--- Date: Mon, 10 Nov 2003 22:44:11 -0600 Subject: Re: [Politech] U.S. Treasury invokes PATRIOT Act against jewel industry [priv] Cc: politech@private To: Declan McCullagh <declan@private> From: Jim Davidson <davidson@private> In-Reply-To: <6.0.0.22.2.20031107180244.02ef32a0@private> Dear Declan, These Treasury rules have been in the development phase for quite a while. They were submitted for public comment in February 2003 as I recall, and were expected to be in place by Summer 2003. The rules establish that gold and other precious metals, gemstones, and jewelry are excellent stores of value. Evidently, the US Treasury has not forgotten this fact, in spite of Nixon taking the last tie to gold away in 1971. Unfortunately, the rules have a large element of insanity to them, paired with a healthy dose of inanity. I admit that these rules may have changed from the ones I was asked to review last Winter. One of the obvious tips for precious metals dealers and jewelers is that the rules require a dealer who buys from the public and sells to the public beyond $50K per year to maintain detailed money laundering "know your customer" or, to convert from Biblical language, "screw your customer" documentation. The quick workaround is to split any business into two pieces, half of which only buys from the public and the other half of which only sells to the public. Doing so would completely bypass the money laundering paperwork requirements. Equally obvious, it would leave the businesses both open to the sort of capricious application of "justice" that the government has become famous for. Another of the interesting features of these rules was the obligation for automobile dealers to register as precious metals dealers, owing to the large amount of platinum in the catalytic converters of their vehicles. Gnarly. The rules themselves point up the unconstitutional vagueness of the USAPATRIOT Act, which fails to establish what is or is not a regulated business under its terms, and leaves to government agencies to promulgate rules hoping to spell such things out. The rules also point out the hopelessness of the challenge the government has set itself. It can certainly destroy the domestic precious metals industry, as it has destroyed the domestic airline industry, or it can simply ignore the fact that money is converted into and out of gold at a fantastic rate every day. My guess is that the socialist-Republicans will choose to destroy whatever they cannot control. Like they did with the steel tariffs and the incipient trade war that has brought on, it seems clear that these tax-and-spend Republicans are very different from the earlier mold. These new Treasury regulations remind me that there was once a moratorium on new government regulations instituted by a guy named Reagan, and lifted by his successor, Bush the elder. Regards, Jim http://www.ezez.com/ _______________________________________________ Politech mailing list Archived at http://www.politechbot.com/ Moderated by Declan McCullagh (http://www.mccullagh.org/)
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