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Kibbe on Liberty
Ep 354 | The Banking System Is Being Weaponized | Guest: Jorge Jraissati
00:46:31
Matt Kibbe sits down with Jorge Jraissati, president of Economic Inclusion Group, to talk about this little-understood means of censorship that is a growing threat to individual liberty.
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- [00:00]
Matt Kibbe
Welcome to Kibbe on Liberty. I'm talking to my friend Jorge Jarasati, president of the Economic Inclusion Group. The Economic Inclusion Group. And we're going to talk about debanking and how the banking industrial complex colluding with government agencies may well be giving.
- [00:18]
Free the People Host
Your private financial information to some tyrant.
- [00:21]
Matt Kibbe
Halfway across the world. Check it out. Foreign. Welcome to Kibby on Liberty. Jorge, good to see you again.
- [00:58]
Jorge Jarasati
It's very good to see you.
- [00:59]
Matt Kibbe
Yes.
- [01:00]
Jorge Jarasati
After Mexico.
- [01:01]
Matt Kibbe
After Mexico. We were just in Mexico City at the Universidad de la Libertad and we were talking about your work on financial privacy and debanking, which to me is a much bigger issue than I think people appreciate.
- [01:18]
Jorge Jarasati
Exactly.
- [01:20]
Matt Kibbe
It's a First Amendment issue. It's a freedom fighter issue. And I want to get into that. But we were talking before we went live about your story. I think I first met you in 2017. Does that sound about right?
- [01:34]
Jorge Jarasati
Probably, yes, most likely.
- [01:36]
Matt Kibbe
And we were. Maybe it was in New York, but maybe even before that we did a panel together about Nicolas Maduro and his. At the time, at the. At the height of the starvation in Venezuela. And you're a born Venezuelan?
- [01:53]
Jorge Jarasati
Yeah, definitely.
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Matt Kibbe
That's right. But your parents are from. Your grandparents are from Lebanon and Italy.
- [01:59]
Jorge Jarasati
Yes, my grandparents from my father's side are Lebanese, from my mother's side, Italians, and both went to Venezuela and they met in Venezuela, my parents there.
- [02:08]
Matt Kibbe
Yeah. And most people probably don't know this, but at that time, Venezuela was. Was a booming, prosperous country, producing a lot of oil, relatively free compared to the rest of Latin America.
- [02:24]
Jorge Jarasati
Yeah. From 1920 to 1980, we had the highest GDP per capita growth of any country.
- [02:30]
Matt Kibbe
Yeah. Yeah.
- [02:32]
Jorge Jarasati
By 1970s, we were at top 20 economy. We used to be the richest economy in Latin America, or GDP per capita was two and a half times the average of the region. One of the most stable currencies up until the 60s. And then everything became a problem.
- [02:50]
Matt Kibbe
Yeah.
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Jorge Jarasati
And yes, when you and I met, I was starting to raise awareness about this because at the time in 2017, most Americans were not aware about the collapse of Venezuela or the magnitude of the problem. And you are right. We had a panel, I believe in Maryland University. I'm not sure. And then definitely we saw each other and we did interview at NYU at the time. Yeah, I was 21 at the time.
- [03:14]
Matt Kibbe
And you had been, you had. You had emerged as an outspoken critic of the Maduro regime. And I'm sure I asked you at that time, but have you been able to go back? Can you go back to Venezuela.
- [03:27]
Jorge Jarasati
I cannot go back to Venezuela, honestly, it's too risky. So I have no formal limitation, but it's too risky, I believe because of the work that I have been doing. The last time I came back was in 2021. So I have already four years without going to Venezuela. Particularly I published research on the Venezuelan crisis. I published research on sanctions evasion. I do this work. So I think it's not advisable for me to go there until we make a change, which is what we want.
- [03:58]
Matt Kibbe
Yeah, yeah. And there's hope and indication that Maduro's days are coming to an end because there's only so much suffering you can put people through.
