Thursday 13th October 2005 AD
"THE TRANSFER OF VALUE BETWEEN INDIVIDUALS"

Today, an e-mail from an Australian friend; "Phil, you have to read this article in the Age".  Naturally the headline caught my attention, "LAW TO CHECK ON BULLION".

Marc Moncrief, banking reporter for the Melbourne Newspaper went on; "An ancient method of underground banking may account for the surprise inclusion of bullion dealers among the first targets of new laws against money laundering."

The article read on, "PricewaterhouseCoopers partner Malcolm Shackell said bullion, along with gems and precious metals, was often used in "hawala" banking.  Justice Minister Chris Ellison announced on Tuesday that new laws to curb money laundering would be rolled out in two tranches.   It had been expected that the financial sector would be the first targets. But Mr. Ellison said the gambling sector and bullion dealers would be included, along with lawyers and accountants.  The second tranche will extend to real estate agents and jewellers and will cover other activities of accountants and lawyers." Marc Moncrief.

What is this 'Hawala Banking'? Hawala, the 'Transfer of Value Between Individuals' is nothing new; it has operated for thousands of years and is the basis for all modern banking settlements.  It is a payment network that operates just like Western Union, Thomas Cook and Travelex, only it is cheaper, faster, more effective and unregulated by modern government banking regulation.

In my mind this article raises some questions;"An ancient method of underground banking" reads the article.  Ancient banking operated on the trust and honor system.  Modern banking regulation, as we know it today, has only existed for the last 100 years, and particularly in relation to "money laundering" in the last 20.  If banking regulation didn't exist in the past, how could 'ancient banking' be also 'underground'?

We have commented in the past that whenever gold takes a run, as predictable as Swiss clockwork, the media fires up with its anti-gold commentary.  As the gold price reaches an 18-year high, why is the word 'bullion' being cast in the same sentence with words like 'money laundering', 'underground', 'targets' and 'new laws', if not other than to cast a negative perception?

According to the full article, new Australian 'anti-money laundering' laws are to include the new regulation of jewelers, gem dealers, real estate agents, accountants, and lawyers.  When does a real estate man or a gem dealer 'doing a deal' cross over to becoming a 'money launderer'?

What makes government so scared of gold?  Where is the line crossed between the 'war on money launders' and the 'invasion of personal financial privacy'? In the long run, will government be successful in regulating the Transfer of Value Between Individuals?

Best Regards  - Philip Judge pjudge@anglofareast.com