc.
And nationwide, the picture wasn’t much better: Sales dropped 18 percent, research firm Real Capital Analytics Inc. found.
Here"s a rundown of the new capital controls, as reported by Bloomberg:
But the capital controls were just the spark: For months we"ve been warning that real estate markets in NYC and San Francisco, among others, are getting ready to rollover as the market is squeezed by already-high valuations and a flood of new luxury apartments (see here and here).
As we reported back in December: With a substantial amount of capacity expected to come online over the next several quarters and a growth cycle that is entering its 8th year, one Chinese real estate investor admits "you get a sense now that it’s peaking."
Of course, the mainstream media would be remiss if it didn"t find some way to blame it all on Trump:
As Bloomberg reports:
Much of the slowdown has nothing to do with Trump. Concern is mounting that real estate prices have peaked following six years of record-shattering growth, and there are signs of overbuilding in large cities such as New York and San Francisco—the biggest beneficiaries of the recent boom.
Some of this hesitancy, however, can be traced to Trump’s gilded door. Real estate investors worry that Trump’s industry-friendly tax cuts will fail to pass. At the same time, others figure that lower taxes and higher spending could spark inflation and rising interest rates—a liability in the debt-driven business.
In fact, "uncertainty about the fate of Trump’s entire economic agenda is holding up deals across the country. Buyers and sellers “need to have shared expectations” before signing on the dotted line, said Jeff Friedman, a principal at Mesa West Capital, a Los Angeles-based real estate investment firm," Bloomberg reported.
If investors are worried about rising interest rates, they should stop paying attention to the Federal Reserve"s dubious projections. Remember, Trump wants to keep interest rates low; the dot are just a distraction.
But that doesn"t change the fact that the New York market is sagging as developers struggle with a glut of hotels, condos and apartment complexes following a multiyear construction boom. Now, landlords are slashing rents, and lenders are tightening loand requirements.
Bloomberg uses Louis Ceruzzi, a developer who, like Trump, got his start outside Manhattan, as an example of how major projects have ground to a halt in the city. Two years ago, Ceruzzi and a Chinese partner bought a plot at 520 5th Avenue, paying $275 million - doubled the price paid for it in 2011. In late 2015, Ceruzzi told the Commerial Observer that construction would begin the following Spring.
But more than a year later, theere"s only "an empty lot, an idle backhoe and scattered piles of rubble," Bloomberg notes.
Ceruzzi, for his part, didn"t respond for comment. A picture of his land can be seen below.
New York, NY — There are only eight counties in the United States where prostitution is legal, all in Nevada. But that didn’t stop one retired police officer, who was drawing disability and receiving a pension, from starting up his own escort service, raking in millions of dollars in the process.
Unfortunately for Michael Rizzi (45), his fellow law enforcement officers found out about it and put a stop to it. Rizzi was arrested last year when it was discovered he operated 58 escort service websites.
The Department of Homeland Security investigated Rizzi and arrested him at his Brooklyn home in May of 2016. He was tried, convicted, and sentenced to 14 months in prison for money laundering.
After he serves his time, the dirty ex-cop will spend four months in home confinement and two years probation. He forfeited over $120,000 in cash as well as his Florida vacation home.
Reportedly, Rizzi raked in millions upon millions of dollars and laundered the money through a vast system of shell corporations connected to organized crime. DHS can hardly be pleased with only recovering a little over one hundred thousand dollars. All of which begs the question, “Where’s the rest of the money?”
Also concerning to some was the fact the former police officer wasn’t charged with running an illegal prostitution ring. His lawyer reportedly defended his client’s actions saying the only business with which he was engaged was an escort service and the women knew there were not obligated to perform sexual favors for clients.
Rizzi’s business was called BJM Manhatten Stakes and Entertainment and directed interested Johns to call booking agents to set up the dates with high paid escorts earning as little as $600 per hour with one reportedly bringing in $25,000 in one 24 hour period.
Judge Carol Amon presided over the criminal case and ordered his assets seized, which included the websites as well. U.S. Attorney Bridget Rhode reflected on the life of the former law enforcement officer.
“Michael Rizzi left behind a life of law enforcement for a new career in which he flagrantly disregarded the law and exploited others for his own enrichment…This office is committed to dismantling money laundering organizations, including those which promote and capitalize on illegal prostitution.”