- [04:10]
Jorge Jarasati
Yeah, I mean like it has been extreme suffering. Extreme suffering is that I can talk about cult numbers and statistics, but you know, these are millions of families who are broken. These are families that were supposed to be middle income families with their family members all together in one city having normal good life and their entire life was destroyed by bad economic policies. That's when you really feel that ideas have consequences. That's something that really stuck into my mind because these are economic ideas that then literally destroy the life of millions of people.
- [04:49]
Matt Kibbe
Yeah. And tell me about your newish organization and what your portfolio is.
- [04:56]
Jorge Jarasati
Yes. We founded Economic Inclusion Group last year. I was thinking about in which area should I focus on. The thing that I realized that is the most important issue was on this issue of debanking. We are a nonprofit. We're established in Florida 501c3 because the debanking problem, which for the people in the audience who don't know, is the fact that many people, organizations, companies are losing their access to financial services in the U.S. without any warning, without any explanation, without any remedies. And many of these people are facing this issue because of political reasons. And it's a deep problem because if people don't have access to financial services, how can you operate, how can you live life, how can you do your business? So if the financial system becomes weaponized, it's a massive problem. So we have been focusing on that. We have met, I believe, with over 80 offices in Congress, thanks to our effort, there will be a bill soon if everything goes correctly with many of the recommendations that we have put together. And we have been, again, we have been doing presentations at the treasury, at the State Department, at Department of Commerce, trying to raise awareness to policymakers and trying to build also the corpus of research, because there is not much research on this. There's not much understanding on this. The Trump administration has done Some effort in this regard, but it's very superficial in nature I think, because they don't understand the complexity behind that. I understand that because I saw how in other countries more authoritarians, this has been done. So I knew this before it became a bit more mainstream in the US So that's primarily what we're working on.
- [06:45]
Matt Kibbe
Right now, I think. And to take it back to the beginning of the conversation, obviously not the very first authoritarian regime to use this, but the Maduro regime went after his political opponents and seized bank accounts. What's her name? Maria.
- [07:04]
Jorge Jarasati
Yeah, Maria Corrina, for example. Yeah.
- [07:06]
Matt Kibbe
And so it's very much a weapon that you see used in the social credit system in China and authoritarian regimes. It's happening in Nicaragua, definitely. The first thing you do is you accuse your political opponent of being a terrorist and then you seize their, their accounts, you debank them, you steal all their money. So it seems to be in, in the. And when it comes to dissidents and civil rights activists, it seems to be almost the number one weapon used by governments against the people. Is that true?
- [07:43]
Jorge Jarasati
It's a deep weapon and it's a very hidden weapon because it's almost like a taboo to talk about finances in many cycles. So as you mentioned, just by blaming an organization saying that they're doing money laundering or any kind of financial crime, it gives governments all these tools they can use to froze people's bank account, which is for example, what happened in Canada with the truckers. And they also can access all your private financial information and they're able to paralyze your operations. And in Venezuela, for example, everybody who is doing politics, they cannot have bank accounts. So you just don't, you just know about it, you just don't have it. This happens in Africa. It's a widespread issue in which banks accounts are frozen. In Nicaragua, it's one of the most paradigmatic cases. And again, it's always with the excuse of money laundering or terrorist financing or all these financial crimes. So that's one issue. The second issue is the way in which debanking happens as a result of misinformation campaigns. So for example, if they connect an organization with financial crimes enough in media or in social media, it makes you financially toxic. So when banks make you the compliance. So when banks check you out, they will see all this misinformation against you and it will make them very hesitant to keep the bank account you have with them. And again, this is not only banks, this is all type of services that have to do know your Customer guidelines, anti money laundering regulations. So it can be a lot of factors, not only financial institutions, and a lot of people are facing this in the private sector as well. So it really becomes a weapon for that. And as you know, if your private banking information is shared, it really means that you are very exposed to that. It's just that it's very hidden. So people don't want to talk about it because for many people it's a shameful thing. They think that there is a stigma. So they may think that, for example, if you're a business and you are the bank, if you say this, imagine your business partners, your suppliers, your personnel, you lose trust and so they don't want to say it. And if you are in the political world, people may think that if you lose your bank accounts it's because you did something wrong, but the reality is that it's not. It's because of political issues or it can be because of the unintended consequences of bad regulation. You as an economist also know about how this compliance has been growing and growing to the point in which banks are just hesitant to have deep bank accounts or keep the bank accounts of people that they may see as too risky for them. So if you're an international foundation sending money to the Middle east or sending money to Eastern Europe, banks will say, okay, this is too risky for us. We will not just going to have you in our account. But this can be easily solved by making the backed secrecy act way more transparent and objective and simple. And not the ways right now, which is like extremely complex, vague, subjective and it puts so much pressure into financial institutions.
