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To: Don Pueblo who wrote (16372)	1/10/1999 7:09:00 PM
From: Karin	Respond to of 71178

What your bank knows, the government wants to find out By ROBYN E. BLUMNER © St. Petersburg Times, published January 10, 1999 -------------------------------------------------------------------------------- The government wants your bank to build a dossier on you. It wants your bank to get to know your financial habits, your sources of income and to let it know if you do something out of the ordinary with your account. Sound illegal? Unconstitutional? It's not. But it should be. In December, the Federal Reserve and three other financial regulatory agencies proposed new regulations that would require banks to establish a "Know Your Customer" program. A summary of the regulations, from the Federal Register, says the program would: "require each bank to develop a program designed to determine the identity of its customers; determine its customers' sources of funds; determine the normal and expected transactions of its customers" and report any suspicious activity to the government. The regulatory agencies say the spying is necessary to flush out money laundering practices. But the sacrifice in privacy is too high a price. The program would turn bank tellers into government spooks. If you sell a house for cash and put that money in the bank, you might soon find yourself having to provide proof for the source of that money to the teller. Anything that breaks your normal banking pattern could be flagged for investigation. Robert Rowe, regulatory counsel of the Independent Bankers Association of America, calls it "Big Brother watching" and says the use of these regulations to crack down on money laundering is using "a sledgehammer to handle a gnat." But Richard Small, the assistant director of the Division of Banking Supervision and Regulation at the Federal Reserve who helped design the regulations, disagrees. He sees Know Your Customer as a way banks can keep from inadvertently helping criminals launder money. And he defends their reach as a natural extension of rules passed in 1984 that oblige banks to submit reports of known or suspected money laundering or other illegal activity to federal law enforcement. Talk about a slippery slope. True, current regulations put the onus on banks to rat out customers, but they do not go so far as to direct banks to act like J. Edgar Hoover. Know Your Customer "essentially deputizes tellers not only as law enforcement agents but as private investigators as well," wrote 12 congressional members of the House Committee on Banking and Financial Services who submitted comments in opposition. "(It) would convert our nation's banks into wholly owned subsidiaries of the government-wide movement to invade every aspect of American's privacy," wrote U.S. Rep. Ron Paul, R-Texas. He intends to sponsor legislation to block the regulations. But if Congress doesn't act to quash this measure, the rest of us can lend a hand. Comments on Know Your Customer, which if approved would take effect April 1, 2000, may be submitted to the Federal Depositors Insurance Corp. (Comments@fdic.gov), the Federal Reserve Board, the Comptroller of the Currency (regs.comments@occ.treas.gov) and the Office of Thrift Supervision (public.info@ots.treas.gov) until March 8. The FDIC has already received a record of more than 7,600 mostly antagonistic comments, and all agencies will share comments with each other. Small dismisses the hundreds of written comments the Federal Reserve has received in opposition so far, calling the opinions not "substantive." "They are all complaining that KYC is unconstitutional or an invasion of privacy, but they don't explain how," says Small. He points out that the U.S. Supreme Court has not granted individuals constitutional protection over their banking records, since the Fourth Amendment does not apply to records held by third parties. And the federal Right to Financial Privacy Act, which limits the government's access to our personal financial records, contains an exclusion for any new laws or regulations passed. So, Small contends, it would be perfectly legal. Although Small may be technically right, civil libertarians know in their gut he's wrong. Know Your Customer would alter the fundamental relationship between the government and citizen. Civil liberties principles presume that people are to be trusted and the government's role in citizen surveillance is limited to investigating criminal behavior. Under the bank spy philosophy, people have to be constantly monitored for potential wrongdoing. If their behavior deviates from the norm, they are on the hook to explain why. It's a philosophy fitting the former East German Stasi and Soviet secret police. Rep. Paul thinks the Federal Reserve may have unwittingly done us all a favor. By proposing such a plan that so grossly violates our individual privacy, the agency has called the public's attention to the highly intrusive 1984 regulation that requires banks to report suspicious transactions. He will soon file legislation to block that as well. Paul couldn't be more right when he says: "The only way this information should be available to the government is under a search warrant and nothing else." The government already has its hands on our money, now it wants its eyes on it too.