If it’s true Mr. Rizzi took in millions; then the Feds walked away with very little to show for their investigative efforts. Web sites can be replaced, as well as the home and the chump change confiscated.
But those who are caught up in human trafficking, who may have unwillingly worked for Rizzi at one time or another, may be the real victims in the former law enforcement officer’s shady schemes.
For those who want to go down the rabbit hole into conspiracy theories, one could ask the question why the Feds chose not to investigate the prostitution ring, and its connections to wealthy clients, such as politicians, billionaires, etc.
After all, in the very beginning, the Feds made it clear they were only concerned with the money laundering, a crime for which the federal government receives no revenue. Homeland Security Investigations Assistant in Charge Steven Schrank said, “At the end of the day, we’re focused on the money laundering and organized crime connections to this investigation.”
Schrank claimed Rizzi “moved multiple millions of dollars through shell corporations that operated in and out of New York, and in the financial crime arena, we’re very concerned about the movement of illicit proceeds through shell corporations.”
Absent from his concerns were any mention of the human assets who, one could say, were trafficked from John to John, whether or not they did so willingly or not.
Maybe the answer to the question of why the Feds chose to go after the money instead of The Who’s Who of clients comes from Rizzi’s own admission. He reportedly bragged, “I’m number one for a reason…I get the most business, my girls make the most money, my clients are the wealthiest people in the world.”
In the Land of the Free, it is against the law to get paid to have sex, unless that sex is filmed, distributed on DVD, and taxed. One of the least talked about systems of oppression in the US is that of persecuting prostitutes.
When referencing prostitution, we are talking about the mutually beneficial exchange of sexual favors for money by two or more consenting partners; not forced human trafficking.
It’s called the “oldest profession in the world” for a reason. Sex is a basic human need. One need only observe the explosive population growth of humans in the last 10,000 years to see that desire to mate is inherent in each and everyone one of us.
When one takes this into consideration, the notion of outlawing consensual sex is seen for what it is, sheer insanity.
Just like the war on drugs creates crime by pushing the unending demand for illicit substances into the black market, the war on the sex trade creates crime in the same manner.
Because the demand for sex is pushed into dark alleys and late night street corners, a woman working in the sex trade becomes far more vulnerable than if they were legally allowed to operate out of brick and mortar setups. This danger of working on the street drives the need for protection from pimps who are often more abusive than any customer would be.
Despite the tens of thousands of arrests each year, the market has found a way to provide the service of sex using safer solutions. In spite of the laws, sellers of sex have found ways to safely conduct business by setting up “massage” parlors, using phone books, and, of course, the internet — like Rizzi.
Besides being an immoral gang of thieves, the state is also relentless. They have deep pockets of extorted tax dollars of which to dig in to enforce their distorted will on the people.
Despite prostitution arrests dropping from 2001 to 2010, the cost of arresting people for sex remains staggeringly high. Individual cities continue to spend up to $23 million a year stopping people from having voluntary sex.
Meanwhile, involuntary sex goes uninvestigated at an alarming rate. Hundreds of thousands of rape kits are sitting in police departments across the country — collecting dust, as cops petition the government to allow them to have sex with prostitutes so they can then bust them.
In police state USA, truth is stranger than fiction.
An investigative reporting coalition recently released a report alleging a multi-billion dollar money laundering operation that has affected hundreds of banks and companies in 96 countries including the repeat offender, HSBC.
In 2012, HSBC, one of the world’s largest banks, settled with the U.S. Government, avoiding criminal prosecution of its executives, for helping to launder money for Mexican drug cartels as well as Al Qaeda. According to the US Senate’s report, which investigated the matter, HSBC provided a “gateway for terrorists to gain access to U.S. dollars and the U.S. financial system.”
Loretta Lynch, while serving as the U.S. District Attorney in NY said HSBC engaged in a, “sustained and systemic failure to guard against the corruption of our financial system by drug traffickers and other criminals and for evading U.S. sanctions law.” As a result of the criminal charges for money laundering and admitted guilt in four counts against the global banking firm — the megabank was let off with a slap on the wrist.
“HSBC has agreed to forfeit 1.256 billion dollars, the largest forfeiture amount ever by a financial institution for a compliance failure,” Lynch stated.
