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Avoid making suspicious withdrawals from a bank account

Posted by John Reed on

An AP story about former Speaker of the House Denny Hastert says he has been charged with one count of evading bank regulations as he withdrew tens of thousands of dollars at a time to make extortion payments.

Not illegal, but you must disclose over $10,000

I have been telling my readers there is nothing wrong with moving tens of thousands of dollars or more offshore. But that banks must disclose it to the U.S government and if you have cash or any financial instrument like a check made out for $10,000 or more, you must declare it when you cross the border.

So just take a blank check and fill it out after you cross. Or take $20,000 or whatever in cash and just tell them you have it.

Tell the truth

They will want to know why. So tell them the truth. That’s what I have done when I went to Canada on a number of occasions. I even wrote a web article about it because the border guards ask accusatory questions and I was afraid my readers might feel like they should lie.

Do NOT ever do that. It can get you banned from Canada forever, and your money confiscated. One of my readers took $40,000 in US cash across the border, did not declare it and got caught. Jesus H. Christ on a crutch!! A Canadian lawyer told me they could have confiscated it. Lucky for him they just gave him a warning.

Hastert was charged not only with evading banking regulations, but also with lying to the FBI when asked why. Martha Stewart did not go to jail for trading on undisclosed inside information, but for lying about it.

SAR

So what’s up with Hastert being charged with evading bank regulations? I asked my wife who has been a U.S. bank regulator for about 30 years. “AP is not telling you the whole story,” she said. He may have been taking out amounts like $6,800 or some such to stay under the $10,000 amount that would trigger the bank reporting it to the U.S. government, but doing it frequently. That would likely trigger a suspicious activity report (http://en.wikipedia.org/wiki/Suspicious_activity_report) by the bank to the FBI. If people want to withdraw $20,000 say for a legal reason, they just withdraw it all at once. Withdrawing high, four-figure amounts repeatedly, however is suspicious.

The Wikipedia article I just gave you a link to says a transaction that warrants a SAR is,

“…generally is any financial transaction that does not make sense to the financial institution, is unusual for that particular client or appears to be done only for the purpose of hiding or obfuscating a transaction.”

It’s stupid to try to hide legal activity—and illegal—a felony no less!

So, dear hyperinflation readers, follow my advice to get your rainy-day savings out of the USD, but do not lie about it or try to conceal it because of some nutty paranoia or hatred of the government.

Are you engaging in illegal activity by following my advice? Hell, no! Will that behavior be illegal later if and when we get hyperinflation? Almost certainly yes, but not retroactively. In fact the government officials during hyperinflation learning you followed my advice before the ’flation hit the fan would likely say to you unofficially, “I wish I had done that, but you’re good. Just don’t do it anymore as long as the capital controls are in effect. Have a nice day.”

Here’s another pertinent web article of mine. “A financial Berlin Wall is going up and you are on the wrong side of it:” The key phrase there is “going up.” Until it’s up, getting your money out is NOT illegal, just smart.

If it doesn’t make sense, walk

One final point. I was talking to some lawyers on the phone recently who wanted me to do an expert opinion on a real estate investment. Apparently my report was to be some sort of CYA document. I asked what the structure and purpose of all the complexity was. They declined to answer saying it was outside the scope of my report. I insisted using phraseology like in the above Wiki definition—any financial transaction that does not appear to make sense…explaining that I am 68 and I have been around the block many times in real estate and that one of the things I learned and taught my readers is if at any time you encounter something that does not make sense in a deal, stop, and demand to know why the thing that does not make sense is happening.

If you get no satisfactory explanation, you walk away immediately. Anything along the lines of “you don’t need to bother your pretty little head about that” is unsatisfactory. The lawyers said their complexity was for asset protection. I tried to write a book about that once. I abandoned it after concluding the only totally honest, moral, legal way to protect assets was bankruptcy exemption planning. These guys were doing that but also—suspenders and belt like—adding offshore trusts and such. I turned down the assignment.

The first time I sold a property, the buyer was paying all cash and did not want to inspect the property before buying it. Turned out he was a shill for a local S&L that had to buy my property so they could create a drive-through window. I sold too cheap.


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