Why your bank thinks you're a terrorist

MSN ^ | 9-11-06

[JOAT]

Banks are reporting even slightly 'abnormal' transactions to comply with the law. The result: A deluge of reports, a lot of confusion and more government intrusion.

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It's called the Suspicious Activity Report, or SAR, and critics say it victimizes honest citizens who are conducting legitimate financial activities through legitimate banking channels, while generating a flood of useless paperwork and burdening financial institutions with billions of dollars in costs.

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In total, 919,230 SARs were filed in 2005. You cannot find out if one has been filed on you; anyone revealing that information is breaking the law.

What can trigger a SAR? Almost anything out of the ordinary that rouses the suspicion of the personnel where the transaction took place. According to their rules, any group of transactions totaling $5,000 or more that "is not the sort in which the particular customer would normally be expected to engage" can cause enough suspicion to create a SAR. The reports are filed with the Financial Crimes Enforcement Network (FinCEN), a division of the Department of the Treasury, and shared with law enforcement.

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Scared of paying off a debt

Unlike other government spying programs, this one is out in the open -- and it's creating fear among people doing ordinary banking activities. Take a recent college graduate from Columbus, Ohio, whose parents offered an interest-free loan to pay off his high-interest credit-card debt. While surfing online, a message-board post caught his attention.

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"They could report you to Homeland Security if payments deviate from the norm. It sounded scary and made me nervous. I think it's ludicrous that anyone should be afraid of paying off their debt."

[Still Thinking]

There are regs with mandatory filing, but the government also leaves it up to the bank's discretion to file for any transaction that doesn't meet the mandatory filing requirements, but is still suspicious given the unique circumstances. Thus, the banks are probably playing CYA by reporting almost everything.

But in reality that protects out financial privacy almost as well as not reporting anything. Security through obscurity.