[ISN] Feds Want Banks to Spy on All Customers...Even You!

From: mea culpa (jerichoat_private)
Date: Tue Nov 24 1998 - 23:56:41 PST

  • Next message: mea culpa: "[ISN] REVIEW: "Java Cryptography""

    From: ISPI Clips 6.51
    From: WorldNetDaily, November 23, 1998
    Big Brother Banks? FDIC has snooping plans
    David M. Bresnahan, Davidat_private
    Contributing Editor, WorldNetDaily
    Are you a potential criminal? Are you a threat to banks, airlines, a
    potential spy, or perhaps an IRS tax protester? The government would like
    to know and they are about to force banks to be their detectives. 
    The federal government wants banks to investigate you. Soon your banker
    will know more about you than anyone else in town. Banks must not only
    determine your correct identity, they must also know how you make your
    money, and how you spend it. Once you establish a pattern of deposits and
    withdrawals, banks must inform federal agencies when you deviate. 
    Bank customers may soon find themselves explaining to the FBI, Internal
    Revenue Service, and the Drug Enforcement Agency why they made a $15,000
    deposit to their bank account. According to current Federal Deposit
    Insurance Corporation plans, banks will soon establish "profiles" of their
    customers and report deviations from those profiles. 
    If you sell a car, for example, and place the proceeds in your account
    while you shop for a new one, a red flag may go off in the bank computer. 
    Such a situation puts law abiding citizens in a situation where they must
    prove they are innocent, says Scott McDonald of the watchdog group Fight
    the Fingerprint. 
    An uproar from grass roots Americans is the only thing that will stop the
    current plans for the FDIC "Know Your Customer" program, according to
    McDonald. His organization has led the charge against the national ID,
    medical ID, and computerized information about private aspects of people's
    A recent announcement by the FDIC provides for citizen comment prior to
    implementation of their new banking regulations. The deadline for comments
    is Dec. 27, 1998. 
    "The FDIC is proposing to issue a regulation requiring insured nonmember
    banks to develop and maintain 'Know Your Customer' programs," according to
    a recent FDIC information package sent to Congress to provide notice of
    proposed rulemaking, and to banks for comment. 
    "As proposed," the 29-page FDIC document begins, "the regulation would
    require each nonmember bank to develop a program designed to determine the
    identity of its customers; determine its customers' source of funds; 
    determine the normal and expected transactions of its customers; monitor
    account activity for transactions that are inconsistent with those normal
    and expected transactions; and report anytransactions of its customers
    that are determined to be suspicious, in accordance with the FDIC's
    existing suspicious activity reporting regulation. By requiring insured
    nonmember banks to determine the identity of their customers, as well as
    to obtain knowledge regarding the legitimate activities of their
    customers, the proposed regulation will reduce the likelihood that insured
    nonmember banks will become unwitting participants in illicit activities
    conducted or attempted by their customers. It will also level the playing
    field between institutions that already have adopted formal 'Know Your
    Customer' programs and those that have not." 
    Many banks across the country have already begun to implement such
    programs, according to the FDIC. A quick search of the Internet found many
    stories in press accounts of problems reported at such banks. There have
    been a number of stories dealing with banks requiring fingerprints to open
    accounts and to cash checks. There are several lawsuits presently underway
    testing the right of banks to make that requirement. 
    McDonald has been fighting that issue, along with fingerprints on driver's
    licenses for some time. He pointed out the many errors found on credit
    reports and suggested that banks will soon make similar errors when they
    begin creating profiles of their customers. 
    The FDIC is selling the planned regulations by pointing out the need for
    prevention of financial and other crime. 
    "By identifying and, when appropriate, reporting such transactions in
    accordance with existing suspicious activity reporting requirements,
    financial institutions are protecting their integrity and are assisting
    the efforts of the financial institution regulatory agencies and law