- [11:07]
Free the People Host
Thank you for joining me today on Kibbe on Liberty and for being part of our fiercely independent audience. Every week my organization, Free the People, partners with BlazeTV to bring you this show. My guests bring smart perspectives on everything from current events to timeless philosophical debates. If you like what you hear, go to freethepeople.org kol and support Kibbe on Liberty so we can continue to produce these honest conversations with interesting people. Now let's get back to it.
- [11:39]
Matt Kibbe
So there was a program during the Obama administration called Operation Chokepoint. And I think that's the first time that conservatives noticed that these obtuse banking regulations could be weaponized against people with legitimate businesses, let's say gun shops in this case. But the Obama administration went after a number of disfavored industries that were viewed as sort of right of center. And it was. And I wonder if this is right. I'm thinking about the censorship industrial complex that exposed government agencies kind of badgering and jawboning tech companies to censor certain types of speech. And originally it was supposed to be violent speech and going after terrorists. But eventually it became politicized and those same companies were basically being forced to be partisan. And in that process, I think a lot of tech companies probably embraced the project with gusto because they were kind of left wing themselves. And it strikes me that the same dynamic is happening between the regulators and the underlying legislation and how they're browbeating banks into compliance through primarily intimidation. Is that, is that an accurate analogy?
- [13:12]
Jorge Jarasati
It's a good assessment because with the excuse of exactly terrorist financing or extremism, you are giving these extraordinary powers to regulators or to specific bureaucrats to not only identify crimes, but identify these subjective bad behavior of people. The way compliance works is that it gives the regulators all this power to for example, put penalties on banks not based on whether they had a client who did money laundering, but on subjective matters. For example, if a regulator think that a bank should have done more to analyze risk in this specific area of customers bank can have a huge fine and the executives can be liable even criminally for these issues. So they gave all this power to regulators. So this results in weaponization as you mentioned, because it's a very straightforward way to attack your political opponents. But it also allows people to unsubsciously transfer back biases into the way you do compliance. So even if a regulator has no bad intention, they are allowed to transfer these biases into the way they do assessment of banks. There is an element called reputational risk in the assessment. So banks, what they're going to do, they're going to avoid anything that can be problematic for them. That means that anything that seems to be, I don't know, right wing, they don't want to have it. Anything that is related to international trade, they will know how to have it new technologies. So they start de risking everything around them. So I think your analogy is on point.
- [15:08]
Matt Kibbe
Yeah, it's easier not to take the risk. And I think in a lot of cases, and I don't know if this is true in the banking industry, I'm guessing that it is. But in the era of DEI and all of these woke filters, I'm guessing there's a left wing tilt amongst the compliance officers. So it's easy to be risk averse when you have those biases even if you don't explicitly say so.
- [15:38]
Jorge Jarasati
Right, exactly. And there is reward thing is that let's say that a bank pushes back and they Say, no, I will give this non profit a bank account, I will support this free speech organization. Then the reward is usually not as big because these are not hundreds of millions of dollar accounts. The risk is that these people, these bank executives, can be in huge fines, in huge troubles. So the calculation is just not there.
- [16:08]
Matt Kibbe
Yeah, and you know, there's. Todd Zywicki has documented endless examples of debanking for political rationales, the most famous of which is Miliana Trump herself got debanked, which is wildly outrageous. It seems like you're poking a rattlesnake's nest with that one. But they did it.
- [16:36]
Jorge Jarasati
Yeah, they did it because they think that again, the incentives for the banks are not there to do anything. Again, it's very problematic because then it's a point in which if you are a political person, you not only have the risk of everyday life, now you have the risk of not being able to have a bank account to support your everyday life, to support your organization from any moment. That means that your bank accounts can be frozen and you don't know how to pay your payroll, you don't know how to pay suppliers, you don't know how to pay your life. I don't know if you have tried to pay things on cash. It's almost impossible.
