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."

Retailers are not LEOS. The 4th amendment only applies to government. Its like crying for your first amendment protections here if a moderator zaps one of your posts. The constitution is irrelevant until the government gets involved.

Just who do you think is asking the Retailers to submit the informaiton, and to whom do you think the forms are sent?

business owner = public, ie regulated by government...licensing, taxes, Commerce Clause, etc.

I disagree that a buisness owner is public, unless that buisness is an arm of government.

You do understand, I assume, that the idea that buisness as "public", is a hallmark plank of socialism and fascism, right? If we take away the right of individuals to be buisness owners, and force them under the auspices of government, or make them "public", we have abandoned capitolism and started down the road to fascism.

BTW, I feel that if our current course is maintained, America WILL be the next great fascist power in history, and those like you, who refuse to recognize the Bill of Rights as absolute, facilitate that change.

So be it...

Were you going to reply, or did you need a 2nd example?

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.

If you can give me one example I may agree with you.

JUST ONE? --- How about this. I am an Artist, I paint and make scuptures. I have a local storefront where I sell my wares. A local patron comes into my stores and wishes to buy my Art for $15,000 in cash. I am engaged in a business, but it is local only. I have no catalog, no advertisment, and no website furthering or advertising my Art outside my local community.

Being forced to report this transaction, other than legally reporting the income, is a violation of the 4th Amendment. Your thoughts?

Just who do you think is asking the Retailers to submit the informaiton, and to whom do you think the forms are sent?

That's a beef between the retailers and the government. Until its determined you're a clear and present danger or are accused of a crime, you dont get to cry 4th amendment. To hold otherwise would be a follow. You enter into these transactions on a volunteer basis.

Being forced to report this transaction, other than legally reporting the income, is a violation of the 4th Amendment. Your thoughts?

First, that you are multi-talented..I thought you were a lawyer. But I will assume you are using the "I am an artist" as a hypothetical. And I will also assume for this hypothetical that 100% of your supplies are local and that you never bill through the mail or ship anything "home" for tourists who buy in your store...all things that would be considered interstate commerce.

But for your hypo, I will consider that your business is truly local. Given your local hypo would you consider any reporting a violation of the 4th Amendment, like a recording of sales tax...or some other administrative legal requirement? And I guess my most relevant question would be: If you really intended to report all your cash income, why would it bother you to say you got one lump sum of over $10,000? Is this truly more invasive than filing quarterly income tax estimates? I think not. Comments?

Just who do you think is asking the Retailers to submit the informaiton, and to whom do you think the forms are sent?

I am not sure I understand your logic. I am a citizen, and a store ownwer/retailer.....I am CRYING 4th Amendment violation at being told I must report these transactions. And I am right.

Until its determined you're a clear and present danger or are accused of a crime, you dont get to cry 4th amendment.

Now I understand...you have this EXACTLY BACKWARDS. "Until government has a specific and probable cause of criminal activity, and swears to such before an independent jurist, it MAY NOT search you."

If you are a lawyer, I am incredibly depressed...

I consider myself a very creative, non-practicing atty..... see my web design

Just flip it, now I am the local patron and I am purchasing the Art. Why should my cash purchase of art warrant my name being reported to the government? The Federal government is requesting, with no particular suspicion, that my name and other information be reported to the government by this private business owner/artist just because I paid in cash.

It is more invasive than him filing his quarterly tax returns which make no mention of me? YES.

I am CRYING 4th Amendment violation at being told I must report these transactions. And I am right.

Nope. Not until you violate the act and are charged with a criminal violation. Until then its no different than being required to file a tax return.

Now I understand...you have this EXACTLY BACKWARDS. "Until government has a specific and probable cause of criminal activity, and swears to such before an independent jurist, it MAY NOT search you."

Its not search you, the customer. Its examining the store records which are required to be submitted in compliance with a validly enacted law. YOU have no reasonable expectation of privacy in those records. No different than someone searching your trash once its in the back of a garbage truck. Its not that hard to understand, is it?

My reply at #211 answers why it affects more that just tax cheats. I am more concerned about the purchasor and used the small artist/owner as an example. But, just becuase the store owner wants to cheat the government with the cash I pay, is no reason for the government to come after my rights. Wrong solution to the problem.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated; and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched and the persons or things to be seized.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated;

But they're not your papers! Get it? Try going back to the store and asking that they turn them over to you. Aint gonna happen.

You know, you constitutional warriors are great at citing the consitution but you overlook the part of that document that provides that the supreme court applies that language to the facts of a particular case. You're like people that think because they have checks left in their checkbook they have money in their account; or your speedometer goes up to 120 mph and think your car should go that fast.

I find it incredible that you can make these arguments.

LOL I do to since it came out so mangled. But you understand what I mean. Its not a search of you, the customer. Its a review of the business. And its not an argument, its the facts. If I twist them its not going to change reality, although a number of you constitutiona warriors seem to think thats all it will take.

I find it incredible that [VAA] can make these arguments.

Here's what he said last night:

If they come to my door I will invite them in. I will not and no one need[s] to travel with large sums of money in today's day and age

I was just about to post that again. IMHO, the ONLY place advocates of universal government surveillance have a leg to stand on, is that this MIGHT, repeat MIGHT, be considered a "reasonable" search, rather than an unreasonable search.

I, howwver, do not agree with that line of thought. I find it UNREASONABLE to profile every person who spends $10K cash, and to compile lists of said individuals in order to monitor their activities.

I fear the day when the Fedgov examines my file, determines that I have bought firearms, determines that I belong to the Republican party, determines that I post at FReerepublic, determines that I attend a Catholic church, and that I occasionally buy alchohol at the local supermarket, and that therefore, I am a threat as a domestic terrorist.

Others on this thread will not feel that fear until the govt starts profiling lawyers.

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