Because they were let off with zero criminal charges, the bank was allowed to go back to crooked business as usual.
The Organized Crime and Corruption Reporting Project published a comprehensive narrative that details how billions of dollars were moved from Russian sources to bogus shell companies before traveling further into various banks, and ultimately numerous companies that inadvertently accepted corrupt funds.
The OCCRP reports:
Money entered the Laundromat via a set of shell companies in Russia that exist only on paper and whose ownership cannot be traced. Some of the funds may have been diverted from the Russian treasury through fraud, rigging of state contracts, or customs and tax evasion. Money that might have helped repair the country’s deteriorating roads and ports, modernize the health care system, or ease the poverty of senior citizens – was instead deposited in a Moldovan bank.
At the other end of the Laundromat, money flowed out for luxuries, for rock bands touring Russia, and on a small Polish non-governmental organization that pushed Russia’s agenda in the European Union. (It is run by Mateusz Piskorski, a Polish pro-Kremlin party leader arrested for spying for Russia).
The Guardian noted the”ingenious” strategy behind how the money was easily relocated from faceless companies to banks. “Typically, company A ‘loaned’ a large sum of money to company B. Other businesses in Russia – fronted by Moldovans – would then guarantee these ‘loans’. Company B would fail to return the ‘money’. Moldovan judges would authenticate the “debt”, allowing Russian companies to transfer real money to a bank in Moldova,” The Guardian reported.
READ MORE: Russia Exposes U.S. Support for Syrian Terrorists with One Epic Tweet
HSBC, which is headquartered in London, processed US$545.3m in Laundromat cash, mostly routed through its Hong Kong branch, according to the Guardian.
In response to these allegations, HSBC said, “This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not.”
“The bank has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities.”
Apparently, those ‘systems and processes’ aren’t good enough to catch hundreds of millions of dirty money coming through.
An OCCRP infographic further explained that all of the “debt” settlements consistently involved a citizen of Moldova.
A great number of banks accepted these funds easily, and the scheme touched upon at least 96 countries receiving the tainted money including the United States, with money ending up at Citibank and Bank of America. The OCCRP reported that “the 21 shell companies fired out 26,746 payments from their various Trasta Komercbanka and Moldindconbank accounts” between 2011 and 2014.
Earlier estimates of about $20 billion in laundered money through this project were initially reported, but recent projections have increased that number to as much as $80 billion.
While the OCCRP first reported on this operation three years ago, knowledge of the corruption has only begun to reach mainstream news outlets. The Guardian reports that the suspected “architect” behind this massive undertaking is Moldovan businessman Vyacheslav Platon. Platon was arrested and extradited to Moldova in 2016 and has so far denied evidence of any crime.
Moldova has accused Russia of “harassment” related to its investigation of the operation which has been commonly referred to as the “Global Laundromat.” The OCCRP echoed that “law enforcement in Moldova, Latvia, the United Kingdom, and Russia continue to investigate the Laundromat, but attempts to bring those responsible to justice and to recover the money have been hampered in part by the reluctance of Russian officials to cooperate.”
The latest note out of real estate expert Mark Hanson points to something we have discussed since 2012: the use of US real estate to park "hot" and in some cases illegal foreign capital in US real estate courtesy of the NAR"s exemption from anti-money laundering regulations. Some of the highlighted observations are stunning.
Higher-End REAL ESTATE TROUBLE Worsens (From New York to Florida to California), by Mark Hanson of M Hanson Advisers
In Feb. 2016, the Treasury"s FinCEN enacted "GEOGRAPHIC, ANTI-MONEY-LAUNDERING, TARGETING ORDERS of 2016".
Apparently, the program worked out so well, in August "16, it was expanded to cover the rest NYC and SoFL, in addition to the LA, San Diego, San Fran Bay Area, and San Antonio regions. Regarding the expansion, on July 28, 2016, I put out a note entitled "7-28 Hanson...Higher End Real Estate"s Coup De Grace...Heads-Up,." copied at the bottom of this note, highlighting what I perceived to be the fall-out.
Everybody assumed this program would end organically last month, but it was renewed for another year, which wasn"t widely reported.
