Another Loss of Personal & Financial Privacy

Bob Bauman (July 13, 2010)

We at The Sovereign Society constantly are concerned about unjustified government intrusions into both domestic and offshore financial matters – a large part of which can be characterized as destruction of personal and financial privacy. Much of this is done in secret and is constitutionally questionable.

As a life-long conservative (albeit with a decided Libertarian bent), it gives me no comfort to find myself in league with those on the left on these important issues of civil rights.

But the fast pace of the destruction of rights continues unabated in America, regardless of who is president. We all should be concerned.

Unfortunately, a large percentage of Americans seem oblivious as their freedoms are diminished. I think a feeble public awareness needs to be converted into a true understanding of what’s really happening – followed by action to stop it.

U.S. Deal with the EU

All of which is a preface to a discussion of a little-noticed agreement between the U.S. government and the European Union last week.

The European Parliament approved a deal that allows the sharing of masses of sensitive personal financial data with U.S. counterterrorism officials, something Obama and his administration have sought since the previous system was shut down at the start of this year.

This agreement was voted down by the EU parliament in February 2009 because of serious privacy concerns. A new EU vote now approves the deal after months of tough negotiations.

The EU was struggling to find an acceptable level of data privacy for EU citizens. Based on the recent negotiations, the U.S. representatives seemed to have little or no concern for the privacy rights of Americans.

All they wanted was to get their hands on any information about U.S. persons they can, without regard to the Fourth Amendment that prohibits searches and seizures without a warrant.

The Usual Terrorism Excuse

As has now become the custom, regardless of which political party controls the government, President Obama claimed the power to snoop in secret is vital to stopping terrorists and terrorism. “This new, legally binding agreement reflects significant additional data privacy safeguards but still retains the effectiveness and integrity of this indispensable counterterrorism program,” the president said in a statement.

Of course, the terms of the agreement are secret, so the government apparently again will have the power to examine masses of financial data while most will have no idea whether they are under surveillance or not – just the way Obama the alleged civil libertarian likes it.

Secret Deal Compromises American Privacy

The U.S. government first gained access to European financial data shortly after the Sept. 11, 2001, attacks under a secret deal that President George Bush said was needed to track terrorist financing.

That deal gave U.S. government agents virtually unlimited access to financial information contained in the international system that transfer cash around the world – a Belgian based banking cooperative known as the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

A privately run cooperative founded in 1973 that’s headquartered in Brussels, Belgium, SWIFT electronically transmits trillions of cash transfers every day to more than 200 countries. The network handles some 9 million transfer instructions and confirmations a day with a value of about US$6 trillion.

SWIFT is considered the nerve center of the global banking industry, routing huge amounts of cash each day among banks, brokerage houses and other financial institutions.

Its secret partnership with the U.S. government, reported in The New York Times in June 2006, gave the U.S. Central Intelligence Agency and the U.S. Treasury Department access to millions of records on international banking transactions by private individuals and businesses, Americans as well millions of others from 200 countries.

U.S. Loses Control

At the time SWIFT was based in Brussels but had some of its data servers in the U.S. in the state of Virginia. The government used their territorial jurisdiction to pressure SWIFT system officials to allow U.S. access.

When SWIFT relocated all of its servers to Europe, U.S. access to the information was lost because data stored on SWIFT’s European servers was no longer available to U.S. investigators.

One of the reasons the U.S. was cut off from SWIFT data was a 2006 news story that got a lot of coverage in Switzerland, but was generally ignored elsewhere.

Spying on Switzerland

To those who advocate offshore financial activity and believe Switzerland is one of the world’s best offshore financial centers, this was an important story. Datelined from Zurich, it stated that “the United States has confirmed it has been monitoring international financial transactions, including those in and out of Switzerland, for almost five years.

The Swiss government remained quiet on the issue, but data protection experts and lawyers were concerned by the revelations that the U.S. government had been tapping into records of SWIFT, supposedly looking for evidence of “potential activity by terror groups.”

In my opinion SWIFT, in secret cooperation with the U.S. government, violated the privacy of an untold number of persons by allowing the official U.S. access to SWIFT cash transfer records.

Terrorism and Taxes

You better believe that the U.S. money snoops who said they were looking for terrorist cash were (and are) also looking for tax evasion, money laundering of all kinds and any other indictable offenses. And they did this in violation of the Fourth Amendment guarantees against illegal searches without a warrant.

