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There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems. He points out that the U

There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems. He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London. But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vanish. The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.

Spooky23 4y ago
Real estate is the ultimate legal grift in the US. The whole tax system is wired up to the benefit of real estate investors.
- mistrial9 4y ago
  further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.
  - Spooky23 4y ago
    Probably. How much of the middle class lifestyle in big metros is built on home equity?
fedreserved 4y ago
[dead]
lotsofpulp 4y ago
> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name. What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not. And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.
- wpietri 4y ago
  If you want to deposit that same cash in a bank, it's going to raise questions. Real estate is a bit of an exception here. For reasons explained in the article.
  - pyuser583 4y ago
    An innocent buyer would just say “I sold my home of 20 years to some company - Perwinkle LLC of Bermuda. Pretty strange, but not my problem.” The bank would report it, and in theory the feds could track down Periwinkle LLC. But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision. The US is obsessed with having a clean financial sector, but doesn’t care one jot or tittle about corporate transparency.
    - ethbr0 4y ago
      As separation of concerns, this sounds reasonable and efficient: why should it be the financial sector's job to weigh whether someone is good or bad? Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism). That the US (and especially certain states) permits opaque corporate structures is a different problem.
      - MomoXenosaga 4y ago
        I'd go further and say it isn't the job of Western countries to fix corruption. If Putin wants to fleece his people he can take his billions to a European bank.
        ethbr0 4y ago
        I'd ask a slightly different set of questions: (1) "Is it good for {country} if {country's corrupt leaders} are able to bank elsewhere?" (2) "Is it good for {bank elsewhere country} if they accept corrupt money?" (1) is probably not good for that country, but do other countries care? To some extent, this is just colonialism by proxy: extracting wealthy inequitably from a foreign country. Historically, few third party countries take issue with that, when they're the winners. (2) is where the more interesting point is. Does the country accepting the money net benefit, or net loss? Aka the London banking question in a nutshell. I'd argue that if money is political power (it is) and corrupt money can't be firewalled (it can't), then it's net loss. Inevitably and especially if we're talking lifestyle roots (e.g. property, establishing a home, etc), that corrupt money corrodes government and civil systems in the banking country. At minimum, because the wealthy corrupt people bring their expectations and behavior with them!
Havoc 4y ago
>He points out that the US financial system is squeaky clean. Then he is incredibly naive. See Wachovia and HSBC's US operations getting caught laundering for Mexican cartels This stuff is unfortunately pervasive in the global financial system
baybal2 4y ago
[dead]
csomar 4y ago
I don’t think the US financial system is anything close to clean but they might be strictly hostile to Russians and the government/regulators will not tolerate that. That boils down to US conflict with Russia. Europe didn’t have a beef in this until the Ukraine invasion.
- pyuser583 4y ago
  Read Kleptopia. It’s written by a British author and mostly about the British financial/legal system. I’m not sure how much of it is current in light of the sanctions. The big example it uses (90% of the book) is Khazakhstan. From what I’ve read more recently, many rich/middle class folks in Latin America are moving to the US. If their businesses so much as look at drug money, and then they so much as look at an American bank, they can wind up in a US prison for a long time. So they just move to America to get away from drug gangs. The US does not f*ck around with criminal financing.
super256 4y ago
The USA is the only economically significant country that opts out of participating in the Common Reporting Standard (CRS) data exchange. The USA claim that FACTA is enough. This puts the USA in the unique position where it only receives information from other countries through FACTA and its IGAs, without providing any information in return. Why doesn't it provide information in return? Well, only specific bank accounts are subject to FACTA: - Accounts of individuals who are not US taxpayers. - US deposit accounts of individuals and entities that are not US taxpayers to which US income flows. And certain types are exempted from the data agreement: - US corporate accounts, even when foreign companies hold these US accounts. - Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests). Example: A German has a custody account in the USA and holds German shares in it. This data won't be disclosed to Germany. You probably know where this leads to... If you think you are now in the need for an American corporate account, don't worry, we got you covered! Delaware offers setups without the need to file yearly lists of managers, owners (shareholders), directors, or members. In case this is not sufficient for you because tax evasion isn't enough, and you are doing some really shady business, don't look further than this weird US arm called “Puerto Rico”. It is common knowledge among wealthy (and fishy) Europeans and Russians to just park your money there. Banks like the Euro Pacific bank allowed you to keep your money safe, and even allowed you to trade stocks electronically through IBKR without any disclosure to anyone. (ok, maybe the EuroPac Bank was too well known for this because they had to close down, but don't worry, there are a bunch of alternatives like facebank). Combining a PR bank account with a Belize company is also very popular for money laundering. You know, Stripe doesn't allow banana republics, but for whatever reason PR is allowed there. The setup is to create a company in Belize with a heavenly tax rate of 0% and just laundering through it to your bank account in PR. This is mostly used for companies who straight up do illegal things, but you know, you can sell virtual stuff all day long and it scales infinitely. My personal opinion is that the USA doesn't want to disclose anything to third parties because they know too well that too much transparency would make them unattractive as the financial centre of the world. While they want to nail down US tax evaders at all costs, they have little motivation to fuck around with the billions of foreign capital in the US by providing too much information/support to foreign tax authorities.
alliao 4y ago
ever since US broke Switzerland by snooping via UK's help US determined to harbour all the world's dirty money... big fries only though and AML is just an extension to this.. SWIFT and Swiss don't just give up client data easily and yet they did due to US had exact names and details of every transaction, I recall some said fibre optic was tapped. too bad I left London soon after GFC there was a tonne of high quality gossip fun times.
meekaaku 4y ago
Honest question, where does this happen? If you are buying a house, the solicitor or whoever is dealing with legal/deed etc will ask where the money came from, don't they? In the UK atleast that seems to be the case. Lenders are fine as long as you can show your future income (eg by being employed), but not much about how you got your initial deposit money.
- deleted 4y ago
  [deleted]

