Dirty Money

The New York Times devoted a lot of ink to the Bush Administration's practice of secretly rummaging through international banking transactions in pursuit of terrorists. But, frankly, I had a hard time grasping the scandal.

After all, the Treasury announced it was going to do something like this after 9/ll -- a legitimate, legal method of discovering the networks financing terrorist cells.

So I called an old friend and source for elucidation. Jack Blum is a legendary investigator and lawyer in Washington, who for decades has tenaciously uncovered the global flows of dirty money. Jack confirmed my hunch. He was outraged, but not by the Times revelations.

The scandal here is not government over-reach, he tells me. The scandal is the pitiful reluctance of this administration (and others before it) to get serious about the problem.

Bankers, Blum explained, "have fended off every conceivable rule that would really be effective. Why are we pandering to them if we say we are in such a desperate situation?"

The political influence of bankers tops all other sectors, I learned as a young reporter. Regardless of party or ideology, politicians seek their friendship. So the United States has created a truly bizarre banking code that legalizes--and keeps secret--vast flows of ill-gotten gains. For what purpose? Terrorist financing, yes, but that business is dwarfed by the drug trade profits, insider looting of corporations, offshore tax evasion, securities fraud, plain-vanilla fraud, and other uses.

The American dollar is lingua fria for illegal commerce and Congress protects the sanctity of its privacy, even allows it the criminal proceeds to flow freely through government-chartered and regulated financial institutions. This shady business is not an inconsequential profit center for banks (a bit like pornography for Microsoft).

The monitoring system described by the Times seems unexceptional to Blum. Indeed, his complaint is that it's so narrowly focused that it mostly harvests empty information. "Meanwhile, the biggest purveyor of terrorist money, as everyone knows, are accounts in Saudi Arabia," Blum observes. "Nobody will deal with it because the Saudis own half of America." An exaggeration, but you get his point.

Blum knows the offshore outposts where US corporations and wealthy Americans dodge taxes or US regulatory laws. Congress could shut them tomorrow if it chose. Instead, it keeps elaborating new loopholes that enable the invention of exotic new tax shelters for tainted fortunes. The latest to flourish, he says, are shell corporations-- freely chartered by states.

"The GAO says this device is being used for money laundering by everyone else in the world," Blum says. "Congress ought to start there." He is not holding his breath.

My point is, individual privacy deserves vigorous defense against the government. But who is the victim when the government itself shields the criminals and their bankerly accomplices from exposure?

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