- [17:15]
Matt Kibbe
It's becoming impossible.
- [17:16]
Jorge Jarasati
Yeah, it's becoming impossible. Like the only way, I guess, is to pay for groceries, but you cannot pay your rent, you cannot pay anything on cash. And in Europe the situation is way worse. In the US there's still some, and by the way, the same regulators that are creating this structure that is creating debanking, they also want to get rid of cash eventually. So you have a situation in which people will not have bank accounts and people will not have cash. And it's a problem because if we don't make something about it, I believe that in five years or in 10 years, banking will become almost the privilege of a few industries and a few people. But anything that is risky financial sector will just throw aside. So anything that is, for example, a show like yours who touches about politics or a person like me, or let's say that you have a trade company doing business with Panama, or let's say that you are trying to develop a new technology on how to do payments. Anything that is risky, banks will just say, no, you better not with us. And what kind of society is that? One that's a society in which you don't have economic freedom, you don't have political freedom, you don't have groups. Growth is really Problematic. And what I found interesting and the reason that I founded my organization is that most people are not talking about this. It seems to be that other issues are way more, I don't know, on the news. Right. Like for example, free speech or free trade or lawfare. But on this weaponization of finance are unintended consequences of finance. There is not much expertise, there is not much understanding. So I found this opportunity and I'm really trying to create right solutions because there could be some momentum now with the current administration. We just need to use it in a way that is actually productive for us.
- [19:08]
Matt Kibbe
Yeah. And for. I think it's when you say people are focused on free speech, as they should be, but this is in fact a weapon against free speech. And, and if you want to know where we're headed if we let this stuff continue, all you have to do is look at the Chinese social credit system, where your right to have access to your own money and your right to bank and your right to process payments is very much linked to whether or not the banks and the tech companies and the government have determined whether or not you're a good citizen. Right.
- [19:51]
Jorge Jarasati
Yes. And I have, for example, I have interviewed many people and one of them is from China. So he told me that if you post something on one of their social apps, your bank account can be frozen in a matter of minutes.
- [20:05]
Matt Kibbe
Yeah.
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Jorge Jarasati
So the connection is right there.
- [20:08]
Matt Kibbe
Exactly right. They control you. It becomes the matrix. And I want people to appreciate, I think my audience is going to be more attune with what you're saying because it's a very libertarian tilt to this and we understand the power of money and why the banking industrial complex. And when I say that, I'm talking about the regulators and the dominant players who have sort of gamed the regulatory system to profit from that. They, they like this stuff because it crowds out innovation and competition. And I'm thinking specifically Joe Rogan had Marc Andreessen on a show in, in, let's say January of this year. And he and Andreessen casually mentioned that many of his friends in the crypto space innovating when it comes to payments, when it, when it, in terms comes to, to banking and financial instruments, they were debanked. And that's kind of an anti competitive thing. I think ultimately, obviously the Biden administration wanted to go after anybody doing crypto because they're afraid of that freedom that might come from something like Bitcoin. But of course, the incumbent banking system would go after it as well. So in that case, it's sort of weaponized against, against competition that would actually liberate us from this death grip.