    enforcement authorities to combat illicit activities at such
    institutions,"  says the FDIC. 
    The proposed regulation is, according to FDIC spokesperson Carol A. 
    Mesheske, authorized by current law. It comes from the statutory authority
    granted the FDIC under section 8(s)(1) of the Federal Deposit Insurance
    Act (12 U.S.C. 18189s)(1), as amended by section 259(a)(2) of the Crime
    Control Act of 1990 (Pub. L. 101-647). 
    The FDIC claims that the law requires them to develop regulations to
    require banks to "establish and maintain internal procedures reasonably
    designed to ensure and monitor compliance with the Bank Secrecy Act. 
    Effective 'Know Your Customer' programs serve to facilitate compliance
    with the Bank Secrecy Act." 
    The proposed regulations will mandate that all banks insured by the FDIC
    must maintain an intelligence gathering department that screens out
    customers and keeps an eye on existing customers. Before you decide to
    move your money to a credit union, you should know that the FDIC is not
    the only federal organization making such plans. 
    "Each of the other Federal bank supervisory agencies is proposing to adopt
    substantially identical regulations covering state member and national
    banks, federally-chartered branches and agencies of foreign banks, savings
    associations, and credit unions. There also have been discussions with the
    Federal regulators of non-bank financial institutions, such as
    broker-dealers, concerning the need to propose similar rules governing the
    activities of these non-bank institutions," reports FDIC attorney Karn L. 
    Main in the proposal. 
    The purposes for the regulation are to protect the reputation of the
    banks, to facilitate compliance with the law, to improve safe and sound
    banking practices, and to protect banks from being used by criminals as a
    vehicle for illegal activities. 
    Current customers will be subjected to the new regulation in the same way
    new customers will be scrutinized. The FDIC does not wish to permit any
    loop hole which would leave any bank customer unidentified or
    Each bank will create profiles. The first profile will determine the
    amount of risk a potential customer might present by opening an account.
    The system of profiling potential customers will be different from one
    bank to the next, since the FDIC does not provide a uniform program. The
    purpose of the profile is to identify potential customers who might use a
    bank account for funds obtained through criminal activity. 
    The next profile will be one that is used by automated computers to
    determine when suspicious activity is taking place in an account. When
    activity in the account does not fit the profile, banks will notify
    federal authorities so they can investigate. 
    Banks are expected to identify their customers, determine normal and
    expected transactions, monitor account transactions, and determine if a
    particular transaction should be reported. 
    The FDIC has sent copies of the proposal to all banks and is asking for
    input. The questions asked by the FDIC in the proposal do not ask whether
    the regulations should be put into place, only how to implement them in
    the best way. None of the questions in the proposal are directed to bank
    The FDIC reassures banks that because the requirements will be universally
    applied to all banks it will not hurt their business and drive away
    customers. The proposal does not mention penalties for non-compliance, nor
    is there any mention of regulations to provide access to bank records by
    customers so errors can be found and corrections made. 
    "If 'Know Your Customer' programs are required, insured nonmember banks
    can more easily collect the necessary information because customers cannot
    turn readily to another financial institution free of such requirements,"
    stated the proposal. 
    Comments from the public may be sent to Robert E. Feldman, Executive
    Secretary, Attn: Comments/OES, Federal Deposit Insurance Corporation, 550
    17th Street N.W., Washington, DC 20429 or faxed to (202) 898-3838 or
    e-mailed to commentsat_private 
    David M. Bresnahan [ Davidat_private ] is a contributing editor of
    WorldNetDaily.com, is the author of "Cover Up: The Art and Science of
    Political Deception," and offers a monthly newsletter "Talk USA
    Investigative Reports" [ http://talkusa.com ]
    Subscribe: mail majordomoat_private with "subscribe isn".
    Today's ISN Sponsor: Repent Security Incorporated [www.repsec.com]

    This archive was generated by hypermail 2b30 : Fri Apr 13 2001 - 13:12:21 PDT