A Merrill Lynch banker has been indicted on charges of helping clients move undeclared money abroad. By using a few simple and free hawala privacy tips he could have drastically strengthened his criminal defense and perhaps even avoid arousing suspicion in the first place.
[pullquote]A bedrock legal principle is that the accused stands innocent until proven guilty.[/pullquote]BLOOMBERG REPORTS
Just before dawn on a cool June morning, six submachine-gun-wielding federal agents charged into Alexandre Caiado’s Sao Paulo apartment. After arresting him, they hustled Caiado into a pickup truck for a 30-block drive to Merrill Lynch & Co.’s office, where he had been working as a private banker for two years.
As the agents scoured Caiado’s desktop computer, Mary Livingston, a lawyer for Merrill, sat down alone with Caiado. “She gave me very specific instructions,” says Caiado, recalling the scene in 2006. “I wasn’t supposed to say what I really did.”
Prosecutors charged Caiado with arranging illegal fund transfers for Merrill clients -- part of what has become a four- year investigation into bankers helping clients secretly move undeclared money abroad to evade Brazilian income taxes. ...
“I kept trying to figure out what I did wrong,” says Caiado, in his first interview ever with journalists. “It was Merrill Lynch, one of the most respected places to work on the planet. They were emphatic about the fact that it was OK to transfer money abroad.”
Caiado, who wears jeans and a sports shirt with the sleeves rolled up, says he’s a scapegoat.
[pullquote]An ounce of prevention is worth a pound of cure.[/pullquote]PRIVACY TIPS
In this interview with Bill Rounds of How To Vanish we discuss the Merrill Lynch banker's case and provide three powerful tips on how to protect your privacy when engaging in legal hawala transactions.
Bill has contributed before with Hawala Banking And Currency Controls Part I and Part II. These privacy tips would also be helpful for those who are implementing the strategies found in the Tax Domicile Report.
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1. Advantageously use the $10,000 reporting limit. When you cross borders there is often a safe haven of having to declare only amounts of cash or monetary instruments in excess of $10,000 per person per crossing. If you, family and friends travel frequently then availing yourself of this limit can quickly add up to material amounts.
2. Use encryption. Encrypt email. Encrypt files. I find using TrueCrypt and Dropbox to be a potent duo for encrypting and transferring files.
3. Jurisdictional arbitrage. Different jurisdictions have different privacy laws and free speech protections. You can use the differences, multiple jurisdictions and information technology to leverage your defensive position and make it exponentially costly for nefarious individuals to breach your privacy in the first place.
For example, England may throw you in the pokey if you do not disclose an encryption key in contrast to the United States where you often do not have to disclose an encryption key.
Iceland recently enacted extremely strong legislation to protect free speech that was almost entirely written by the team at Wikileaks. By encrypting and bouncing data around the globe which resides in the cloud you can make the acquisition of your personal information without your consent extremely costly in terms of time, money and legal process.
The goal is to protect your data and have it reside safely and out of reach in the cloud. If costumed thugs break into your office wielding submachine guns then they will find nothing useful. By using anonymous web surfing techniques such as VPNs or proxy servers you can obfuscate the path to your data.
A bedrock legal principle is that the accused stands innocent until proven guilty. While it is possible that Mr. Caiado did engage in illegal conduct we should keep in mind that the case has not been proven beyond a reasonable doubt and therefore Mr. Caiado is presumptively innocent.
Additionally, unlike real criminals who lie, steal, murder and intimidate, even costumed ones wielding submachine guns, even if Mr. Caiado engaged in the alleged illegal conduct there is no victim. None of the allegations are for charges of using violence or intimidation against innocent people or their legitimately acquired property.
But as quantitative easing increases, the State becomes hungrier and currency controls are ratcheted up there will be increasingly large amounts of innocent behavior that is criminalized by various costumed criminal gangs to extort holders of capital. But the cost of protection has dramatically fallen and jurisdictions like Iceland and Montenegro are arising and catering to the productive members of society.
By starting early and taking proactive steps to engrain these privacy tips into your habitual activities you will be in a better position to avoid arousing suspicion and if in the unfortunate and unlikely event there is a criminal case brought your defense will be that much stronger. An ounce of prevention is worth a pound of cure.