- [21:42]
Jorge Jarasati
Yes. And again, all these regulations are done by people who are already in the system, who are exactly representative of industry that is already developed. You don't have a lot of civil society organizations engaging in these kind of forums. You don't have many libertarians, for example, involved in how to make anti money laundering rules better. So it really gave so much power to all these people who want to take away this freedom to innovate, this freedom to transact that we really believe on it. They make all these rules trying to prevent crime and they don't think about the unintended consequences. In fact, one of the things that I mention every time that I am in the treasury or I am with the Central bank of European Central bank in Europe, I ask them, can we make a cost benefit analysis of these rules? Like this is step number one, Right? Like let's see if these rules are working or not. They're clearly not working. But there's not even many studies showing how all this AML anti money laundering framework damages innovation and businesses. And there's many ways in which we can see that again, it costs like $50 billion per year in the US to do this compliance. It's not very effective because banks have to do every year 20 million what they call transaction reports. And they need to do 5 million what they call suspicious activity reports, which basically are reports that they consider risky. And they send this to law enforcement agents that they have to redistribute millions of reports instead of focusing on the people really doing financial crimes. So it's very costly, it's very ineffective, it's very anti competitive. Exactly. Because you are just raising barriers to entry. And it's not only anti competitive in the financial sector, but it's also on the market as a whole. Because now imagine if you are, if you're a trade company and if you want to import from Colombia and to sell stuff here in Washington now all the compliance you have to do financial compliance to do these transactions without these transactions to being frozen, you need to pay lawyers, you need to pay this and that. It really becomes not profitable for you. So this really benefits very big corporations who already have this methodology already in place and they can pay the lawyers. So it's very anti competitive from the banking perspective. The number of correspondent banks, banks that engage with the US and engage with foreign banks, have been declining since 2008 every single year because the compliance is too high. The number of banks In Europe, for example, who take American customers, is also declining because of how difficult is the compliance in relation to America's international taxation rate. So it really posed all this bad compliance pressure that especially smaller banks, community banks or new crypto asset solutions just cannot do. And that's not the way the financial sector should develop, which again banking is already extremely slow. If you have tried to make cross border payments, they take a lot of time, they're all the time frozen. It's really a problem.
- [25:09]
Matt Kibbe
What are the origins of this? Because the entire censorship apparatus that was exposed by the Twitter files, when you dig deep enough you're going to discover anti terrorist legislation, the Patriot act and that flood of new power that we gave our government to protect us from potential terrorists. I know that these financial regulations didn't start with 9 11, but I think they really expanded after that and didn't find many terrorists and then they turned it on the rest of us.
- [25:48]
Jorge Jarasati
You are completely right. This is after 911 I would say particularly in the last 10 years it had become worse and worse. But that's the origin of it is the idea that you need to give special powers to people to prosecute. And again you don't have presumption of innocence, which is the problem. If you are accused of money laundering is that automatically you become a criminal, Your bank account is frozen, you cannot do any deals. Right now there is no court that you can go to re establish your banking access. It just doesn't exist the mechanisms in fact you can win a defamation case. So let's say that for example somebody creates misinformation against you saying that you are involved in these crimes and you win in court against this person. You can go to the bank and you can tell them look, I'm not a criminal, right? And what the bank is going to tell you is too risky for us. So there's really no due process. When you talk about also about these extraordinary powers. If you are accused of money laundering, it means that not only they can go against you, they can also go against your surroundings because it's considered to be a network crime. So they can go against your wife, they can go against your business partners, they can go against your team, everybody can be exposed. So it is really against all due process in the way that we see it. So that's a problem is very vague in the way like the regulation in itself. So for example, many people get really mad because when their bank accounts are shut down, they are mad because the banks don't tell them why. So the banks Just shut down the account and that's it. And the bank says you have this amount of days to move your money if you can. In other cases, the money is frozen. And I think I even heard Andreessen said saying, oh, why? The banks don't even want to tell us why. The reality is that the regulation blocks banks from saying that. So the regulation is written in a way that banks are not allowed to say why you froze an account of somebody because technically you don't want to give potential criminals any clues of why they're being caught or something. So the regulation is really done in a way in which there's no transparency. So we don't know how many people have been debunked. So there's no records. So that's step number one. We need to know how many people are being debunked. When somebody's been debunked, banks have to then write why they're being debunked so they can say they are an international company. And we think that it's too risky for us because of this, this and that, or this person used to be member of Congress. So we think it's too risky because of this, this and that. So we at least have data. The only thing we know now is that 12,000 people have filed complaints in the U.S. but that's pretty much it. And all the cases that we have been documenting is interesting for me. It's very interesting is that before us there was no report showing cases of this. There was no report showing what regulations were being abused. So it's extremely new area of research. And that's what really got my attention because it's very difficult to find areas in which not much work has been done that are so fundamental for freedom.
