[105243] in Cypherpunks
IP: [FP] Your Banker, the Snitch
daemon@ATHENA.MIT.EDU (Vladimir Z. Nuri)
Mon Nov 9 00:49:34 1998
To: cypherpunks@cyberpass.net
Date: Sun, 08 Nov 98 21:35:21 -0800
From: "Vladimir Z. Nuri" <vznuri@netcom.com>
Reply-To: "Vladimir Z. Nuri" <vznuri@netcom.com>
From: "ScanThisNews" <mcdonalds@airnet.net>
Subject: IP: [FP] Your Banker, the Snitch
Date: Sun, 8 Nov 1998 16:03:49 -0600
To: ignition-point@majordomo.pobox.com
SCAN THIS NEWS
-----Original Message-----
From: Wolfe's Lodge [mailto:wolfelodge@bigfoot.com]
Sent: Friday, November 06, 1998
--------------------------
Your Banker, the Snitch
The Tampa Tribune
11/6/98 Dan Lynch
ALBANY, N.Y. - He works for a big banking outfit, and he's fairly high up in
the organization. He was telling me about a new proposed federal banking
regulation called the "Know Your Customer" program. The thing had just hit
his desk.
"I'm still waiting for my blood pressure to go down." he said.
"What does it do?" I asked.
"It'll require financial institutions to do six things - some of which we
already do. The first one is to determine the true identity of a bank's
customers. In a business situation, that's just common sense. If Dan Lynch
walks into XYZ Bank and says, 'I want to open a checking account,' it's
good, prudent business sense for XYZ Bank to determine that Dan Lynch is
really Dan Lynch."
"Then it goes on. It's going to require a bank to determine a customer's
source of funds for transactions involving a bank, including the types of
instruments used and where the funds were derived or generated. OK, Dan
Lynch goes into the bank and opens an account. He has a thousand bucks he
wants to put in the account. Now, we're going to ask Dan Lynch where the
money came from."
This is about drug dealers," I said.
"Oh, yeah, the drug dealer thing is the whole basis for this. ... Then we're
going to determine the particular customer's normal and expected
transactions involving the bank. Based on a bunch of questions we're going
to ask you, we're going to find out how much money is regularly going to go
into your account, how much money is going to come out, and when these
transactions are going to take place."
"Then we're going to monitor all of your transactions...And, based on this
monitoring of your account, we're going to determine if any of your
transactions are unusual or suspicious. And if any of them appear to be,
we're going to report them to the appropriate authorities."
This banking executive is fairly horrified that the federal government wants
his bank to serve as a law enforcement arm of the federal government - as
snitches, essentially, who'll surely end up siccing the feds on a whole
squad of people who've done nothing wrong.
What's odd about this is that I have a friend who worked for years for a
large federal agency that I won't name. That agency has a strong interest in
how much money people put in bank accounts. If a suspected drug dealer made
a big deposit, then my friend and his fellow computer geeks would go into
the bank's computers, grab the money and keep it until the suspected drug
dealer decided to explain to the authorities where he got the cash. The
federal government grabs millions of dollars in drug money that way every
year.
Under this plan, though, the feds would end up with a whole new list of
names and bank accounts to watch.
My friend the banker says that this possibility makes his blood run cold.
How about yours?
--------------------------
[Banking regulations]
As publicly regulated entities, banks are "quasi-governmental" agencies that
must comply with federal laws. They are supposed to comply with the
requirements and prohibitions of the Privacy Act, though most agencies now
completely ignore the Act's limiting language. They also must enforce all
federal regulations regarding financial transactions. In addition, banks
establish internal, industry-wide policies which all banks typically
implement; a good example is the requirement for non-member customers to
submit a fingerprint when cashing a check. Below is an excerpt from SCAN's
SSN FAQ regarding federal banking requirements for reporting customer SSNs
and other information. These same reproting requirements apply to postal
money order transactions. The FAQ is posted at:
http://www.networkusa.org/fingerprint/page6/fp-ssnfaq.htm
---
Banks (Financial Institutions):
Banks may deny service or resist opening an account or transferring funds
for an individual who does not provide a social security number upon
request.
Banks are required by federal regulations to make and file certain reports
on the purchase of money orders and other transfers of funds. As of January
16, 1996, Title 31 U.S.C. Sec. 5325, Subtitle IV - Chapter 53 - Subchapter
II, imposes a requirement upon financial institution for the filling of
reports for certain financial transactions.
Title 31 U.S.C. Sec. 5325 Section 5325, titled "Identification required to
purchase certain monetary instruments" states that:
"(a) No financial institution may issue or sell a bank check, cashier's
check, traveler's check, or money order to any individual in connection with
a transaction or group of such contemporaneous transactions which involves
United States coins or currency... in amounts or denominations of $3,000 or
more unless the individual has a transaction account with such financial
institution...; or the individual furnishes the financial institution with
such forms of identification as the Secretary of the Treasury may require in
regulations..."