THESE STATEMENTS BY INVESTIGATORS ARE OMINOUS, especially considering that "foreign and domestic fraud and money laundering" was one of my "four pillars of unorthodox housing demand", over which I have pounded the table for the past several years.
"We don"t come across [money laundering in real estate] once every 10 or 12 cases," John Tobon, U.S. Homeland Security Investigations Deputy Special Agent in Charge for South Florida, told the Miami Herald in January. "We come across real estate being purchased with illicit funds once every other case."
"FinCEN said that 30 percent of reported transactions across the nation were linked to buyers who had been flagged by banks and other financial institutions for suspicious activity."
Well, this is one way to narrow the ever-increasing divergence between higher and lower end real estate prices...blow-up the higher end.
I don"t find it any coincidence that the era of ASPIRATIONAL PRICES in the middle-high to luxury segment ended abruptly in early 2016, in lock-step with this program ramping up, as evidenced by headlines of 20% to 40% list price haircuts reported constantly - most recent is Mickey Drexler"s $35M to $19.95M haircut -- in exactly the markets, which the program targets.
There is such a thin pool of demand for middle-high to luxury real estate, that if one demand cohort goes away (fraud, or suspicious purchases by LLC"s, for example), and some "innocent others", who simply don"t want the Treasury tracking them, "move to the sidelines", it will create a massive hole in demand and pricing power.
It only takes a few real estate transactions to "reset" entire markets, higher and lower, and establish new trends before most everybody else (headline readers) without access to real-time, transactional data even realizes it.
Region"s being tracked now are listed, as follows. The price triggers aren"t too high. Heck, $2mm may not even get you a quarter-acre dirt in Palo Alto.
Small leaks in large bubbles can turn into rips very easily. Which makes it critical for high end owners, investors, and speculators, that the remaining "three pillars of unorthodox demand", which I am tracking closely, don"t fail (some already are).
The article below by Miami Herald covers the renewed GTO for 2017:
Feds renew crackdown on dirty money in Miami real estate
By Nicholas Nehamas
http://www.miamiherald.com/news/business/real-estate-news/article134518184.html
nnehamas@miamiherald.com
Feb 23, 2017
After months of “will-they-or-won’t-they” speculation, the U.S. Treasury Department announced Thursday that it will extend its search for dirty money in six high-end real estate markets, including South Florida, for another six months.
The rules, initially imposed early last year as a temporary measure on Miami-Dade County and Manhattan, require shell companies buying expensive homes with cash to report their true owners to the Financial Crimes Enforcement Network (FinCEN), a Treasury agency. Law enforcement officials have said a lack of oversight allows criminals from around the world to launder money through luxury real estate in the United States.
In the weeks following the election of President Donald Trump — a former real estate developer — it was unclear whether the new administration would continue the effort, which was set to expire on Thursday.
“This is an administration that says it is both pro-business and pro-law enforcement,” said Lee Stapleton, a South Florida attorney and former federal prosecutor. “This order shows that they’re not incompatible. … It’s not good for real estate or for business if illicit dollars are artificially inflating the market. And law enforcement doesn’t want real estate to be a safe haven for money laundering.”
The so-called geographic targeting order had already been renewed once before when it was also expanded to Broward and Palm Beach counties; the other four boroughs of New York City; Los Angeles County; San Diego County; the greater San Francisco area; and the county that includes San Antonio, Texas. The rules kick into effect at different price points depending on the market. In South Florida, home sales of $1 million or more are covered.
By extending the order rather than announcing a plan to craft permanent regulations that would apply nationwide, the Trump administration showed it has perhaps not made up its mind on whether to continue the crackdown long-term, said Andrew Ittleman, a Miami-based attorney who is an expert on anti-money laundering compliance laws.
“I wouldn’t read too much into the extension,” Ittleman said. “Trump was only inaugurated a month ago. To me, this is a sign the administration could be kicking the can down the road a little bit. … They have plenty of issues on their plate right now.”
The cities chosen for enhanced scrutiny all feature pricey real estate markets and an abundance of foreign buyers, a combination that federal law enforcement officials believe make them prime targets for money laundering.
“We don’t come across [money laundering in real estate] once every 10 or 12 cases,” John Tobon, U.S. Homeland Security Investigations Deputy Special Agent in Charge for South Florida, told the Miami Herald in January. “We come across real estate being purchased with illicit funds once every other case.”
