What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not.
And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.
The bank would report it, and in theory the feds could track down Periwinkle LLC.
But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.
The US is obsessed with having a clean financial sector, but doesn’t care one jot or tittle about corporate transparency.
Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism).
That the US (and especially certain states) permits opaque corporate structures is a different problem.
(1) is probably not good for that country, but do other countries care? To some extent, this is just colonialism by proxy: extracting wealthy inequitably from a foreign country. Historically, few third party countries take issue with that, when they're the winners.
(2) is where the more interesting point is. Does the country accepting the money net benefit, or net loss? Aka the London banking question in a nutshell.
I'd argue that if money is political power (it is) and corrupt money can't be firewalled (it can't), then it's net loss.
Inevitably and especially if we're talking lifestyle roots (e.g. property, establishing a home, etc), that corrupt money corrodes government and civil systems in the banking country. At minimum, because the wealthy corrupt people bring their expectations and behavior with them!
In practice though that’s exactly what happens. Banks have to look for transactions that are potentially illegal (including OFAC and AML). And the banks not only report but have to block some of those transactions or they become liable for the initial crime (if it existed at all).
And 9x/10 when you track down Perwinkle LLC you'll find that it's owned by a couple American brothers who own a successful regional HVAC business and everything they are doing is legal.
People love to act as if all this offshore stuff is frequently closely connected to illegal things but if you just randomly pull samples you'll be hard pressed to find anything that isn't just a case of someone completely legally doing what the law incentivizes.
There was a minor scandal a while back when it became clear Queen Elizabeth was using exotic techniques to hid her assets.
She wasn’t doing anything wrong. She just didn’t want people conflating her private assets with her royal persona.
Even Jeremy Corbyn (socialist, republican, then-head-of-Labour) didn’t criticize her for it.
She just didn’t want the public snooping in her private business.
I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it. That same loan is still available on the market.
You also need a citation on your reason for the financial crisis of 2008.
I had to walk away from my home BECAUSE of the financial crisis (after having paid down 90% of the principle). Was it triggered by defaults or the credit default swaps themselves? Sure, maybe some bad loans were floated,but the sophisticated, hot off of the regulation preventing it, people in New York started gambling on the plebs losing their homes. Well, a few plebs (really, over-leveraged affluent people) lost their homes, and a cascading effect of credit default swaps came due and spun out of control. The crisis was directly caused by Bill Clinton signing a bill that removed key regulation that would prevent the very thing that happened: Gambling on Wall Street.
So STFU.
It's unreasonable to blame one source for something that metastisized over years, involving most parties in the financial sector, until exploding.
Banks could have chosen not to do this business or to hedge their risk in a better way. Credit ratings agencies could have shown some independence and objectivity. Derivatives buyers could have done more due diligence on what they were buying. Home buyers could have looked at the market and said "This is way too hot, and the party can't go on forever."
Deregulation handed everyone rope, including us, and we all hung ourselves.
It stings when you get personally @+$#ed, and it feels good to blame massive, systemic failures on one source, but they're systemic failures for a reason -- because the entire system was culpable.
This is a general comment, nobody is saying every bank required zero documentation.
> I got a "no-doc" non-conforming FHA loan back then. They fucking strip searched me. It was not easy--I still have PTSD from it
I cannot imagine how bad some forms and id checks would have to be to give me PTSD.
> So STFU.
Not useful.
But insurance doesn’t have “know your customer” like banking.
If a customer commits a crime, we just don’t renew (unless we do). If a customer commits a crime and expects us to insure the criminal act, we refuse (unless we don’t).
Mortgage companies can issue small print dealing with much of legitimate financial uncertainty. Most mortgages require several types of insurance (title insurance, home insurance, and mortgage insurance).
If the financial strip search was about underwriting, it could be done in a way that didn’t require tons of paperwork from the customer.
But it’s about complying with “make sure your customer isn’t a criminal” laws.
Then he is incredibly naive. See Wachovia and HSBC's US operations getting caught laundering for Mexican cartels
This stuff is unfortunately pervasive in the global financial system
That boils down to US conflict with Russia. Europe didn’t have a beef in this until the Ukraine invasion.
I’m not sure how much of it is current in light of the sanctions. The big example it uses (90% of the book) is Khazakhstan.
From what I’ve read more recently, many rich/middle class folks in Latin America are moving to the US. If they’re businesses so much as look at drug money, and then we much as look at an American bank, they can wind up in a US prison for a long time.
So they just move to America to get away from drug gangs.
The US does not f*ck around with criminal financing.
Why doesn't it provide information in return? Well, only specific bank accounts are subject to FACTA:
- Accounts of individuals who are not US taxpayers.
- US deposit accounts of individuals and entities that are not US taxpayers to which US income flows.
And certain types are exempted from the data agreement:
- US corporate accounts, even when foreign companies hold these US accounts.
- Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests). Example: A German has a custody account in the USA and holds German shares in it. This data won't be disclosed to Germany. You probably know where this leads to...
If you think you are now in the need for an American corporate account, don't worry, we got you covered! Delaware offers setups without the need to file yearly lists of managers, owners (shareholders), directors, or members.
In case this is not sufficient for you because tax evasion isn't enough, and you are doing some really shady business, don't look further than this weird US arm called “Puerto Rico”. It is common knowledge among wealthy (and fishy) Europeans and Russians to just park your money there. Banks like the Euro Pacific bank allowed you to keep your money safe, and even allowed you to trade stocks electronically through IBKR without any disclosure to anyone. (ok, maybe the EuroPac Bank was too well known for this because they had to close down, but don't worry, there are a bunch of alternatives like facebank).
Combining a PR bank account with a Belize company is also very popular for money laundering. You know, Stripe doesn't allow banana republics, but for whatever reason PR is allowed there.
The setup is to create a company in Belize with a heavenly tax rate of 0% and just laundering through it to your bank account in PR. This is mostly used for companies who straight up do illegal things, but you know, you can sell virtual stuff all day long and it scales infinitely.
My personal opinion is that the USA doesn't want to disclose anything to third parties because they know too well that too much transparency would make them unattractive as the financial centre of the world. While they want to nail down US tax evaders at all costs, they have little motivation to fuck around with the billions of foreign capital in the US by providing too much information/support to foreign tax authorities.
Well, only specific bank accounts are subject to FACTA:
...
Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests).
Unfortunately, I don't have a reference, as I was told this by an advisor from PWC a few years ago. I guess you could contact any good tax consultant, tell him the details, and let him look into it. I have no idea about how 401K works in the US.
Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have \*US\* income flows (eg dividends or interests).
But, if you don't have the before mentioned US income to your account, you are exempted from data sharing.
SWIFT and Swiss don't just give up client data easily and yet they did due to US had exact names and details of every transaction, I recall some said fibre optic was tapped. too bad I left London soon after GFC there was a tonne of high quality gossip fun times.
He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London.
But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish.
The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.