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 <[EMAIL PROTECTED]>
To: Declan McCullagh <declan@well.com>
CC: <[EMAIL PROTECTED]>
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
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