The revelations of the Panama Papers showed how easily secret money from offshore flows into South Florida real estate.
Money laundering fight
In a news release, FinCEN said that 30 percent of reported transactions across the nation were linked to buyers who had been flagged by banks and other financial institutions for suspicious activity.
The agency has not said how many transactions have been reported or whether any have led to criminal investigations. Officials have described the rules as a temporary data-gathering activity meant to determine whether money laundering in real estate deserves permanent national regulations.
“These GTOs are producing valuable data that is assisting law enforcement and is serving to inform our future efforts to address money laundering in the real estate sector,” FinCEN acting director Jamal El-Hindi said in a statement. “The subject of money laundering and illicit financial flows involving the real estate sector is something that we have been taking on in steps to ensure that we continue to build an efficient and effective regulatory approach.”
Some brokers and developers have worried that the rules would affect sales — although a Herald analysis found that doesn’t appear to be the case — and criticized the government’s efforts as unnecessary and poorly designed. But a national trade group for the title industry said it supports the anti-money laundering push.
“Our members have collected this information for more than a year and the good news is those efforts appear to be beneficial to the government’s work identifying money laundering schemes and the illegal purchase of real estate,” Michelle Korsmo, chief executive officer of the American Land Title Association, said in a statement. “We continue to work closely with our members and FinCEN to collect the needed information as efficiently as possible.”
When a bank is found guilty of doing business in countries where they’re not supposed to be, and when the same bank is found guilty of helping drug cartels launder money, shouldn’t the public have a right to know about the banks’ efforts at correcting such actions? That’s the question being raised with respect to HSBC’s 1.92 billion dollar settlement with the U.S. and oral arguments are taking place in federal court this week on whether or not the compliance report should stay sealed.
The bank lost in court in 2012 when it was discovered they had business dealings in, “Cuba, Iran, Libya, Sudan and Burma, racking up violations of the Bank Secrecy Act, the International Emergency Economic Powers Act and the Trading With the Enemy Act,” according to CNS. The bank’s executives, who knew full well what the bank was doing, were given deferred prosecution agreements, so long as the bank, going forward, would reform its business practices and comply with the law.
“HSBC admitted to violating U.S. sanctions laws and failing to stop Mexican and Colombian cartels from laundering hundreds of millions of dollars in drug proceeds through the bank,” but now is fighting to keep the contents of the compliance report a secret. And the bank is getting help from what should be considered the most unlikely of sources, the Department of Justice. Yes. That’s right. The same justice department which prosecuted HSBC and won, is now seeking to keep the progress, or lack thereof, in complying with the law, a secret.
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One lone ranger, a mortgage holder with HSBC, is fighting to make the compliance report public. Hubert Dean Moore believes HSBC’s progress with complying with the law should be a matter of public record and is arguing his case this week in Manhattan, NY. The DOJ’s lawyer, Jenny Ellickson, argued for the government on Wednesday saying Gleeson shouldn’t’ be involved in the proceedings. She argued that releasing the report would make it harder for the federal government to enforce the deferred prosecution agreement adding that doing so would mean that HSBC would be less likely to cooperate going forward. “The importance of the monitor’s confidential sources is critical here,” she said according to the New York Post.
Yahoo News writes,
Circuit Judge Gerard Lynch, one of the judges on the panel, expressed skepticism of that argument, saying that sources were most likely to suffer retaliation from HSBC, which received the monitor’s reports anyway. Paul Clement, representing HSBC, said it would not be fair to the bank to have the report released, when the original agreement called for reports to be confidential. David Schulz, who represents Moore pro bono, said it was prosecutors, not Gleeson, who had overreached. When Lynch pressed him to explain what gave Gleeson the power to order the report’s release, Schulz cited his ‘inherent supervisory powers’ over the case.
For the moment the report will remain confidential, as judges continue to hear arguments both for and against releasing the compliance report’s findings. The federal government’s own lawyers are helping to keep it that way, and the bank is more than happy to keep their movements in complying or not complying with the settlement, a continued secret.