Spooky23 4y ago

Real estate is the ultimate legal grift in the US. The whole tax system is wired up to the benefit of real estate investors.

mistrial9 4y ago
further, some say that the expansion curves in Piketty's "Capital in the 21st Century" are not across the whole economy, but that rapid inflated asset values in real estate in particular, are drivers.
- Spooky23 4y ago
  Probably. How much of the middle class lifestyle in big metros is built on home equity?

fedreserved 4y ago

[dead]

lotsofpulp 4y ago

> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name. What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not. And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.

wpietri 4y ago
If you want to deposit that same cash in a bank, it's going to raise questions. Real estate is a bit of an exception here. For reasons explained in the article.
- pyuser583 4y ago
  An innocent buyer would just say “I sold my home of 20 years to some company - Perwinkle LLC of Bermuda. Pretty strange, but not my problem.” The bank would report it, and in theory the feds could track down Periwinkle LLC. But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision. The US is obsessed with having a clean financial sector, but doesn’t care one jot or tittle about corporate transparency.
  - ethbr0 4y ago
    As separation of concerns, this sounds reasonable and efficient: why should it be the financial sector's job to weigh whether someone is good or bad? Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism). That the US (and especially certain states) permits opaque corporate structures is a different problem.
    - MomoXenosaga 4y ago
      I'd go further and say it isn't the job of Western countries to fix corruption. If Putin wants to fleece his people he can take his billions to a European bank.
      - ethbr0 4y ago
        I'd ask a slightly different set of questions: (1) "Is it good for {country} if {country's corrupt leaders} are able to bank elsewhere?" (2) "Is it good for {bank elsewhere country} if they accept corrupt money?" (1) is probably not good for that country, but do other countries care? To some extent, this is just colonialism by proxy: extracting wealthy inequitably from a foreign country. Historically, few third party countries take issue with that, when they're the winners. (2) is where the more interesting point is. Does the country accepting the money net benefit, or net loss? Aka the London banking question in a nutshell. I'd argue that if money is political power (it is) and corrupt money can't be firewalled (it can't), then it's net loss. Inevitably and especially if we're talking lifestyle roots (e.g. property, establishing a home, etc), that corrupt money corrodes government and civil systems in the banking country. At minimum, because the wealthy corrupt people bring their expectations and behavior with them!

