How the Free Market Fights Sex Trafficking – Freedom Philosophy

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sex trafficking

Justin Trudeau campaigned on the reduction of sex trafficking in Canada. He doesn’t appear to know where to begin and those that do generally stay out of politics. To be blunt, he has failed miserably. Canada is now a safe-haven for sex traffickers.

Surprisingly, private companies make a lot of money catching them.

My passion for investing landed me the dullest job I could have imagined: Compliance. After nearly two decades of dreaming of one day managing my own hedge fund, I finally made it into the business as a compliance officer. Rather than market returns, I was filling out paperwork, making sure investors and fund managers had checked off the proper boxes.

I felt as though I was dreaming; getting to work for the hedge fund industry. I was right, I was dreaming because my job was a total snooze.

For security reasons, I’ll have to forego getting into the specifics of how compliance works. It will suffice to say that private hedge funds will pay serious money to have their funds reviewed to ensure there’s no dirty money coming into their jurisdiction.

They don’t require government oversight to do it either; private companies work with private companies. They handled the investing, we handled the checking. The free market is doing a much better job than Justin Trudeau of regulating themselves. My friends in the international finance industry are baffled by Canada’s standard practices on anti-money laundering but impressed with what a private company can do.

Sex trafficking has enormous difficulty. In addition to the tremendously bad eternal karma I am emotionally forced to believe traffickers will face, there’s a financial difficulty as well. What do you do with $300,000 in cash? How does one use it to buy a house, pay their taxes, or make other clean investments?

What they try to do is a process many in the industry refer to as scrubbing the money. They take dirty money (money from terrorist financing or sex trafficking, for example), invest it into a legitimate source — a hedge fund that invests in real estate, for example — and when the capital is returned, they can now claim the source of wealth is real estate rather than sex trafficking.

Every so often, our company would come across a suspicious business structure. One where the source of money is obscure, hidden by a plethora of LLCs, trusts, and corporations, where benefactors and beneficiaries are nearly impossible to identify.

I came into work and encountered one of these structures. Generally, they’re harmless, just burdensome to deal with. These complex structures also have tax advantages and avoid estate tax; thus they become excellent vehicles for passing on money to children. They are common enough that a slothful review would ignore them.

I worked through the directors and owners of each entity affiliated with the investor into a fund one day. Boredom was gripping my mind while I was trying to piece this together. My manager was going to need a report at the end of the day, so I pressed on. It became more and more suspicious as the further I investigated, the more obscure it became.

After a day’s worth of data entry (typically I could handle 60 in a day, but that day I finished one). I had a list of names for controllers and owners of the funds. We did an investigation, five of them were involved with sex trafficking, and they were arrested (my libertarian community might debate on the ethics of this, but they were killed. I must confess that in spite of my ethical objections, I haven’t lost any sleep).

Fund managers want nothing to do with dirty money. Free people, operating within the freest of markets, are happy to go after evil. They regulate themselves far more diligently than Justin Trudeau can. They have a greater desire to ensure the cleanliness of their money than the government does.

It’s not that the government doesn’t want to eliminate these things, it’s that they don’t know how. People that know how tend to remain in the private sector. People in the private market will continue to succeed, while governments, whose directors have minimal comprehension of this, will continue to be baffled as to how so much slip through their fingers.

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Brandon Kirby

Brandon Kirby has a philosophy degree with the University of New Brunswick. He works for a Cayman Island hedge fund service firm, owns a real estate company, and has been in the financial industry since 2004. He is the director of Being Libertarian - Canada. He is a member of the People’s Party of Canada and the Libertarian Party of Canada.