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."

Reasonable is a subjective word. The U.S. Constitution does not have any provisions for subjective terms. The only place where one can find where the Founding Fathers thought "reasonable" might fit is in the 10th Amendment which granted the sovereign STATES the right to determine what those instances might be. "Reasonable" is not granted to the federal government.

The Fourth Amendment prohibits "unreasonable" searches and seizures. The Fifth Amendment requires "due process of law," which raises the subjective question of what process is "due." The Eighth Amendment prohibits "excessive bail" and "excessive fines." The Constitution is full of subjective words, which is one thing that keeps lawyers in business.

ROTFLMAO!!!!

Me, too.

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.

The $10,000 threshold, established by the Bank (Anti-)Secrecy Act of 1970, has never been raised. Adjusted for inflation, the $10,000 minimum of nearly 32 years ago was equivalent to an approximate $45,000 minimum in 2000.

Last year, when legislooters were pushing HR 3886 (International "Know Your Customer") the Congressional Budget Office had to prepare an analysis of the bill's compliance costs, as that bill represented yet another unfunded mandate (a vital component of a fascist system). The estimated increased-cost imposition, for banks and financial institutions alone, was guessed to fall below the annual threshold allowed by the Unfunded Mandates Reform Act (UMRA), but, according to the CBO, "because compliance costs would depend directly on specific standards...established by the Secretary of the Treasury, CBO [could not] make that determination with confidence." (So much for the notion of representative government and a system of checks and balances, right? (Non-elected secretary of treasury=king?))

Given that the CBO figure of increased costs, for US banks and financial institutions alone (or, in actuality, the customers thereof) was in the neighborhood of $109 million per year, can you even begin to imagine what the figures will be for virtually all retail business in the US? (Now, there's an effective shot in the arm for an ailing economy. </sarcasm>)

Lest we forget:

In 1998, the total cost of combating money laundering in the US was more than $10 billion for the public and private sectors combined. Despite the additional filings of Suspicious Activity Reports (SARs), required as of 1996 and averaging about 10,000 per month, 1998 saw only 932 money-laundering convictions, representing a cost of more than $10 million per conviction. [Source]

Close enough, for government work?

ROFLMAO, indeed.
{"I get these--ooh-ooh--suspicions"}

The real object of despotism is revenue.—Thomas Paine

But....but.....but.....doncha wanna feel secure?

Yes, I do, which is why I find voyeurism to be so repulsive--no matter how it's packaged, or who's getting their jollies.

I'm fairly certain that the victims of 9/11 would have appreciated a little security, too. Tens of thousands of peaceful Americans were targeted for death, two and half months ago, while their government was apparently too obsessed with such bullsh*t as monitoring and scrutinizing their financial transactions to notice a genuine threat in the making--right under its own nose--and offer any defense against it. (And now, the result of that deadly failure is being used to promote more of the same??? F'ing sick.)

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.