U.S. GOVERNENT DECLARES WAR ON CASH: "Whenever any form of government becomes destructive... It is the right of the people to alter or abolish it." [Declaration of Independence (1776)]. Using the "War on Drugs" as justification, the U.S. Government is tightening the screws on cash transactions. The fear is that the next step is a "cashless society," where surveillance is easy. Government bureaucrats don't like cash transactions. After all, cash is difficult, if not impossible, to trace. Cash makes it easier to do business "off the books" without paying taxes. In short, cash is a private way of doing business, and the United States Government doesn't like too much privacy. To fight cash, the United States Government has adopted legislation to discourage its use. The Bank Secrecy Act, for example, requires banks and other financial institutions to report cash transactions over $10,000 and any other "suspicious cash transactions." [Subsequently amended to lower the threshold level of "suspicion" to cash transactions over $3,000] The Act also considers money orders, cashier's checks and traveler's checks as "cash." Amendments to this Act enlist ordinary businesses for the war on cash. The new cash reporting form for business, Form 8300, even requires merchants to report "suspicious transactions" by their customers. No one is exempt, not even your attorney! The money you pay your defense attorney can now serve as the "smoking gun" to convict you of a crime. Section 1957 of the Money Laundering Control Act states that merchants who accept cash from customers they suspect of committing a crime may themselves be entering into criminal conspiracy. But if you refuse to do business with someone you suspect of a crime, you may be sued for discrimination! Forfeiture laws adopted in the 1980s give the federal government the right to seize cash "tainted" by drugs. Yet analysis by the Drug Enforcement AdministratHidden Agenda: Cancer Exposeof all cash in circulation is drug tainted. Does this make cash illegal? You be the judge! NEW DIRT ON MONEY LAUNDERING By definition, money laundering is any action you take to disguise cash tied to an illegal activity. Obviously, income tax evasion is an illegal activity. So, if you earn cash that you fail to report on your tax return, you're not just a tax evader, you're a money launderer. Money laundering now includes the deposit and/or use of cash on which taxes have not been paid, and violators are threatened with prosecution. And the maximum 20-year prison term and $500,000 fine for money laundering is far harsher than the maximum penalties for tax evasion. Moreover, convictions are far easier to obtain, since "money laundering" and "drug crimes" are inexorably linked in the minds of juries. By far, the most insidious money laundering crime is "structuring", defined as any act taken in order to avoid filling out a currency transaction report (Form 4789 for banks, Form 8300 for other types of businesses). This might seem a fairly trivial offense, but fines run up to $25,000 per violation, in addition to forfeiture of the funds involved. This statute, for all practical purposes, makes any attempt to protect financial privacy from government financial inquisitors unlawful. And because the structuring law is worded vaguely, not even Internal Revenue Service agents are sure what it means. It is clear from IRS regulations that a person depositing $2,900 in cash into an account on two consecutive days is "structuring" his transactions. But six consecutive $490 deposits may be considered structuring as well. The regulations don't address this specific possibility, or any of an infinite number of other possibilities. One of the first individuals prosecuted for structuring was Charles Scanio, an ordinary citizen who attempted to pay off a $13,000 loan in cash without filing a currency transaction report. The government never claimed that Scanio had any criminal intent. Even so, he was convicted of the offense, and his money was FORFEITED TO THE IRS. NEW CASH CRIMES The latest salvos against cash come in the form of 13 proposed anti-money laundering bills introduced in the current Congress. The most comprehensive bill is HR-26, the Money Laundering Enforcement Amendments. If enacted, this bill will: (1) Prohibit banks from informing customers of an investigation of their financial records by any government agency; (2) Permit the government to seize bank accounts or cash whose origins or transaction records were suspicious, without a trial; (3) Greatly expand the definition of "structuring" by making it illegal to arrange transactions to avoid IRS reporting requirements for money transferred outside the U.S. Currently, structuring is illegal only when it involves a U.S. financial institution; and (4) Require the Treasury Department to recall all $50 and $100 bills, and to study proposals for a dual currency; one to circulate inside the United States, another currency for use outside the country. HR-950, the Money Laundering Control Act, duplicates many of the provisions of HR-26, but would also: (1) Permit customs officials to conduct body searches, open mail, and inspect the private correspondence of anyone entering or leaving the United States; and to seize cash or monetary instruments it finds, all without a warrant; and (2) Require the Treasury to study proposals for a "more traceable" currency. HR-3326, the Drug Supply Reduction Act, contains the most incredible provision of all. It would permit the government to confiscate your car or boat if it contains any hidden compartments "not part of the normal vehicle configuration". Such compartments might conceivably be used to hide drugs or "illegal cash", according to the Bill's sponsors. (Do you own some tools you don't want to leave in the back of your pickup truck? Don't construct a "hidden compartment" to put them in, your truck might be seized!) MAGNETIC MONEY If the government can't end the use of cash overnight, the next-best solution from a bureaucratic perspective might be to require all citizens to use currency whose movements can be tracked. The first example of a new, "more traceable" currency, the $100 bill, was introduced in 1991. The new $100 bills contain a microscopic line of print circling the portrait in the center of the bill and a tiny thread running vertically down the left side of the bill. The bills also contain magnetized ink. New $20s and $50s were introduced in early 1992. The polyester thread running down the left side of the bill is interwoven with magnetic threads. Moreover, these threads are capable of being encoded with messages, a Social Security number, for instance. At least some U.S. banks are said to be already equipped with machines capable of "reading" the messages. Now that the new money has been introduced, the next step might be for an outright recall of the "old money". In 1989, a suggestion for a currency recall came from former Treasury Secretary Donald Regan, who recommended that all $50 and $100 bills be recalled and replaced with a new currency. The changeover should occur in a ten-day period. Regan proposed, and the old money would no longer remain legal tender after that time. Furthermore, Regan recommended that anyone turning in more than $1,000 in old bills be required to prove that all taxes on the cash had been paid, and that the cash had not been generated through illegal activity. Otherwise, the funds would be impounded by the IRS, and their former owner would face further investigation. Shortly after the Regan proposal was made public Senator John Kerry (D- Mass) introduced an act that called for machine-readable bar codes on all U.S. currency, so that all $20s, $50s, and $100s would be "more traceable". Kerry recommended that serial numbers on these bills be tracked by optical scanning devices such as those used in grocery store checkout counters. In this manner, perhaps in combination with a national ID card, the identity of the individual spending the currency could be ascertained. Today, the tools are in place to put into effect Regan's and Kerry's suggestions. If a sudden currency recall were to take place, it would presumably be justified as part of the "war on drugs". And once the old money had been recalled, the Treasury could announce that money laundering, for all intents and purposes, had been eliminated. .c.:A LICENSE TO PRINT MONEY But the recall could have a much more sinister purpose: the introduction of a two-tiered currency--a "domestic" currency to circulate in the United States, and an "international" currency to circulate abroad. The two-tiered system could also be justified as providing a permanent end to the money laundering problem. The real reason for the changeover, however, would have nothing to do with money laundering. The real reason would be to establish a two-tiered exchange rate for the dollar. At first, the values of the domestic and international dollars would be equal. However, the use of a currency that could not leave the country except under restricted conditions would permit the Federal Reserve and the Treasury to inflate away the government's gargantuan debts and unfunded obligations, using the power of the printing press. This would rapidly depreciate the value of the domestic currency against the international currency. A law on the books for nearly a decade makes this kind of debasement completely legal--and the U.S. dollar has already lost more than 90 percent of its value in relation to gold in the past 60 years. U.S. Public Law 96-221, the Depository Institutions Deregulation and Monetary Control Act of 1980 added "bills, notes, revenue bonds and warrants with a maturity date not exceeding six months...by a foreign government or agency thereof" to the list of items constituting "legal monetary reserve" for the U.S. money supply. In other words, it is perfectly legal for the U.S. government to simply buy or borrow a few trillion dollars' worth of foreign bonds denominated in the Russian ruble, Brazilian cruzeiro, or any other Third World currency. It could then use these "assets" as a "legal monetary reserve" in order to print as much currency as is required to meet the obligations for the welfare state. Moreover, the Fed could allow the international dollar to float in the international currency markets. U.S. Treasury securities issued for purchase by foreigners would be denominated in this new currency, perhaps even backed by gold. This would have the effect of greatly increasing foreign purchases of U.S. Treasury debt which have declined from net purchases of $75 billion in 1988 to less than $5 billion in 1991. Treasury securities held by U.S. citizens would be denominated in the virtually worthless, non-gold-backed domestic currency. Only selected banks would be authorized to exchange domestic dollars for international dollars, and the amount of currency that could be exchanged at one time could be made progressively smaller. The domestic dollar would become a "blocked" currency, no longer freely exchangeable in world markets. Currency recall could touch your life directly, even if you don't think you have anything to hide. Millions of citizens have perfectly legitimate reasons to hold cash. For instance, many people who experienced the Great Depression firsthand recall that thousands of banks failed during those years. Anyone who lost money in a failed bank, or fears that the government could someday violate current deposit guarantees, might prefer to keep his or her money in cash. If you think that there would be massive opposition to a new money conversion, opinion polls show otherwise. Market Facts, a market research company, revealed enormous public support for any currency exchange that was part of a fight against counterfeiting or drug trafficking. "Conservative" columnists such as William Safire have gone on record as favoring currency recall to fight money laundering. And when former Treasury Secretary Regan proposed his recall of all $50 and $100 bills, his suggestion met with virtually no criticism outside the alternative press. .c.:THE ULTIMATE BUREAUCRATIC GOAL One way for bureaucrats to do away with cash is to make possible substitutes very convenient. Today, credit cards and personal checks have eliminated most cash transactions. And tomorrow, electronic "debit cards" promise to eliminate the rest. With a debit card, purchases are paid for with a card read by a merchant's computer terminal. Your bank account is debited automatically for the amount of purchase and the merchant's account is simultaneously credited the same amount (minus a service charge). The process is neat, simple, and all the paperwork is done automatically. A paper trail on every item you purchase is created. But if you are making a purchase or contribution that you wish to keep private, then you have a problem. Debit cards are popular with merchants because they provide an instant, foolproof credit that is applied to their account. Credit card chargebacks and bounced checks are eliminated. Debit cards also permit a merchant to categorize his customers by what they purchase and how much they spend, allowing the merchant to direct his marketing efforts appropriately. Banks like debit cards because they can deduct a service charge for each transaction. Banks are already imposing service charges for use of automatic teller machines (ATMs), which are nothing more than debit card terminals. Marketing firms like debit cards since the profile created from individual purchases will create a much more detailed picture of consumer spending patterns than is currently available. And government bureaucrats like debit cards because they eliminate cash and permit much more detailed financial surveillance. Debit cards won't eliminate cash overnight. But their convenience will make them a hot product of the 1990s and beyond. A national debit card system is already in use in France. Canadian banks intend to launch a national debit card system as well. A recent agreement between a dozen of the largest regional ATM networks would set up a national debit card system that would allow consumers to instantly deduct purchases from their checking accounts anywhere they travel. In the near future, you will hear much more about debit cards. ------------------------------------------------ (This file was found elsewhere on the Internet and uploaded to the Patriot FTP site by S.P.I.R.A.L., the Society for the Protection of Individual Rights and Liberties. E-mail alex@spiral.org)