Note: Further update September 15, 2014 introducing the idea of “Third Party Confiscation”. Updated September 12, 2014 – Reader comments of “indirect confiscation added” – if you can think of more, please add them to the comments and I will add them to the post. Thanks: NotAmused and Mark Twain.

American shakedown: Police won't charge you, but they'll grab your money http://t.co/fAuSlA6EF8 – #OVDP (hospitality) for Cdn #Snowbirds

— U.S. Citizen Abroad (@USCitizenAbroad) September 11, 2014

Direct Confiscation – Let me count the ways

The above tweet references an article which appeared at CBC.ca and was written by Neil MacDonald who is the Senior CBC Correspondent in Washington. The article is about the increasing U.S. use of “civil forfeiture” to confiscate people’s assets. (There have been previous Isaac Brock posts on the use of civil forfeiture here, here and here.)

To put it simply:

Civil forfeiture is a process where the government simply comes in and directly takes your property and money. As the article in the above tweet notes, cash is particularly susceptible to arbitrary confiscation.

But, what about the confiscation of cash according to U.S. law? For example, what about the confiscation of cash pursuant to Title 31? This issue was recently explored as comments to a blog post about the backlog of renunciations in Toronto.

• somewhere says Aug 29, 2014 2:10 am

  @Phil..there are already exit controls in place. They just aren’t overt.

  1. CBP “interviews” people on the jetway or at border crossings enforcing Title 31 violations -i.e. not reporting $10,000 the country.

  2. They regularly scan names on departing flights. IRS issuing Writ ne exeat republica anyone? See:

  http://www.forbes.com/sites/jayadkisson/2014/02/07/a-wedding-and-the-writ-of-ne-exeat-republica/

  and

  http://www.irs.gov/irm/part5/irm_05-021-003.html

• Phil Hodgen says Aug 29, 2014 7:21 am

  Every — and I do mean every — Los Angeles to Dubai flight I have ever taken has a group of uniformed officers checking people for Title 31 violations. To other destination? Meh, nope. Those guys are not checking anyone.

It’s based on a simple principle: “We will do it because we can”. (Interestingly President Clinton noted that this is the least morally defensible reason for a course of conduct.)

Indirect Confiscation (or in some cases clearly intentional) – Let me count the ways:

To continue the context of confiscation, the U.S. government is confiscating the assets of Americans abroad through:

– PFIC taxation

– devaluation of the U.S. dollar

– taxing the devaluation of the U.S. dollar

– Obamacare surtax

– the Exit Tax

– the necessity to pay for expensive compliance costs

– Double taxation

– OVDP penalties

– Streamlined complexity

– FBAR penalties

– FATCA penalties (added courtesy of Mark  Twain)

– Medicare and Social Security penalties (added courtesy of NotAmused)

– Social Security (not available to many Americans abroad)

– No right to vote for certain Americans abroad

… and more

Third Party Confiscation – The U.S. Government Encourages Third Party Asset Confiscation

This is an “unintended consequence” of FATCA. FATCA requires a “hunt for American Citizens”. Once discovered, both foreign governments and criminal organization may seize their assets. See the following post at Citizenship Solutions which discusses how U.S. citizens in Saudi Arabia may lose their property courtesy of the Saudi Government.

But, I digress. To get back to the original article, which should be read by anybody planning on visiting the United States of America:

The article includes:

Seizing suspected drug money has been legal here for decades, but after 9/11 police acquired a whole new set of powers and justifications. And they set about using them for profit.

The Washington Post this week reported that in the past 13 years, there have been 61,998 cash seizures on roadways and elsewhere without use of search warrants.

The total haul: $2.5 billion, divided pretty much equally between the U.S. government and state and local authorities (hence the Kafkaesque “equitable sharing” euphemism).

Half of the seizures, according to the Post, were below $8,800. Only a sixth of those who had money taken from them pursued its return.

Some, no doubt, were indeed drug dealers or money launderers and just walked away from the money. Others just couldn’t spare the expense and time of going to court.

Of those who did, though, nearly half got their money back, a statistic that fairly screams about the legitimacy of the seizures.

So does another fact: In many cases, authorities offer half the money back – money they’d claimed was proceeds of crime. And when they do issue a cheque, they almost always insist their victim sign a legal release promising never to sue.

It would also appear police like to target minorities, who tend to be cooperative and less likely to hire a lawyer.

Civil rights advocates have documented all sorts of outright legal theft:

• The (minority) businessman from Georgia who was relieved of $75,000 he’d raised from relatives to buy a restaurant in Louisiana.
• The (minority) church leaders who were carrying nearly $30,000 from their Baltimore parishioners to carry out church activities in North Carolina and El Salvador.
• The young college grad with no criminal record on his way to a job interview out West who was relieved of $2,500 lent to him by his dad for the trip.

News outlets here have reported many such abuses over the years. But the Washington Post’s latest investigation exposes money-grabbing as big business.

It involves a nationwide network of enforcement agencies (except in the few states that have banned it) that operates with the help of a vast private intelligence service called “Black Asphalt” (police forces pay an enrolment fee of $19.95). The network uses consultants and trainers who either charge fees or operate on contingency, keeping a percentage of cash seized by their police pupils.

Police forces use the money to finance their departmental budgets, sometimes spending it on luxury vehicles, first-class tickets to conferences, and lavish quarters. They regard the money as rightfully theirs. One prosecutor used seized cash to defend herself against a lawsuit brought by people whose cash she seized.

It’s just human nature, really.

Give police the legal ability to take someone’s money, and to claim it’s in the national interest, and then tell them they can keep a nice chunk of it, and what other result could there be?

Travel advice

So, for any law-abiding Canadian thinking about an American road trip, here’s some non-official advice:

Avoid long chats if you’re pulled over. Answer questions politely and concisely, then persistently ask if you are free to go.

Don’t leave litter on the vehicle floor, especially energy drink cans.

Don’t use air or breath fresheners; they could be interpreted as an attempt to mask the smell of drugs.

Don’t be too talkative. Don’t be too quiet. Try not to wear expensive designer clothes. Don’t have tinted windows.

And for heaven’s sake, don’t consent to a search if you are carrying a big roll of legitimate cash.

As the Canadian government notes, there is no law against carrying it here or any legal limit on how much you can carry. But  if you’re on an American roadway with a full wallet, in the eyes of thousands of cash-hungry cops you’re a rolling ATM.

The comments are interesting.

Conclusion:

It’s about confiscation, stupid!!

That’s the:

“FATCA Of The Matter”