The "regulations" state that banks must request a social security number
when establishing a bank account for an individual and from anyone that does
not have an established account seeking to obtain "bank checks, cashier's
checks, traveler's checks, or money orders". Pursuant to Title 31, Code of
Federal Regulations, Section 103.34, banks are required to ask for the
Social Security number when opening a bank account or issuing a certificate
of deposit for a new customer. But "In the event that a bank has been unable
to secure, within the 30-day period specified, the required identification,
it shall nevertheless not be deemed to be in violation of this section if
(i) it has made a reasonable effort to secure such identification, and (ii)
it maintains a list containing the names, addresses, and account numbers of
those persons from whom it has been unable to secure such identification,
and makes the names, addresses, and account numbers of those persons
available to the Secretary as directed by him." This provision applies also
to purchases of bank checks, cashier's checks, traveler's checks, or money
orders without providing a SSN.
Under the federal regulations (with the exception of casinos and the Postal
Service) financial institutions are required to file "reports" for all
financial transactions in amounts of $10,000.00 or more. And all
institutions which issue or sell "bank checks and drafts, cashier's checks,
money orders and traveler's checks" must file a report on all purchases made
by a single person totaling $3,000.00 or more.
The Code of Federal Regulations states that (as of July 1, 1997):
Title 31CFR103
"Subpart A - Definitions"
"Sec. 103.11 Meaning of terms."
"(l) Established customer. A person with an account with the financial
institution, including a loan account or deposit or other asset account, or
a person with respect to which the financial institution has obtained and
maintains on file the person's name and address, as well as taxpayer
identification number (e.g., social security or employer identification
number) or, if none, alien identification number or passport number and
country of issuance, and to which the financial institution provides
financial services relying on that information."
"Subpart B--Reports Required To Be Made"
"Sec. 103.20 Determination by the Secretary."
"The Secretary hereby determines that the reports required by this subpart
have a high degree of usefulness in criminal, tax, or regulatory
investigations or proceedings."
"Sec. 103.22 Reports of currency transactions."
"(a)(1) Each financial institution other than a casino or the Postal Service
shall file a report of each deposit, withdrawal, exchange of currency or
other payment or transfer, by, through, or to such financial institution
which involves a transaction in currency of more than $10,000."
"Sec. 103.28 Identification required (for filing reports)."
"Before concluding any transaction with respect to which a report is
required under Sec. 103.22, a financial institution shall verify and record
the name and address of the individual presenting a transaction, as well as
record the identity, account number, and the social security or taxpayer
identification number, if any, of any person or entity on whose behalf such
transaction is to be effected..."
"Sec. 103.29 Purchases of bank checks and drafts, cashier's checks, money
orders and traveler's checks."
"(a) No financial institution may issue or sell a bank check or draft,
cashier's check, money order or traveler's check for $3,000 or more in
currency unless it maintains records of the following information: (2) If
the purchaser does not have a deposit account with the financial
institution: (i)(A) The name and address of the purchaser; (B) The social
security number of the purchaser, or if the purchaser is an alien and does
not have a social security number, the alien identification number..."
U.S. Post Office:
Being denied service may not be the biggest problem for a person refusing to
provide their SSN when purchasing a money order. The U.S. Postal Service has
implemented a policy requiring that Postal employees must report as
"suspicious" anyone who resists giving their social security number when
purchasing a Postal Money Order in amounts over $3,000.00. Postal employees
are instructed to obtain SSNs on Form 8105A when a Money Order is purchased.
And they are instructed to use Form 8105B to report anyone who resists, or
even acts reluctant to, supplying their social security number. A Money
Order purchase absent a SSN is considered a "suspicious transaction"
according to the new Postal guidelines.
=======================================================================
Don't believe anything you read on the Net unless:
1) you can confirm it with another source, and/or
2) it is consistent with what you already know to be true.
=======================================================================
Reply to: <fingerprint@networkusa.org>
=======================================================================
To subscribe to the free Scan This News newsletter, send a message to
<majordomo@efga.org> and type "subscribe scan" in the BODY.
Or, to be removed type "unsubscribe scan" in the message BODY.
For additional instructions see www.efga.org/about/maillist.html
-----------------------------------------------------------------------
"Scan This News" is Sponsored by S.C.A.N.
Host of the "FIGHT THE FINGERPRINT!" web page:
www.networkusa.org/fingerprint.shtml
=======================================================================
****************************************************
To subscribe or unsubscribe, email:
majordomo@majordomo.pobox.com
with the message:
(un)subscribe ignition-point email@address
or (un)subscribe ignition-point-digest email@address
****************************************************
www.telepath.com/believer
****************************************************
