Posted on 11/23/2001 2:58:00 PM PST by Smogger
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."
Scott Bernard Nelson can be reached by e-mail at nelson@globe.com.
I have no problem with that interpretation. I'm just trying to figure how defending America from these whackjobs has anything at all to do with how I pay for a car or whether the FBI can break into my house to read my e-mail while I'm at work.
The Bill Of Rights may be a troublesome anachronism for some folks inside the Beltway (cough cough Ashcroft cough), but jeez, they should at least try not to urinate directly onto it if they want some of the more alert frogs to stay in the pot.
Personally, I recognize that some measures in the bill were necessary and good. They did ask for the right to hold illegal immigrants for a longer period of time than previously allowed, which makes sense. What frustrates me however is that I can't figure out why it is ok to watch me in a manner previously not allowed, while those same illegal immigrants aren't held indefinitely or deported alogether. Yes, there are tools in the Patriot Act that will assist law enforcement in tracking terrorists. Unfortunately, I believe they slipped a lot of other stuff in there under the guise of anti-terrorism that they have always wanted but could not get because the things they wanted were unconstitutional as a cynical and opportunistic ploy. It happned when the Murrah building was bombed and it just happened again. A few more bombings and we won't be that much different than Stalinist Russia. Hyperbole? Perhaps. But 10 years ago, nobody would believe the measures they have recently slipped through.
To be sure, I blame Clinton for this, not Bush. I can even get conspiratorial and not discount the idea that Clinton was purposely setting us up for this for his own benefit. Nevertheless, the effect is real.
If you or somebody else could demonstrate for me how these measures will stop terrorism and that they won't be used for a single political purpose ever, I would feel better about it. Unfortunately, it is not possible to prove a future event. The Framers understood the nature of government and put protections in the Constitution for this very reason, with the understanding that the impediments to government might make things difficult, but that those difficulties were more desirable than the alternative.
This is so good, it bears repeating. I still haven't gotten over the 14 Syrians let in the country in October for flying lessons.
Not going to be used against American citizens??
Yup, I do.
Anyone who doesn't believe it needs to take a look at the clinton scandals for starters.
I've known a number of people over the course of my lifetime who bought with cash and they were normal, just wealthy. Once upon a time, paying cash allowed you to negotiate for a better deal with a business owner. I suppose that's still true even today with a business such a jewelry store.
This comment was made in response to the issue of absolute privacy.
Now might be a good time to define freedom.
Okay, how would you suggest the concepts of freedom, privacy and the need for national security be reconciled?
Well, the cause seems admirable....but you obviously object to the methods.
What would you consider reasonable for tracking cash transfers? $50,000, $100,000, none?
And if the answer is none, what alternative would you propose?
The law we are discussing is about cash PURCHASES....
please show me where there is anything about how much money you can make? or keep? or even spend?
Please explain how cash in your pocket is a transaction?
This law does not govern transactions between private parties. It covers cash purchases in the amount of $10,000 from a retailer. As you well know, such transactions are covered by the Commerce Clause of the US Constitution and reasonable limitations on interstate commerce have been upheld by the Courts.
Please explain how this law has anything to do with PRIVACY. This is a regulation of commerce, allowed by the Commerce Clause of the US Constitution. Your right to privacy is not absolute. It is bounded by many things besides the Fourth Amendment.
Law enforcement is a branch of government, the Executive Branch. (The President is the top law enforcement officer.) My right to privacy is not limited by the "need" of law enforcement. The "need" of law enforcement to violate my privacy is limited by the 4th Amendment.
I would agree with your assessment of the 4th Amendment...to a point. As a practical matter, the more people who live in the country, the more accommodations we each have to make for others...which means our individual rights are not absolute. We have a right to privacy in our homes but we cannot screen porno flicks in the living room with the curtains open in a subdivision where many children reside. Closing the curtains is a limit on your right to do whatever you want in your home...because not doing so impacts others. We have a right to privacy in our cars but we cannot drink and drive, run red lights or speed through subdivisions. Driving within the limits of the law is a limit on your right to do whatever you want in your car...because not doing so impacts others.
We have a right to spend our money in whatever amounts we desire for whatever we desire...but if we choose to do that in cash, the limit is $10,000 or there will be a paper trail. If you wrote a check for $10,000 there would be a paper trail. Please tell me what you think the difference is between the two.
Exactly on point.
Exactly!
You are right. And this law does not say otherwise. It says a record will be made that you paid cash for the car, if you paid $10,000 or more.
That has been the law for years. If someone from the government later asks you why you did, you have several choices: tell them, don't tell them,
ask them why they want to know, ask to talk to a lawyer before responding further. But until someone from the government asks you why....
the 4th Amendment does not apply.
Me neither...:)
It's an example of the worst kind of lawmaking that is ripe for extreme abuse and the sooner it's cut to shreds the better.
I know you addressed this in your post, but it IS without doubt very unconstitutional.
LOL...and your point would be? I noticed your comment was posted at 2:56 am Pacific time....:)
By the way, why not set it lower to say $1,000? Why would anyone need to walk around with $1,000 cash on them?
As a practical matter, thousands, maybe millions, of people occasionally have $1,000 in their pocket...like payday after cashing their checks...or when traveling. Thousands probably even spend $1,000 in cash on a semi-regular basis, like buying a computer. This law is not intended for the ordinary transactions....but for the extraordinary transactions.
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