- [29:08]
Matt Kibbe
It reminds me of the Edward Snowden revelations that the government was in fact surveilling innocent Americans who hadn't been accused of a crime. And forget the civil rights violation, the fundamental violation of that, practically speaking, what it did was just broadly expand the number of people that agencies were looking at as potential terrorists. And in a sea of people, you're not going to find anybody. It's a great place for actual bad guys to hide.
- [29:48]
Jorge Jarasati
Exactly. Like for example, when you ask to do banks 20 million reports, reports on transactions, that really means that you are not asking them to look deeper into the real high risk situations. When I talk to, for example, Congress people, I try to make examples of this and I ask them if you have a highway and if you have a transit, you are a transit officer. You will put policemen in the places where there is a lot of traffic accidents. You will put policemen and you will put cameras where you actually have traffic accidents. Right now the way financial compliance works is like you have policemen everywhere in the highway at every second. Nobody can be more than 30 miles per hour. It really doesn't work. And the people who are doing actual money laundering, they can take helicopters and they just, they're not, it's not a threat for them. So it really creates a system in which there is no efficiency, is extremely inexpensive. And what many governments are doing is that they are doubling down on them. Some for political reasons, others maybe just because of. They just don't understand this issue very well. So they are doubling down, putting more and more regulation to a completely failed system. And as you mentioned, they are just. And when the Bank Secrecy act began, imagine they can only look at your financial statements. But now there is so much data that we leave out there in every single one of our transactions. There's all this data about the way we travel, about the way we do our entire life that there's just so much data of us that we also need to protect it. I feel that should be protected, especially people working in C sensitive issues because imagine that you're a policymaker or you are a thought leader like yourself and somebody doesn't like what you're saying. The financial system is built in a way in which your data is extremely exposed and that's very risky from every perspective possible.
- [31:56]
Free the People Host
If you made it this far into the show, it means I must be doing something right. Key Beyond Liberty is just one of the amazing products we created. Free the people. We tell emotionally compelling stories and produce educational videos for the Liberty Curious. Our award winning documentaries personalize all things liberty. Independence, creativity, hard work, integrity and perseverance. After the show, check out our work@freethepeople.org and if you like what you see, donate to support what we do. That's freethepeople.org now back to the show.
- [32:34]
Matt Kibbe
Am I going to get debanked because of this conversation?
- [32:37]
Jorge Jarasati
No, I think you have less probability because you know they will. They say, okay, he was thinking about it, you know. Yeah, yeah, we cannot make him into a use case.
- [32:46]
Matt Kibbe
Yeah, I assume I'm on all the lists I'm thinking about. I don't know if you remember this, but in the first days of the second Trump administration, Tulsi G. Gabbard released an unredacted memo from the Biden administration with all sorts of aspirations to label their political opponents Think about parents going to school board meetings as domestic terrorists. So the T word has lost any sort of legal meaning. Like I think when, I think when people hear about terrorists, they think about the people that flew into the building the twin towers on 9 11. But the government's definition is so broad that again this is a weapon to be used against political dissent in a way that I don't think people fully appreciate.
- [33:45]
Jorge Jarasati
Yeah, that's very sad. For example, because terror is such an important issue by the way. Terrorists, money laundering, sanctions, evasion, all these are important issues. So we need to make them efficient and real. So you need to actually catch the bad guys. And I really think it goes through having a very formal objective definition. I think you make the definition very clear. You can solve many of these issues. You need to have a lot of transparency. For example, in all these debanking situation, the conversation between regulators and banks can be totally secret. Banks in fact are not allowed in many cases to say things that regulators tell them to do. It's classified. It's not classified as I know that as a legal term, but you know what I mean. So we just need to make everything transparent. You make everything transparent, objective and clear. Because the reality is that terrorism is a big problem. Money laundering is a big problem. We don't want that. We don't want to have crooks from an authoritarian country to flow money into the US to buy all the nice apartments. That's not a good economy. Nobody benefits from that. But we need to make the system good.
- [35:02]
Matt Kibbe
Exactly. Is there any data on how many actual terrorists, how many drug kingpins, how many crony oligarchs have actually been caught by this sweeping system? Does it actually work?
