Most wars do not turn out the way the people who started them intended. Setting aside the hot military wars, look at the consequences of the “war on drugs” and the “war on money laundering and tax evasion.” The global war on money laundering and tax evasion has failed in the three decades since it began in earnest, and it is now on its way to undermining the rule of law around the world, the legitimate role of financial institutions, and the right of sovereign governments to determine their own tax policies.
The new anti‐money‐laundering laws and regulations have resulted in millions of Americans who live abroad and others living outside their home countries being unable to get bank accounts and other financial services in the countries where they live. Rather than protecting people who need financial services, government regulations are increasing their misery. Banks avoid potential government fines by dumping customers, whose source or use of their money is too difficult to figure out. International money‐laundering expert, Burke Files, reported to me from Mombasa last week that in central Africa “more and more money is leaving the banking system to seek alternative remittances. The money is now out of the system and being shipped in bulk currency, and the remitters are being forced to pay about 9 percent — from what was 3 percent to 4 percent.” The Financial Stability Board based in Basel, Switzerland, released a damning report last week on the decline in corresponding banking as a result of excess money‐laundering regulations.