READ MORE: "Too Big to Jail" -- US Refuses to Charge HSBC Because it Could Hurt the Financial System
Discovering HSBC engaged in illegal business dealings is almost as shocking as the slap on the wrist settlement it was given. According to one estimate, the 1.92 billion dollar figure amounts to five days worth of business earnings by the bank. Even more surprising may be the fact that not one person has spent any time in jail or prison over dealing directly with drug cartels and rogue governments leading many to question what would happen to an individual caught doing the same things. Are banks who are “too big to fail” also too big to prosecute?
Moore’s attorney, David Schulz said, “The appellants in this case try to argue that this is judicial overreach into a realm that’s exclusively left to prosecutors, and the fact is, just the opposite is true…What is going on here is not judicial overreach. It’s prosecutorial, executive branch overreach.”
Schulz wrote in his legal brief to the court, “Disclosing the report serves the important interest of informing the public about any substantive reforms actually being made by HSBC, and is needed for meaningful analysis of the propriety of the government’s decision to enter into the DPA (Deferred Prosecution Agreement),” with HSBC.
In a nutshell, HSBC was found guilty of some pretty nasty business dealings. The good old boy Wall Street network and its cozy relationship with the federal government likely resulted in a drop in the bucket type of settlement with the government, and deferred prosecution (some might say immunity) was given to its executives. And now, precisely how HSBC has shaped up its dealings is being kept from the American people, by our own Justice Department. And we call this ‘justice’ in the land of the free.
For months/years we"ve covered the many real estate bubbles that have been inflating all over the world courtesy of Chinese billionaires looking to launder money offshore (here are just a couple of examples: Vancouver, Sydney and New York). But a new set of capital controls enacted in China on January 1st, and aimed specifically at curbing foreign real estate investments, may just be the needle that finally pops all those bubbles.
As Bloomberg pointed out earlier this month, the following new restrictions on foreign currency transaction were implemented earlier this year.
- Customers must pledge money won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance. While such rules aren’t new, citizens previously didn’t have to sign such a pledge
- Customers must give a more detailed account of the planned use of funds, such as business travel, overseas study, family visits, medical treatment, merchandise trade or purchases of non-investment insurance policies, including the timing, by year and month
- Violators of foreign-exchange rules will be be added to the currency regulator’s watch list, denied foreign-exchange quota for three years and subjected to anti-money-laundering investigations
- Customers must confirm compliance with restrictions on money laundering, tax evasion and underground bank dealings
- Customers must now confirm they aren’t lending or borrowing quotas to or from other citizens
And while some of the new capital controls above may not seem that onerous, they"re already threatening real estate deals from London to Melbourne as Chinese buyers are finding it increasingly difficult to fund down payments.
In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.
“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker at Keller Williams in Cupertino, California.
Less than a month after China announced fresh curbs on overseas payments, anecdotal reports from realtors, homeowners and developers suggest the restrictions are already weighing on the world’s biggest real estate buying spree. While no one expects Chinese demand to disappear anytime soon, the clampdown is deterring first-time buyers who lack offshore assets and the expertise to skirt tighter capital controls.
“If it’s too difficult, I’m out,’’ said Mr. Zheng, 66, a retired civil servant in Shanghai who declined to give his first name to avoid attracting regulatory scrutiny. He may abandon a 2.4 million yuan ($348,903) home purchase in western Melbourne, even after shelling out a 300,000 yuan deposit last August. He’s due to make another big payment next month.
As further evidence that the tighter controls are working, Chinese banks last month registered net inflows under the capital account for the first time since the yuan’s devaluation in August 2015.
Moreover, as Bloomberg points out, several new construction luxury buildings are now at risk of losing contracted sales as Chinese buyers, once flush with cash, are finding it very difficult to make progress payments.
At The Spire in London, a 67-story tower with sweeping views of the River Thames and flats starting at 595,000 pounds ($751,901), prospective buyers were caught off guard by the new rules. Less than 70 percent of clients who signed purchase contracts last year have made their initial payments, with the rest now facing “problems,’’ a press official at Greenland Holdings Corp., the project’s Shanghai-based developer, said on Jan. 12. The official asked not to be named, citing company policy.