- [35:20]
Jorge Jarasati
That's the problem is that there is no data. There is a couple of studies here and there that what they say is that only 1% of the criminal proceedings are actually caught because of all these anti money laundering rules. 1%. But there is no data, honestly, there is no cost benefit analysis. We don't know what practices do work and which ones don't work. And I'm just all the time thinking, imagine if you run a business in that way in which you are blind from what things are working and when things are not working, your business will go bankrupt in a day. So the way they're building this regulation is that they're doing it without any data and just doubling down. So doing more transaction reports, more of these and more of that. I would guess that one of the issues is that the system is very flawed because a lot of money laundering doesn't happen despite governments. It happens in cooperation with bad governments around the world. So if you are in partnership with a bad government, you have many tools to actually circumvey the regulation and that's the problem. So it's really not effective.
- [36:30]
Matt Kibbe
So I asked you earlier if you would go back to Venezuela. As I understand the work you've done, it is possible for a hostile government like the Venezuelan government to get access to your personal data. Is that actually true?
- [36:47]
Jorge Jarasati
Yeah, it's perfectly true. It's like governments can access the banking information of all Americans. It is really problematic because the way.
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Free the People Host
Why would we ever let that happen?
- [37:01]
Jorge Jarasati
From what I was told, Because I have interviewed several of the people who created this system, people that work, for example, the Bush administration, and what they tell me is that they never thought that other governments will abuse these mechanisms. I don't know why they thought like.
- [37:17]
Matt Kibbe
That, but maybe it was the way sounds shockingly naive. Okay.
- [37:24]
Jorge Jarasati
My guess is that because at the time there was this idea of again like total dominance of the international space.
- [37:31]
Matt Kibbe
We're going to work together to stop terrorism, I guess.
- [37:34]
Jorge Jarasati
I guess exactly. So right now the way the US works with other countries when it comes to anti money laundering rules or even cybersecurity threats threats is that they work in a system of almost like blind trust. So the US will trust the same way, standard European country to a standard Latin American country to an African country, etc. So that means that there is distrust of, for example, information sharing agreements. So if a country in Africa says, look, that person, we think that he's a money launderer and they send a letter to a bank in the U.S. can you please share the information? Because we're doing an investigation. Banks will just do it. It's just the way the mechanisms work. So what we need to do is to actually create deterrence mechanisms so that way this doesn't happen. So people can actually not do that. And I believe there should be way higher financial privacy protections in the US because by the way, it's not only a matter of human human rights activists or policymakers. I really believe that it's a matter of national security, especially in the economic realm. Because now you will live in a period of trade wars. We live in a period in which there is a lot of what they call technological race towards dominance. If the banking and private information of your businesses can be shared without you even knowing, you are in a huge, huge disadvantage against other people. And again, if the US tried to get the information of a company in China. Good luck getting that.
- [39:12]
Matt Kibbe
Yeah, they're not, they're not cooperating. Is it illegal for a bank to refuse to share your information with Nicaragua?
- [39:22]
Jorge Jarasati
They can, it can be problematic. So the banks who do it, by the way, so. But the incentives are against them. So it's not illegal, it's just that.
- [39:31]
Matt Kibbe
Is, it creates difficulties, creates problems so it's easier.
- [39:36]
Jorge Jarasati
And again in most banks and they just. We live in a world in which 70% of countries are authoritarian. How many liberal democracies do we have? It's like 20 countries.
- [39:47]
Matt Kibbe
Yeah.
- [39:48]
Jorge Jarasati
So if you get a request from most countries, the mostly the compliance officer will not determine. It's like for example, when Interpol was beginning to be abused. You have all these requests from different countries about people. So for example, you have a request from, let's say Colombia, this person is a criminal. Imagine if they have to actually do the analysis of each person. Like there is just not the capacity in the state to do so. So it's like that.
- [40:20]
Matt Kibbe
Yeah, so there's, there's not, maybe there's a market opportunity for a bank that actually comes out and says I'm going to protect your financial information. Is that possible or is it just fundamentally impractical to protect the financial information.
