Banking transactions:
Don't raise the red flags

US dollar: The new tool
of financial oppression?

The US dollar might soon become the basis of a financial surveillance network that spans the world and affects everyone. Is it time to run for cover?

OFFSHORE-FOX.COM
with Alex Hanson

(Part 5 of 6)

It is consequential in the context of banking transactions that the mighty United States dollar might soon become an effective tool with which to intrude into the financial privacy of all, including non-US citizens.

			The United States dollar might soon become an effective tool with which to intrude into the financial privacy of all, including non-US citizens.

Making a transfer in US dollars is set to become particularly perilous following the publication of a US Senate Report which demands that correspondent banks handling US dollars transfers for foreign banks should not only positively identify the foreign banks' ordering customers and transfer beneficiaries, but also note the nature of each transaction.

This situation has come about due to a few isolated scandals concerning so-called shell banks (mainly from Nauru), caught using New York dollar correspondents for illicit means. However, it is likely to affect all banking transactions that make use of the US banking systems -- and that is virtually all US dollar denominated cross-border payments.

For example, if you hold a US dollar account at a bank in Budapest, your funds will actually be held in the United States, at your Budapest bank's nostro account.

Under the new guidelines, you may be required to provide the US correspondent bank with your personal details such as name and residential address, as well as give a reason for any wire transfer you might care to order. Naturally, your local bank will forward this information on your behalf as a matter of course -- you won't even be told. Few banks are willing to risk having their all-important US dollar correspondent accounts closed for non-compliance.

Effectively, this means that banking in a low-profile privacy haven no longer provides a definite protection from the reach of the US government. In addition to getting hold of your personal data, they can even order the freezing of your US dollar funds if they deem your actions with their currency in some way irregular!

What's more, the US tax department is currently negotiating information exchange protocols with foreign governments. What if your government is among them?

It is obvious to anyone that such a system will deter all those who value financial privacy. Swiss Francs, Euros, Norwegian Kroner, Singapore Dollars and a whole range of currencies as yet do not share this surveillance risk. Discreet Swiss forex dealers have noticed a pattern of US dollar-trades amongst their high net worth clientele that does not make market sense -- is privacy the unknown factor?

A handful of privacy-conscious offshore banks have also begun employing a variety of tactical strategies that enable them to serve their customers without the requirement to report on them at the same time. Some had no choice but to "get out of the US" altogether. As quite a few offshore bankers know, the bullying and blackmail by the US authorities over US-based correspondent accounts can get quite intense.