ChokePoint 2.0

The payment processing and banking system represents systemic risks to freedom

Last week I wrote about “opting out” of the banking system. I proceeded to have over the next few days what people would call a “mental breakdown” on Twitter. I’ll admit, I was and have been in an angry and emotional state. I even cried. It’s been tough.

Without a doubt, it has been a trying couple of weeks, with my finally throwing my hands up in exasperation the culmination of ever increasing pressure from financial institutions to fill all of my waking hours with filling out forms to explain who I’m receiving money from and who I’m sending it to.

I paused billing for all my Marhelm customers, just like with the blog. I paid all of my employees a few months in advance and said if they wanted to start looking for another job now was the time, because I wasn’t sure I’d be able to keep paying them. I have issued tens of thousands in refunds over the past 5 days.

Then came the peanut gallery on Twitter and even my Marhelm customers, judging my actions and accusing me of abandoning employees, customers, and even my own family. I’ve had trouble sleeping, and I’ve gone through a roller coaster of anger, grief, and fear.

However, when I really think about it, I keep coming back to the same core conclusion: the issue here is the system itself, not the way I’m reacting to it. Put yourself in my shoes - you have overhead, employees. Your payment processor suddenly shuts you off, citing KYC needs. Just a few months ago, you sent them 50 pages of documentation. They held your payouts for weeks. Now, it’s happening again,  they keep rejecting your documentation, and you can’t even talk to a human about it. Is this a fundamentally sound system to build your business on? Your future? Am I the unreasonable one for reacting?

Was I targeted for something I said? I’m not sure. Supposedly, KYC and AML regulations are supposed to protect us. They’re supposed to to stop terrorism. Before 1989, there was basically zero infrastructure - globally - to track where money was going globally. Then came the Financial Action Task Force, which began in France, launched by the G7.

Financial Action Task Force - Wikipedia

This group spent decades creating intergovernmental reporting standards and integrated financial infrastructure in order to keep tabs on everything going on everywhere. They tried to isolate any country, company, or bank, that didn’t comply, one way or the other. When September 11th happened in 2001, the US passed the Patriot Act, which ushered in the birth of most aggressive financial control policies in the world. US banks started asking for all sorts of paperwork they never asked for before, and the United States began looking into foreign banks all over the world.

Since then, global financial interoperation and control has steadily marched forward, and has now morphed from fighting organized crime and terrorism to a number of ideological goals. More than 140 major banks have signed on to supporting Agenda 2030, hoping to choke off the funding needed by oil, gas, and coal companies and push money into alternative energies.

The Weaponization of Financial Regulation

In 2014, the Obama DOJ basically went around pressuring banks to close the accounts of any businesses it didn’t like, including those that were constitutionally protected (like firearms and ammunition sales), regardless of their legality.

"Operation Choke Point forced banks to terminate relationships with a wide variety of entirely lawful and legitimate merchants...Acting in coordination with the Justice Department, bank regulators labeled a wide range of lawful merchants as “high-risk” – including coin dealers, firearms and ammunition sales, and short-term lending."

Far more troubling, today financial institutions like payment processors and banks are increasingly being weaponized by regulators for political reasons. Check out this horrifying tale from Armstrong Economics:

On March 6, 2024, the House Select Subcommittee on the Weaponization of the Federal Government found that “the federal government was engaged in broad financial surveillance, prying into the private transactions of American consumers. This surveillance “was not predicated on any specific evidence of particularized criminal conduct and, even worse, it keyed on terms and specific transactions that concerned core political and religious expression protected by the Constitution,”’ the audit found.

Banks were instructed to search transactions for keywords such as “Trump” and “MAGA” to look for “domestic terrorists.” They even asked banks to look for people who had purchased certain books such as religious texts. The federal government announced years ago without hesitation that the right-wing Conservatives are the biggest threat that they face, and they see you as the enemy. The federal government has an ongoing list of “hate groups” that includes Christian organizations simple because they do not agree with the far-left narrative.

On the decentralized finance side, entrepreneur John Paller was targeted by Wells Fargo…

Caitlin Long, meanwhile, confirmed that there is a “witch hunt” going on in fintech and crypto.

It’s not just this side of the pond, either. Headlines were recently made in the UK when UK Politician Nigel Farage claimed he had accounts closed for political reasons. Indeed, the number of debanking complaints is rising rapidly.

April 21 YTD
As of March 15th

Not if But When

So to back up for a second, I haven’t been debanked, at least not officially. I’ve just been buried in compliance work. Stripe has now on several occasions frozen my payouts for weeks at a time. I haven’t had any bank permanently seize my funds. Not yet, anyway.

For me, to allow another party to have this much control over my livelihood simply isn’t acceptable. I’m not going to wait around until an actual complete debanking happens to me. I’m not going to wait around until an increasingly zealous and emboldened, politically motivated financial regulator personally fingers me out to have everything shut down. I’m going to get ahead of it and build more resilience. Maybe I’ll keep some relationships with a few small banks that haven’t given me any issues, but I’m going to have one foot out the door with every financial institution I know of. What’s starting to worry me with brokerage accounts is that when it comes time to pull the money out, it might get locked up, too.

My point is this - once upon a time most of human wealth was held in physical things that were defensible. It’s hard to steal land. You have to kill not just the guy who possesses it, but probably all the neighbors, too. It might not give much of a yield, but at least it’s hard to take. And you can live on land. You might not live the fancy city life you’ve grown accustomed to, but you can live.

You have no idea what you say or do will one day be construed as an offense that is worth of unbanking you. Maybe it’s a tweet. Maybe it’s a relationship. Maybe the AI screwed up and just lumped you in a high risk bucket. The point is that people are being targeted in increasingly arbitrary and impersonal ways, and if all your wealth is in basically digital assets (brokerage accounts, bank accounts), what do you do when you personally come into focus? You can keep a low profile, which I obviously don’t, or you can plan on some resiliency in other ways. This will require lifestyle changes, it will require mentality changes. But when the time comes, if they want to oppress you, they’ll at least need to send someone with a gun like a proper tyrant would, not just shut you down with the click of a button.

I know what I’m giving up by deciding to voluntarily check out of the system - a lot of money, and the ability to do business with 90% of people in rich western countries that speak the same language as me. But what I’m gaining is a sense of dignity and self respect that can only come from struggle. I’m willing to struggle because when I was born 35 years ago, the same year the FATF was created, nobody fought it or warned me what was coming. I don’t want my daughter to become an adult in a world where she can have her financial life cancelled by banks for her political beliefs, or have financial institutions constantly flag her for making too much money. I want to build a more resilient way for my family to face the future, one that helps us preserve our freedom and dignity, and limits the hours we waste filling out stupid forms.