[Politech] Why banks want to snoop on you: blame the federal government [priv]

From: Declan McCullagh (declan@private)
Date: Tue Oct 11 2005 - 12:10:33 PDT

Previous Politech message:

-------- Original Message --------
Subject: RE: [Politech] Banks want to know why you want your money, 
"know their customer" all too well [priv]
Date: Tue, 11 Oct 2005 14:12:24 -0400
From: Jim Harper <jharper@private>
To: Declan McCullagh <declan@private>
CC: <egelman@private>

Declan: (cc:Serge)

The Bank Secrecy Act is not quite the root of all evil, but it ranks 
pretty highly. This anecdote is a good illustration of what is wrong 
with it.

Briefly, the BSA requires banks (and, since the Patriot Act, dozens of 
other institutions) to report $10,000+ currency transactions and 
suspicious transactions to the government.  The operating assumption at 
banks used to be that what you do with your own money is your own 
business.  In the name of the War on Drugs, the federal government has 
been working for decades to overcome that.  Now its justification is the 
War on Terror.

What happens when you require banks to report suspicious activity, 
backing it up with an implicit threat to take away their charter?  They 
over-report, sending in worthless information about things like Serge 
Egelman's alleged motorcycle purchase.

That's handy when, later, they decide that Serge Egelman must have done 
something wrong - let's go dig into his records.  But it's not useful 
for finding genuine bad guys.  The chaff obscures the wheat.  So, when 
Mohammad Atta received a genuinely suspicious $100,000 wire transfer 
from the United Arab Emirates in 2000, that lead went into a pile at the 
Financial Crimes Enforcement Center that wasn't dug through until 
sometime after September 11, 2001.

The Bank Secrecy Act takes 1) the premise that banks will not report 
truly suspicious transactions on their own and uses that as a reason to 
2) shred financial privacy.  It gets 3) lots of surveillance data for 
later use but 4) obscures real evidence of crime and conspiracy.

Did I mention the judicial contortions that the Supreme Court went 
through to validate the BSA against Fourth Amendment challenges?  We're 
paying the price more and more each day as more personal and sensitive 
data resides in the hands of third parties like ISPs.

The BSA and FinCEN are also the template that brought us things like 
Total Information Awareness and other, lesser data mining programs now 
buried in the national security bureaucracy.

I was amused to have the chance once to sit before a large roomful of 
law enforcement people on the BSA Advisory Group and tell them that the 
whole enterprise in unconstitutional and backward.  Prepared remarks here:


This is one issue on which I am permanently outraged.  I was pleased by 
the link you provided, Declan, because I was counsel to the Judiciary 
Subcommittee that held that hearing and I am Solveig's successor (to the 
extent it's possible to replace her) here at Cato.

More good info here:


Jim Harper
Director of Information Policy Studies
The Cato Institute

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