While Beijing’s policy tweak may appear symbolic on the surface, it’s likely to cause a “notable reduction” in Chinese purchases of Australian property, according to Christopher Todd ‘CT’ Johnson at Basis Point, a consulting firm that specializes in business relations between the two nations. Australia approved A$24 billion ($18.1 billion) of real estate investments from China in the fiscal year ended June 2015, the most recent figures available, making the country by far the biggest source of foreign buyers.
And with one bubble on the verge of popping, the only question to answer now is which asset class speculative Chinese billionaires will cause to bubble over next?
The FBI has seized $20 million dollars of cash, literally stuffed in a mattress in Westborough, Massachusetts, linked to the infamous TelexFree pyramid scheme that reportedly raised over $1 billion from gullible participants between January 2012 and March 2014.
According to the Department of Justice, the money was found after an associate of one the scheme"s founders, Brazilian-native Carlos Wanzeler, was caught trying to launder the ill-gotten cash through Hong Kong to his boss who has been hiding out in Brazil ever since the TelexFree headquarters were raided by FBI agents back in 2014. Unfortunately, the person chosen to help with the money laundering scheme was an FBI informant...oops.
The complaint alleges that an intermediary working on Wanzeler’s behalf contacted an associate for help transferring millions of dollars of TelexFree money – still hidden in the greater Boston area – from the United States to Brazil. The associate, who subsequently became a cooperating witness for the government, allegedly arranged with Wanzeler’s nephew in Brazil to launder the cash through Hong Kong, convert it to Brazilian reals, and transfer it to Brazilian accounts.
According to court documents, Rocha, acting as a courier for Wanzeler’s nephew, flew from Brazil to JFK Airport in New York City a few days ago. Yesterday, Rocha met the cooperating witness at a restaurant in Hudson, Mass., and allegedly gave him $2.2 million in a suitcase. After the meeting, agents followed Rocha to an apartment complex in Westborough, Mass., and later arrested him. That night, federal agents searched an apartment at the Westborough complex and seized a massive stockpile of cash hidden in a box spring. The cash appears to total approximately $20 million.
Photo of $20M seized in box spring following arrest of Brazilian national in scheme to launder proceeds of TelexFree https://t.co/ulmFXtI9mr pic.twitter.com/0MTHxjaVZL
— U.S. Attorney MA (@DMAnews1) January 23, 2017
For those not familiar with the TelexFree scheme, it spread around the world like wild fire back in 2012 and 2013 before being busted in March 2014. Like most pyramid schemes, the company made 99% of it"s money by charging gullible participants a fee for the privilege of selling its "amazing VOIP telecommunications products" and about 1% actually selling those products. Per the DOJ:
According to the complaint affidavit, TelexFree, Inc., and TelexFree LLC (collectively, “TelexFree”) provided “voice-over-internet-protocol” (“VOIP”) telephone services, for which customers can sign up via a web site maintained by TelexFree. It is alleged that TelexFree was actually a pyramid scheme and that between January 2012 and March 2014, TelexFree purported to aggressively market its VOIP service by recruiting thousands of “promoters” to post ads for the product on the Internet. Each promoter was required to “buy in” to TelexFree at a certain price, after which they were compensated by TelexFree, under a complex compensation structure, on a weekly basis so long as they posted ads for TelexFree’s VOIP service on the Internet.
It is alleged that the ad-posting requirements were a meaningless exercise, in which promoters cut and pasted ads into various classified ad sites provided by TelexFree which were already saturated with ads posted by earlier participants. According to the affidavit, TelexFree derived only a fraction of its revenue from sales of VOIP service – less than 1% of TelexFree’s hundreds of millions of dollars in revenue over the last two years. The overwhelming majority of its revenue – the other roughly 99% – came from new people buying into the scheme. TelexFree was allegedly only able to pay the returns it had promised to its existing promoters by bringing in money from newly-recruited promoters.
On April 16, 2014, the Securities and Exchange Commission obtained a restraining order to freeze assets of Telexfree and eight related individuals. Since then, the U.S. Attorney’s Office has executed 37 seizure warrants for assets in the tens of millions of dollars.
It is further alleged that in 2013, TelexFree reported sales of $1.016 billion, while known sales of the TelexFree VOIP product represented less than 0.1% percent of TelexFree’s total revenues.
Here is a great tutorial explaining exactly how the scheme worked:
There is a saying that "a fool and his money are soon parted"...here is an excellent visual representation of that proverb:
