New Federal Patriot Act Turns Retailers into Spies against Customers

Nov. 18--Ordinary businesses, from bicycle shops to bookstores to bowling alleys, are being pressed into service on the home front in the war on terrorism.

Under the USA Patriot Act, signed into law by President Bush late last month, they soon will be required to monitor their customers and report "suspicious transactions" to the Treasury Department -- though most businesses may not be aware of this.

Buried in the more than 300 pages of the new law is a provision that "any person engaged in a trade or business" has to file a government report if a customer spends $10,000 or more in cash. The threshold is cumulative and applies to multiple purchases if they're somehow related -- three $4,000 pieces of furniture, for example, might trigger a filing.

Until now, only banks, thrifts, and credit unions have been required to report cash transactions to the Treasury Department's Financial Crimes Enforcement Network, under the Bank Secrecy Act of 1970. A handful of other businesses, including car dealers and pawnbrokers, have to file similar reports with the Internal Revenue Service.

"This is a big deal, and a big change, for the vast majority of American businesses," said Joe Rubin, chief lobbyist for the US Chamber of Commerce. "But I don't think anybody realizes it's happened."

The impact is less clear for consumers, although privacy advocates are uncomfortable with the thought of a massive database that could bring government scrutiny on innocent people. Immigrants and the working poor are the most likely to find themselves in the database, since they tend to use the traditional banking system the least.

"The scope of this thing is huge," said Bert Ely, a financial services consultant in Alexandria, Va. "It's going to affect literally millions of people."

The filing of so-called suspicious activity reports, though, is only the latest in a series of law enforcement moves the government has made in response to the Sept. 11 terrorist attacks on New York and Washington. And so far, the filing requirement has been overshadowed by debate over the other changes.

The Patriot Act signed into law Oct. 26, for example, gives the government a vast arsenal of surveillance tools, easier access to personal information, and increased authority to detain and deport noncitizens. House and Senate negotiators came to terms Thursday on a bill that would add 28,000 employees to the federal payroll in an effort to bolster airport security, and Attorney General John Ashcroft has said he is reorganizing the Justice Department and the FBI to focus on counterterrorism efforts.

As for the business-filing requirement, specifics about what companies have to do and when they have to do it still need to be worked out. The Treasury Department has until March 25 -- the date the Patriot Act becomes law -- to issue regulations about how to put the new rules into practice.

"The law itself doesn't go into any detail, because you'd presume that's what the Treasury regulations are for," said Victoria Fimea, senior counsel at the American Council of Life Insurers. "And the devil, of course, is in the details."

When he signed the legislation, President Bush said the new rules were designed to "put an end to financial counterfeiting, smuggling, and money laundering." The problem, he and others have said, was keeping tabs on the billions of dollars that flow outside the traditional banking system and across national borders each year.

Money launderers often disguise the source of their money by using cash to buy pricey things. Later, they can resell the products and move the money into a bank account -- at which point it has been laundered, or made to look legitimate, by the aboveboard sale.

Making a series of transactions just below the $10,000 filing threshold is also illegal under the new law if it's done to keep a business from contacting the government.

Financial services companies such as banks, insurers, and stock brokerages face a higher standard under the new law than other businesses. In addition to the filing requirements, they have to take steps such as naming a compliance officer and implementing a comprehensive program to train employees about how to spot money laundering.

Unlike other businesses, though, most financial services companies already have a process in place to deal with government regulation.

"Certainly for the bigger [insurance] companies, they most likely are already tooled up for this," said Fimea. "For other companies, this creates a whole new landscape."

James Rockett, a San Francisco lawyer who represents banks and insurance companies in disputes with regulators, said he's skeptical the authorities will get any useful information from reports filed by nonfinancial companies.

"You're trying to turn an untrained populace into the monitors of money laundering activity," Rockett said. "If you want to stop this, it's got to be done with police work, not tracking consumers' buying habits."

Voices opposing any of the new law-enforcement measures appear to be in the minority, however. For now, at least, few people and few companies want to be perceived as being terrorist sympathizers.

"In a political sense, it would have been very hard for us to go to Congress in this case and loudly argue that the legislation shouldn't include nonfinancial-services guys," said Rubin, of the US Chamber of Commerce. "Everybody wants to help and to stop money laundering right now."

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To: exodus
Thank you for responding. I agree with your analysis of the 4th Amendment insofar
as it... enumerates our right to be left alone.

However, please allow me to try to make a distinction about invasion procedures and things readily available in public.

