No, that is not a misprint. Sunday's New York Times reports on the Internal Revenue Service (IRS)'s practice of seizing people's bank accounts because they obeyed federal money laundering laws. You see, the Bank Secrecy Act (with should be called the elimination of Banking Privacy Act), requires banks to file a "Suspicious Activity Report" whenever one of their customers makes a cash deposit over $10,000.
So if you make a deposit below $10,000 then your bank does not have to file a report and you do not have to worry about being bothered by the federal government, right? Wrong, the federal law outlaws what is called "structuring" which is making deposits below $10,000. The law assumes that if you make deposits under $10,000 you are doing it to avoid the federal reporting requirements. Therefore banks must file a Suspicious Activity Report on you if you do not meet their federal "profile" of money laundering because the fact that you do not meet that profile is an indication that you are a money launderer.
The IRS is using the filling of Suspicious Activity Reports as a justification for seizing the bank accounts of small business that make bank deposits under $10,000. Under the civil asset forfeiture laws, the IRS does not have to obtain a criminal conviction or even give the business any type of due process, before seizing their assets.
From the New York Times article:
Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.
They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”
On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”
Richard Weber, the chief of Criminal Investigation at the I.R.S., said in a written statement, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.” He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The new policy will not apply to past seizures.
The I.R.S. is one of several federal agencies that pursue such cases and then refer them to the Justice Department. The Justice Department does not track the total number of cases pursued, the amount of money seized or how many of the cases were related to other crimes, said Peter Carr, a spokesman.
But the Institute for Justice, a Washington-based public interest law firm that is seeking to reform civil forfeiture practices, analyzed structuring data from the I.R.S., which made 639 seizures in 2012, up from 114 in 2005. Only one in five was prosecuted as a criminal structuring case.
The practice has swept up dairy farmers in Maryland, an Army sergeant in Virginia saving for his children’s college education and Ms. Hinders, 67, who has borrowed money, strained her credit cards and taken out a second mortgage to keep her restaurant going.
Their money was seized under an increasingly controversial area of law known as civil asset forfeiture, which allows law enforcement agents to take property they suspect of being tied to crime even if no criminal charges are filed. Law enforcement agencies get to keep a share of whatever is forfeited.
It is nice that the IRS promises to focus on their limited resources on their "key priorities," but I am skeptical that this will result in any real change.
Campaign for Liberty Chairman Ron Paul was a leading opponent of civil asset forfeiture and money laundering laws throughout his Congressional career. He was the lone no vote on legislation giving the Federal Government new powers to violate our financial privacy. The bill eventually was added to the PATRIOT Act. Here is Dr. Paul's statement on the bill:
Mr. PAUL. Mr. Speaker, the so-called Financial Anti-Terrorism Act of 2001 (H.R. 3004) has more to do with the ongoing war against financial privacy than with the war against international terrorism. Of course, the Federal government should take all necessary and constitutional actions to enhance the ability of law enforcement to locate and seize funds flowing to known terrorists and their front groups. For example, America should consider signing more mutual legal assistance treaties with its allies so we can more easily locate the assets of terrorists and other criminals.
Unfortunately, instead of focusing on reasonable measures aimed at enhancing the ability to reach assets used to support terrorism, H.R. 3004 is a laundry list of dangerous, unconstitutional power grabs. Many of these proposals have already been rejected by the American people when presented as necessary to ``fight the war on drugs'' or ``crackdown on white-collar crime.'' For example, this bill facilitates efforts to bully low tax jurisdictions into raising taxes to levels approved by the tax-loving, global bureaucrats of the Organization for Economic Cooperation and Development!
Among the most obnoxious provisions of this bill: codifying the unconstitutional authority of the Financial Crimes Enforcement Network (FinCeN) to snoop into the private financial dealings of American citizens; and expanding the ``suspicious activity reports'' mandate to broker-dealers, even though history has shown that these reports fail to significantly aid apprehending criminals. These measures will actually distract from the battle against terrorism by encouraging law enforcement authorities to waste time snooping through the financial records of innocent Americans who simply happen to demonstrate an ``unusual'' pattern in their financial dealings.
in conclusion, Mr. Speaker, I urge my colleagues to reject this package of unconstitutional expansions of the financial police state, most of which will prove ultimately ineffective in the war against terrorism. Instead, I hope Congress will work to fashion a measure aimed at giving the government a greater ability to locate and seize the assets of terrorists while respecting the constitutional rights of American citizens.
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PDFTags: Ron Paul, Patriot Act, IRS, Civl Asset Forfiture