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.
A bedrock legal
principle is that the accused stands innocent until proven guilty.
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
Caiado, who wears
jeans and a sports shirt with the sleeves rolled up, says he’s a
An ounce of prevention
is worth a pound of cure.
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.
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
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.
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