Naturally enough, the question arose as to whether the U.S. government having wholesale SWIFT access to hundreds of millions of wire transfers since Sept. 11, 2001, has compromised the Swiss banking secrecy mandated by law since 1934.

In Switzerland in 2006, some 99 banks and 254 institutions were connected to SWIFT, with a daily transaction value of some CHF200 billion (US$160 billion).

Although the Swiss Bankers Association said that Swiss banking secrecy had not been endangered or violated, the Swiss Federal Data Protection Commissioner said he was alarmed. And well he might be. Switzerland cooperates in foreign criminal investigations.

But however much the U.S. money police may have seen in the records of SWIFT wire transfers, Switzerland was and is home to fully one-third of all private wealth in the world. One can guess that the U.S. SWIFT access played a role in the UBS tax-evasion scandal.

Privacy in Another Time

There was a time in the United States and other major nations when personal and financial privacy was taken for granted. Your business was your own and nobody else’s.

In those long-gone days, your banker was a person of discretion who would never discuss your financial affairs with anyone – certainly not government agents without first being served with a court order.

Today every your American banker is an official government spy (although they don’t call it that), obliged to report to the federal money police any “suspicious activities.”

Under the terms of the USA Patriot Act, government agents can secretly nose through your finances, files and accounts and even freeze your assets without even charging you with any crime. And if your banker tells you that you’re under investigation, he could be fined and jailed.

All these stated excuses are really smoke screens for plans by welfare-state tax collectors for the complete and utter destruction of financial and personal privacy for all. These tax bureaucrats want complete access to every citizen’s financial lives, no matter where you live or where you have assets – thus the secret 2001 SWIFT deal – and the new deal just announced.

Still More Planned Attacks

But abolishing bank secrecy is not enough. They also want to abolish lawyer-client privilege, demand mandatory publication of all beneficial ownership of private trusts, private corporations and private foundations, plus the imposition of total tax information exchange among all nations.

The assumption of all these leftist advocates is that personal and financial privacy must now yield to our Big Brother government’s unlimited right to know all.

For citizens of the United States, all this is at best an academic discussion – under the Draconian terms of the 2001 Patriot Act, financial privacy is already dead.

The government has the power to obtain financial information in secret about anyone – and to confiscate your wealth.

A False Debate

Of course, the usual cry by those who advocate ever increased government surveillance of not just our finances, but every aspect of our lives, is that old saw: “If you aren’t doing anything wrong, what do you have to hide?”

It is absolutely wrong to characterize this debate as “clean money versus dirty cash” or “security versus privacy” or, more recently, “banking stability versus continued economic recession.”

I believe privacy is an inherent human right, and a requirement for maintaining the human condition with dignity and respect. The real choices are personal freedom and liberty versus government control of our lives and our fortunes.

Tyranny, whether it arises under threat of terrorist attack, alleged solutions to banking problems or under any form of unrelenting domestic authoritative scrutiny, is still tyranny.

Liberty requires security without intrusion — security plus privacy. Widespread surveillance, whether by police or nosey bureaucrats, in whatever form it takes, is the very definition of a police state.

And that’s why we should champion privacy, both personal and financial, even when we have nothing to hide.

Unfortunately, a large percentage of Americans seem unconcerned as their freedoms diminish. A feeble public awareness needs to be converted into a true understanding of what’s really happening – and action to stop it.

Can We Help You?

As a Freedom Alliance member, you know that since our founding 12 years ago, The Sovereign Society has provided international banking guidance for members.

Drawing on experience, we can recommend selected banks in jurisdictions where friendly governments welcome foreign financial investors … where banking institutions provide the savvy services investors require and where privacy is still respected.

These banks range from Panama to Switzerland and Austria, to Singapore and Hong Kong. Based on each individual’s unique needs, we direct members to the right bank in the right jurisdiction, sound institutions where you can protect your assets and manage your wealth.

Each of these banks is financially stable, offering modern facilities, services and the necessary understanding to serve an international clientele effectively. The banks we choose have liquidity ratings well above the international minimums set by the Bank for International Settlements in Basel, Switzerland.

If you need banking assistance please contact our staff and indentify your Freedom Alliance membership.
E-mail: thefreedomalliance@gmail.com Member Service Toll-Free Phone: 1-888-856-1412.

Faithfully yours,

Yours in freedom,

Chairman, The Freedom Alliance