For example, you cannot be required to provide a blood sample without probable cause or a search warrant. However, when you walk down the street with your face uncovered for all to see you do not have an expectation of privacy and anyone may take your picture, including law enforcement officials. Now let me make the comparison to this law. No one can come into your house and demand an accounting of your cash without probable cause or a search warrant. However, when you walk into a public retail store and hand over $10,000 in cash you are affirmatively giving up privacy of that transaction. You may not agree with that last sentence but in this case I believe the public good of tracking and catching criminals and terrorists outweighs the private desire to pay in cash when other means are so readily available. Thank you for considering my position.
# 110 by JD86
************

I can't agree with your definition of "privacy," JD86.
It seems that you believe that I only have a right to privacy if I'm hiding in my house.

I believe that I have the right to walk out into a public place,
conduct myself in a lawful manner, go home,
and never be required to explain details of my life to anyone.

Why set the limit at $10,000?
What reason does anyone have to walk around with $5,000 in cash?

Money is property.
You're telling me that I don't have the right to my property.

>"There's a war going on! And this stuff isn't going to be used against AMERICAN CITIZENS!!"

>Well I wonder what Nacer Mustafa and his father Fathi Mustafa would have to say about that.

>Charges against 2 U.S. citizens dropped after lab tests determine documents not doctored...

Put the facts together. Two people of ME background, entering the US from Mexico on Sept 14 (definitely a wave #2 attack scenario to be concerned about). They had passports with the laminate coming off, making it appear that they were false.

collecting a huge database of every consumer transaction that is $10,000 cash and over?

How many consumer transactions do you envision that are $10,000 cash and over? I can't think of a reason to do one......I guess I must be running in the wrong circles. I think your fear of a HUGE DATABASE is unwarranted.

I do know someone who paid cash for a real estate transaction once....and my assumption at the time was that it was unreported income. Now I am not the IRS...but what would you assume in that situation?

Also, you seem to believe the terrorists did not deal in large sums of money. Atta, one of the terrorists pilots, wired money out of the US the week before 9/11. At one point, he tried to buy an airplane....they had lots of cash.

Why set the limit at $10,000? What reason does anyone have to walk around with $5,000 in cash?

I am sure you are being faceious with this comment. The $10,000 is an arbitrary number that has been used for years. This is not a new law.

Money is property. You're telling me that I don't have the right to my property. I NEVER said you didn't have a right to your property. You are changing the argument in midstream. You were arguing you had a total right to privacy that could not be infringed upon. I am saying you have the right to privacy in your own home...and a more limited right to privacy in public. In this case, your right to privacy is limited by the need of law enforcement to track large cash transactions. If you don't want anyone to know you have the money, don't spend it all in one place in one day.

..."This is also true. It's also why we, as citizens who, ourselves, are sworn to defend and uphold the Constitution of the United States have to stay vigilant as all hell during these times..............and even more so when it suddenly becomes generally accepted that "the war on terrorism" is won / over (which will never be a specific date like VE or VJ Day; it'll be a gradual realization; a general understanding of the world situation; perceived changes in mindsets in those countries that have traditionally supported terrorism, etc.)"....

This is probably the most scary thus far of what's been written on this thread.....as though the average Amerikan is going to ' stay vigilant' for a long stretch of years....after the hoopla of the current bombing exercise, it will be back to the arena to watch sports, Suicide, Marry a Millionaire, or whatever......and over these years, the FBI/CIA/DOD/NSA/Fadderland Security will all be coming back again and again 'needing' more of this or that....while the sheeple are being lulled to sleep with assurances that 'we're still striking at terrorists--remember we said it would be a long time, yada yada yada. And with a definite or set date or time period not set, suddenly, we have another generation underfoot that has never lived under anything less than a 'state of war', much like Afghanis under 23 years of age!!!

If you've never had steak (various freedoms), why would you insist on eating one?

Since less than 1% of the population has an annual after tax income over $100,000.....I am not worried about huge databases. In my part of the country the really big spenders are not flashy....in fact the richest man I know with an annual income of millions of dollars...doesn't carry cash at all.

Also I think it is more reasonable to look at what we know the terrorists did to predict their future behavior than to say well they could have done it without spending the cash...yes, they could have, but they didn't...and that is exactly the point.

No you put the facts together. These are US Citizens who did nothing wrong. It is 2 months later and the kid is just getting out of jail and they both are still not cleared. Not once have I seen that even one of the terrorists was or wanted to be a US Citizen.

