Friday, September 26, 2014

Chase Bank 'De-Risks' a Porn Star's Bank Account and What It Means for Your Account

By Mark Nestmann
Recently, The Economist reported that Chase Bank closed the accounts of hundreds of porn stars.
Among them was blond bombshell Teagan Presley, star of Just Over 18 #10 and more than 70 other porn videos. Chase informed her it had closed her account because she was prominent in the “adult” business.
Teagan Presley’s loss of banking privileges is an example of a much larger trend. It’s called “de-risking,” the decision by a bank or other financial institution to end a relationship with a customer to avoid possible embarrassment or, worse, government witch-hunts.
In the last few months, US banks have closed down tens of thousands of
accounts of “politically incorrect” customers. They include gun sellers, coin dealers, fireworks suppliers, dating services, US citizens living abroad, Muslim students, money services businesses, diplomats from third-world countries, and, yes, porn stars like Teagan Presley.
It’s not really surprising that US banks are de-risking as fast as they can. They must follow strict “know your customer” rules and also report an ever-larger list of supposed “suspicious transactions” to a secretive Treasury bureau called the “Financial Crimes Enforcement Network,” or FinCEN.
If a bank perceives a customer as “high risk,” it’s safer to close their account than to possibly face stiff fines and even criminal prosecution. And Congress keeps passing new laws requiring ever-greater levels of surveillance over our financial transactions. Is it really a surprise that a growing number of banks refuse to provide banking services to a growing number of categories of customers?
FinCEN doesn’t like this trend, because when people or companies don’t use regulated financial institutions like banks, their transactions become less visible. As FinCEN director Jennifer Calvery put it in an August 12 speech:
[J]ust because a particular customer may be considered high risk does not mean that it is “unbankable” and it certainly does not make an entire category of customer unbankable….
The only way we can do our job is if businesses actually have bank accounts and their transactions are monitored and reported to FinCEN, as appropriate.
I suppose it’s nice that Ms. Calvery understands there’s a problem, but that doesn’t make it any easier if you – or your business – is the one being de-risked. Without a bank account, about the only practical way you can exist is in the parallel economy or “black market.” That may avoid regulatory scrutiny, but it’s not a very convenient way to live or do business.
De-risking, of course, isn’t limited to US banks. Indeed, tens of thousands of foreign banks have de-risked themselves by “firing” all of their US customers. They’ve decided that the risks of dealing with US customers outweigh the benefits.
But other foreign banks have decided that this phenomenon presents a once-in-a-lifetime opportunity. They’ve invested millions of dollars (yes, that’s what it costs) to become compliant with laws like FATCA, Sarbanes-Oxley, and countless others. In some cases, they’ve set up entirely new corporate structures simply to deal with US clients.
If you don’t want to take the chance that you or your business might be the next Teagan Presley, you might want to consider checking out non-US alternatives. In addition to lowering the likelihood you’ll be de-risked, you’ll also get better interest rates. For instance, I'm earning 3% on a one-year US dollar CD in a very safe Panamanian bank. That’s more than 2% more than I’d get in a US bank. You’ll also lessen the likelihood of getting caught in a “bail-in” at a US bank like the ones we saw in Cyprus.
Of course, you’ll still have to go through a lot of paperwork to set up your offshore account. But the banks that offer account services to US citizens and residents have a great deal invested in their business models. They’re committed to the US market and aren’t likely to de-risk anyone else simply because of their US status.
Mark Nestman writes the Nestmann Notes.

5 comments:

  1. Maybe the E-con-omist can look into this:


    How Goldman Controls The New York Fed: 47.5 Hours Of "The Secret Goldman Sachs Tapes" Explain

    One has to either laugh, or weep, because that statement alone merely confirmed what we said a year ago when we said that "the judicial branch is also under the control of the two abovementioned entities", namely the NY Fed and Goldman.

    In any event, the Segarra case disappeared from the public eye, and was promptly forgotten by the just as corrupted media and the public.

    At least until this morning, when ProPublica's Jake Bernstein revealed something quite stunning: "Segarra had made 46 hours of secret audio recordings to bolster her case about what was happening at Goldman and with her bosses.

    In a partnership with This American Life, Bernstein dissects the tapes, which portray a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority. For example, in a meeting recorded the week before she was fired, Segarra's boss asks her at least seven times to change her finding that Goldman was missing a policy to handle conflicts of interest, saying, "Why do you have to do this?"

    The full ProPublica story can be found here.

    And for those who are time-constrained, and would rather just read the Cliff Notes (the ending should be known to everyone by now), here is Michael Lewis with an op-ed in Bloomberg summarizing the banker-controlled farce the entire US system has devolved to:

    "The Secret Goldman Sachs Tapes"

    http://www.zerohedge.com/news/2014-09-26/how-goldman-controls-new-york-fed-475-hours-secret-goldman-sachs-tapes-explain

    ReplyDelete
  2. This seems to be the new method of fascism where the government doesn't directly trample on rights, but instead uses government friendly banks and crony capitalist corporations as a tool to stifle public opinion and ostracize citizens who don't hitch their wagon to the new socialist standards of decency. The former SNL comedian Rob Schneider was just dropped from State Farm insurance commercials because of his politically incorrect opinions on vaccines.

    ReplyDelete
    Replies
    1. Sorry to say but it is a very old method.

      Delete
    2. The only thing new is the target. Despite the changes of peoples views of porn compared to the late 80s and early 90s it's very unlikely someone with a high profile will come out to defend a porn star. A liberal will be slammed by their feminist base and a conservative who most likely wouldnt bother but if they did their religious basis would scream. Defending a porn star isn't political viable for them and the state knows this.

      Delete
  3. On the bright side, the USG "witch-hunts" now makes it more difficult for them to spy on the financial activities of those they most want to spy on.

    ReplyDelete