In reality, government operatives from a host of three-letter agencies are working to develop large networks of informants. These are mostly folks who deal with other people and are in the know-- the bartender in Beirut, the luxury car dealer in Bogota, the money changer in Riyadh, the hotel manager in Shanghai, etc.
These assets are constantly being pumped for information-- who did you see, what were they buying, where did they go next, who were they with, what were they discussing, etc. And in exchange, informants typically get paid.
In the United States, there are a number of laws on the books which are theoretically supposed to prevent the three letter agencies from spying on US citizens. Naturally, the government dispenses with such inconvenient formalities in its sole discretion, and Congress frequently passes legislative exceptions (USA PATRIOT Act, NDAA, etc.)
There's a little known division of the Treasury Department called the Financial Crimes Enforcement Network (FinCEN) whose mission is to "to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems."
Here's a government agency rule of thumb: The more noble-sounding the mission statement, the more villainous the agency.
FinCEN is basically the CIA of the financial system. But unlike the CIA which is technically not allowed to spy on US citizens and typically has to pay informants, FinCEN has complete legal authority over US persons. And they've managed to turn the entire financial system into the world's largest network of informants.
Simply put, your banker is an unpaid, often unwilling spy of the US government.
Case in point-- last week, FinCEN announced that a California banker had been slapped with a $25,000 penalty for notifying a customer who had become the subject of a federal "Suspicious Activity Report" or SAR.
SARs are required to be filed by bankers, brokers, money changers, check cashers, and even casinos. You may have been the subject of dozens of SARs and never know, because it's against the law for your banker to notify you.
As for what is considered "suspicious", there is no clear guidance on this. It could be anything-- depositing or withdrawing too much cash, ATM withdrawals in foreign countries, unusual fund transfers into your account. Basically, anything that's a departure from a completely sterile existence.
What's more, financial institutions frequently have a minimum quota of SARs to fill out, and those who do not comply face severe penalties. Financial institution employees can even face CRIMINAL charges for failing to file a SAR.
Now, your banker may be a good guy, but do you think s/he's willing to do jail time? No chance.
This is how normal, everyday people end up on government watch lists or have their assets frozen 'pending investigation'. And with the recent passing of the National Defense Authorization Act and its catch-all terrorism clauses, we can only expect this to get worse.
It's truly despicable when you think about it-- the federal government creates a currency monopoly at the point of a gun (try buying your groceries with Swiss francs). Then they make it nearly impossible to function in this world without using the banking system, and then turn the entire banking system into a network of spies.
If you want to reduce these risks and dull the impact of the coming wave of SAR-driven civil asset forfeiture, it would be a really smart move to open a foreign bank account.
Nearly every country in the world has anti-money laundering rules now. Some, are easier than others. But the bottom line is that you'd be moving your money out of the jurisdiction where you live, and into a place where those agencies have zero (or limited) authority.
And if you want even more financial privacy, I'd strongly recommend holding precious metals in an overseas vault.
