Previous Politech message: http://www.politechbot.com/2005/10/11/banks-want-to/ -------- 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: http://www.privacilla.org/releases/BSAAG_remarks_10-22-03.html 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: http://www.fed-soc.org/Publications/Terrorism/financialone.htm Jim Jim Harper Director of Information Policy Studies The Cato Institute _______________________________________________ Politech mailing list Archived at http://www.politechbot.com/ Moderated by Declan McCullagh (http://www.mccullagh.org/)
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