- [40:37]
Jorge Jarasati
The way we should is just not according to anti money laundering regulations. So I don't know how they will get a license or keep a license or actually enforce that because if a government is asking for information, they will get that information. So I just don't know how feasible it is to do so.
- [40:53]
Matt Kibbe
I guess we're going crypto then. Yes.
- [40:55]
Jorge Jarasati
I mean that's why for example, I'm a big proponent of bitcoin, a big proponent of all these solutions. Again, it's not the only solution. That's why I'm pushing for policy reform. But one alternative or complementary solution is actually Bitcoin. And that's why I believe in it and that's why I work on that issue as well.
- [41:15]
Matt Kibbe
Yeah, we should mention the Radical Innovation Summit where we most recently had this conversation in Mexico City because I left that summit more optimistic than I was before. Because to me technology is a double edged sword. It could be weaponized against our freedoms and we could end up with a sort of, of super spy Chinese social credit system that doesn't allow us to think or speak for ourselves that that's possible. But you're also seeing all these, these blockchain type technologies and, and network state innovations and all this stuff that, that tells me that human innovation is always Going to find a way around the authoritarians? Yes.
- [42:05]
Jorge Jarasati
I don't think all always, but in many cases, yeah. The great thing about innovation and technology in general is that it is one of the only ways in which we can be at the offensive. Because many things that we do is always reacting to, let's say, bad policy or bad decisions. Right. So there is bad policy and then there's people like us who try to fix it and try to make reform. In technology there is an opportunity to actually create something from scratch, from nothing and create these kind of solutions. So I agree with your statement and. Exactly. Technology can be used for good things or for bad things. And we are the ones who also need to create the incentives so they're used in the good way. So for example, all the data that we are giving to AI companies, we then need to create the protection so that these data is actually yours or is protected and it cannot be sent to a foreign government. So they know all your conversations with ChatGPT. So again, that's why technology is excellent. It's what we have. We need to create always the incentives towards that.
- [43:11]
Matt Kibbe
Yeah, yeah. So where can people find your work?
- [43:15]
Jorge Jarasati
They can go, they can email me@jorgeconinclusion.org they can go to my Twitter account, they can go to my website. If anybody wants to support, anybody wants to help, we need support on this because we need more voices that people that want to speak out. We need more people who are technical. For example, you are a technical economist. So let's find ways to think about how can we measure the negative impact of all this regulation or innovation, for example, nobody has done that. People who are lawyers, I'm not a lawyer. So let's think about, okay, do we have a case here to make legal reforms in the US and how to do so? This is something that I already began in the policy side, in the advocacy side, but I need experts also. Of course, if there is people who are victims of financial exclusion, please reach out. Because what I'm doing is that I'm collecting many, many cases and testimonies to analyze the patterns. Again, many of these things, there is no book that you can read about, there is no paper. We are the ones building this new area of research. And of course, if you are a financial supporter, we are non profit, we live from donations. So if anybody wants to cooperate on this area, we are also very open to that.
- [44:37]
Matt Kibbe
You're a 501C3, right?
- [44:39]
Jorge Jarasati
We're a 501C3 in Florida.
- [44:41]
Matt Kibbe
Yeah. And I see that you're also working with human rights activists. And that element of this story we do.
- [44:53]
Jorge Jarasati
We build coalition. I really believe in building coalition. So with organizations, with good people, with good activists from many organizations, we are building, again, the standard, very good board of directors, board of advisors with both activists and also people who are experts. So, for example, we have activists who have been debunked in our board of advisors, and we also have financial executives in our board of advisors. So we are really trying to have these conversations that can find good solutions. So we're trying to build coalition with a few people who understand this issue and who want to raise awareness. And the interesting part is that we will be the first ones to do so. So we are in a new topic, cutting edge topic. So the narratives that we create and the policy recommendations we create, they'll have huge impact. So that's why we need to also be very serious about them.
- [45:48]
Matt Kibbe
Okay, we have our marching orders. Thank you.
- [45:50]
Jorge Jarasati
Let's do it.
- [45:50]
Matt Kibbe
Thank you, Jorge.
- [45:51]
Jorge Jarasati
Thank you. Thank you very much.
- [45:53]
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