April 30, 2008

 

by Elwood Earl Sanders Jr.

The circumstances surrounding the fall of New York Gov. Eliot Spitzer is illustrative of how much liberty has been lost in the United States today. It seems that Spitzer’s monetary habits drew the attention of federal law enforcement to his sexual encounters. While I in no way condone unholy living, neither Spitzer’s sexual behavior nor his money habits were any business of the federal government absent evidence that they affected his governance of the Empire State. I have read none.

Currency controls are found in Title 31 of the United States Code. Rather than protect the financial privacy of depositors, the Orwellian-named Bank Secrecy Act requires financial institutions to disclose a number of specific cash transactions to the U.S. Treasury Department. This is how Spitzer came to the authorities’ attention. His bank alerted the Internal Revenue Service of several such transactions, according to reports, which led federal authorities to investigate and, ultimately, discover the prostitution ring. Title 31 regulates the use of currency within (and without) the United States. Any cash transaction of $10,000 or more must be reported by a financial institution to the IRS, and any “questionable financial activity” must be reported to the Treasury Department.

Trying to evade the reporting requirements carries hefty penalties. For example, Spitzer may be charged with what’s known as “structuring,” wherein someone attempts to get around the requirements by making multiple withdrawals of $10,000 or less, or, for example, by masking withdrawals in the form of cashier’s checks. The penalties can be severe — civil fines of as much as $100,000 and a felony conviction with a maximum term of five years in federal prison. Under the Patriot Act — also inaptly named: the true patriots were those with the courage to vote against it — the zeal of fighting money laundering by a banking official is a legitimate issue to raise in a job reference from a former supervisor about that official.

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