I’m suspicious of the corporate embargo on Russia. What does this accomplish, really? If Netflix and OnlyFans block all Russian users, then worker productivity will surely go up. I mean actual productivity; not the bogus ad-driven makework that counts as US GDP these days. Essentially, we are doing Russia a favor.
But. What if we’re not doing this to manipulate Russians? What if the purpose of the embargo is to manipulate Americans?
Fifty years ago, there were no money laundering laws, no concept of clean or “dirty” money. “Currency” meant that cash was considered in its current state, source of funds notwithstanding1.
In the 1970s and 80s, the government manufactured a drug crisis and declared a War on Drugs. At the peak of the Drug war, an odd scandal transpired where the Bank of Boston was criminally prosecuted for failing to adequately report cash transactions to the IRS. This was not a big crime; transaction reporting requirements had been around since the Prohibition Era. Banks regularly ignored them, and regulatory agencies only sporadically prosecuted them.
The Bank of Boston was one such sporadic case. The punishment reflected the unseriousness of the crime – a $500,000 fine, probably less than a banker’s annual meal allowance.
Still, the media jumped on the story. The New York Times revealed that members of the Angiulo mobster family were customers of the bank. Angiulo transactions had nothing to do with the bank’s felony charge, but the papers were in muckraking mode and every bad thing the Angiulos did became the fault of Boston Bank. Murder? Gambling? According to the transitive property, the Bank of Boston was responsible for those things.
Newspapers went from publishing a few dozen money laundering stories per year, to running 228 stories in 1985. The tone changed too. Instead of a minor housekeeping error, the failure to report cash transactions became the equivalent of murdering babies…with drugs.
Other banks wanted to avoid the same hit job and responded accordingly: In 1985, an average of 68,000 currency transaction reports were filed each month. A year later, the number increased to 270,000 reports per month.
Publish enough scary stories about an imaginary stupid thing, and the plebes will freak out and fall in line. Money Laundering is destroying society! People demanded that the government Do Something, so politicians campaigned on promises to solve this imaginary problem.
And that brings us to today. The Money Laundering Control Act of 1986 didn’t end money laundering, and certainly did nothing for the War on Drugs. It was a bait and switch. The media redirected a reasonable fear of violent crime into a fear of unreported currency transactions, and convinced people that financial privacy is a Bad Thing.
Right now we are all freaked out about Putin, who is going to invade the US by way of Alaska as soon as he’s done with Ukraine. Conveniently, this fear can be redirected towards Russians, Russia sympathizers, and businesses that are failing to keep track of which customers fall into those categories.
It’s a lot of work to summon the outrage mob anytime the government wants control. Much easier to convince the masses that they need more oversight. Social media platforms should be required to submit activity reports to the government any time a user fails to denounce Russia. And internet companies act like they can flip a switch and geofence certain regions. What if Russians circumvent the geofence with a VPN, or Tor? Tech companies might be unknowingly funding Putin’s war! That would be the equivalent of money laundering. Extremism laundering, we’ll call it. Ban VPNs!
1. From Henry Dunning Macleod’s The Theory of Credit:
In Miller v. Race (1 Burr., 452), confirming Anonymous (1 Lord Raymond, 738), the Court of King’s Bench decided that Bank Notes have the Credit and Currency of Money to all intents and purposes. “An action would lie against the finder; that no one disputes, but not after the Note had been paid away in Currency. An action would not lie against the defendant, because he took it in the course of Currency: and, therefore, it could not be followed into his hands. It never shall be followed into the hands of a person who bona fide took it in the course of Currency. A Bank Note is constantly and universally both at home and abroad, treated as Money, as cash: and it is necessary for the purposes of commerce, that their Currency should be established and maintained.”
Lawrence T. Nichols. Social Problems as Landmark Narratives: Bank of Boston, Mass Media and “Money Laundering”, Social Problems, Vol. 44, No. 3 (Aug., 1997), pp. 324-341