Havoc 4y ago

>He points out that the US financial system is squeaky clean. Then he is incredibly naive. See Wachovia and HSBC's US operations getting caught laundering for Mexican cartels This stuff is unfortunately pervasive in the global financial system

baybal2 4y ago

[dead]

csomar 4y ago

I don’t think the US financial system is anything close to clean but they might be strictly hostile to Russians and the government/regulators will not tolerate that. That boils down to US conflict with Russia. Europe didn’t have a beef in this until the Ukraine invasion.

pyuser583 4y ago
Read Kleptopia. It’s written by a British author and mostly about the British financial/legal system. I’m not sure how much of it is current in light of the sanctions. The big example it uses (90% of the book) is Khazakhstan. From what I’ve read more recently, many rich/middle class folks in Latin America are moving to the US. If their businesses so much as look at drug money, and then they so much as look at an American bank, they can wind up in a US prison for a long time. So they just move to America to get away from drug gangs. The US does not f*ck around with criminal financing.

super256 4y ago

The USA is the only economically significant country that opts out of participating in the Common Reporting Standard (CRS) data exchange. The USA claim that FACTA is enough. This puts the USA in the unique position where it only receives information from other countries through FACTA and its IGAs, without providing any information in return. Why doesn't it provide information in return? Well, only specific bank accounts are subject to FACTA: - Accounts of individuals who are not US taxpayers. - US deposit accounts of individuals and entities that are not US taxpayers to which US income flows. And certain types are exempted from the data agreement: - US corporate accounts, even when foreign companies hold these US accounts. - Investment accounts and custodial accounts (of individuals and entities), even when they are a resident in the FACTA partner country. This is true, as long as the custody account doesn't have income flows into this accounts (eg dividends or interests). Example: A German has a custody account in the USA and holds German shares in it. This data won't be disclosed to Germany. You probably know where this leads to... If you think you are now in the need for an American corporate account, don't worry, we got you covered! Delaware offers setups without the need to file yearly lists of managers, owners (shareholders), directors, or members. In case this is not sufficient for you because tax evasion isn't enough, and you are doing some really shady business, don't look further than this weird US arm called “Puerto Rico”. It is common knowledge among wealthy (and fishy) Europeans and Russians to just park your money there. Banks like the Euro Pacific bank allowed you to keep your money safe, and even allowed you to trade stocks electronically through IBKR without any disclosure to anyone. (ok, maybe the EuroPac Bank was too well known for this because they had to close down, but don't worry, there are a bunch of alternatives like facebank). Combining a PR bank account with a Belize company is also very popular for money laundering. You know, Stripe doesn't allow banana republics, but for whatever reason PR is allowed there. The setup is to create a company in Belize with a heavenly tax rate of 0% and just laundering through it to your bank account in PR. This is mostly used for companies who straight up do illegal things, but you know, you can sell virtual stuff all day long and it scales infinitely. My personal opinion is that the USA doesn't want to disclose anything to third parties because they know too well that too much transparency would make them unattractive as the financial centre of the world. While they want to nail down US tax evaders at all costs, they have little motivation to fuck around with the billions of foreign capital in the US by providing too much information/support to foreign tax authorities.

alliao 4y ago

ever since US broke Switzerland by snooping via UK's help US determined to harbour all the world's dirty money... big fries only though and AML is just an extension to this.. SWIFT and Swiss don't just give up client data easily and yet they did due to US had exact names and details of every transaction, I recall some said fibre optic was tapped. too bad I left London soon after GFC there was a tonne of high quality gossip fun times.

meekaaku 4y ago

Honest question, where does this happen? If you are buying a house, the solicitor or whoever is dealing with legal/deed etc will ask where the money came from, don't they? In the UK atleast that seems to be the case. Lenders are fine as long as you can show your future income (eg by being employed), but not much about how you got your initial deposit money.

deleted 4y ago
[deleted]