Meanwhile the borders are still open for anyone who wants to enter, student visas are being handed out, rights are being taken and citizens ARE in jail. See anything wrong with this picture yet? Dont bother answering I know you dont. You always take the side of the government.

"RightOnline, we are not at war.
Our leaders told us that we were at "war with terrorists."
But when Congressman Bob Barr asked for a Declaration of War,
as required by the Constitution,
the House as a whole refused to vote the question.

I don't care what kind of man Bush is.
He's asking me to give up my freedom for an un-declared war
against an enemy that CAN NOT be conquered."
# 108 by exodus
*******************

To: exodus
"RightOnline, we are not at war."
Look at the results of 9/11 and tell me this.
We ARE at war, exodus, whether you choose to accept it or not.
Unlike some, I don't need an act of Congress...
If that's what you're waiting for...a "formal" declaration of war...
"...against an enemy that CAN NOT be conquered."
Who said anything about "conquering" anybody??
This isn't about "conquering", exodus. It's about kicking...
....and don't pretend to tell me that we can't "win" this..."
# 116 by RightOnline
************

What's the definition of a legal war, RightOnline?

If Congress doesn't issue a Declaration of War, we are not at war.
Having a group of politicians stand around talking about a "War on Terrorism"
is not the same thing, especially when they have just refused to consider
Bob Barr's bill asking for a Declaration of War.

Look it up. House Resolution # 62.
Especially note the phrase,
"Latest Major Action: 9/13/2001 Referred to House committee"

I don't have to "pretend" that we can't win a non-existant war.
The "War on Crime" will never be won.
The "War on Drugs" will never be won.
The "War on Terror will never be won.

Crime will be with us always, RightOnline;
Mood-altering substances will too.

And there will always be mean people.
Bullies.
Terrorists.

No matter how many rights we "temporarily" relinquish,
those things will always be with us.

Re laws being followed or not....it depends....just as the Constitution is or isn't followed....it depends....seems like a "D" doing it is illegal or unconstitutional whereas an "R" makes it right.

Seriously (I was serious then, too), there are laws for us piss ants and there are laws for the 'elitists', too.

I've followed this nonsense crap going back to 98 or 99 when the Fed, the Thrift supv, the Credit Union, and Treasury all tried to slip in the Know Your Customer program.....it goes way beyond suspicious banking transactions....this is an international thing....offhand the initials are the OSCE and FATF groups that hold secret, private meetings and set this crap up.....several years ago they wanted artwork, vehicles, boats, casinos, hotels, stocks and bonds, other financial transactions, insurance, and 'zillions' of other stuff all stuck in our banking.....and naturally, there were exemptions--for VIPS--I can't remember what they called those sorts of accounts....but I have a file about 4" on this crap; and worked with Benighted of Operation America on a lot more of it.

Back after the first WTC action and/or OKC, the FBI was hot to get all sorts of new powers....I even remember ol Louie baby asking for the roving wiretaps--they had 187 suspected drug dealers they wanted to spy on....I saw wiretap figures a couple of weeks ago and there was over 5,000!!!! But, hey, we've been told 'we're winning the WOD, too"!

I'm also an American.........and we're at war.

Your link to the Congressional Declaration Of War, please?

Bush saying he declares War Against Terrorism carries as much constitutional weight as me saying I declare War Against My Expanding Waistline, except he gets to send planes and bombs and troops out there, outside of his Constitutional Authority, and I have to make do with grilled chicken.

Interesting that you don't trust 'em with anything else, except the full might of our armed forces. Don't quite know what to make of that...

What a sensible post. Some of the nuttier "anti-government" posts are by 'tarians - they're concerned that the government might make their illegal "pastimes" more expensive and/or dangerous - they should be laughed at and/or ignored. Sadly, some others IMO are angry that W won - even though their candidate is essentially a fruitcake - on his good days. I like your post and appreciate your effort to enlighten - a lot of people who post here are at least a bubble and a half off plumb, but some of them aren't beyond help, and posts like yours may sink into their brains.

Bingo. This 10k thing is nothing new, or if it is, no one has explained how it differs from the old requirements to report cash transactions greater than $10K. All businesses were on the hook for that.

As an accountant, though-- may I offer a suggestion? Can we just freaking abolish cash? It's a pain in the butt-- gotta have extra procedures to deal with it, and truth be told, no honest person NEEDS to do big cash transactions. OK? No more big cash. We'll use it for nickel and dime stuff only. Thank you. :)

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