When federal regulators said last week they were abandoning a controversial plan to expand bank surveillance of customers, privacy advocates were hopping mad.
The not-so-obvious reason? Banks already are required to monitor customers for "suspicious" deposits and withdrawals. And last week's decision to nix the formal "Know Your Customer" proposal didn't change that a bit.
Over 88 percent of US banks had Know Your Customer policies in place as of January 1999, according to an American Bankers Association survey.
To privacy advocates, it's a stark example of government meddling in personal lives.
Groups as far apart on the political spectrum as the ACLU and the Libertarian Party have reacted in unison, launching campaigns that urge Americans to investigate their bank's current practices and, if necessary, to complain.
The ACLU's online campaign, called "Know Your Banker," is scheduled to begin Tuesday.
"We are trying to put the banks out of the business of spying on their customers and we're enlisting customers in that effort," says ACLU legislative counsel Gregory Nojeim.
"We are asking customers to ask their bankers two questions: First, has the bank already adopted a Know Your Customer program, and how many times in the last year did it report its customers as suspects to the government?"
Reports are filled out by a teller or other bank official, and consist of a five-page form that includes the customer's name, address, Social Security number, driver's license or passport number, date of birth, and information about the transaction.
If tellers have PC terminals, the Financial Crimes Enforcement Network (FinCEN) offers a Windows fill-in-the-fields application that submits the data electronically.
In whatever form, the information ultimately goes to FinCEN, a sister agency of the IRS also housed within the Treasury Department. An estimated 100,000 reports were filed last year.
The IRS computing center in Detroit is the home of FinCEN's Suspicious Activity Reporting System (SARS), a mammoth searchable database that went online in April 1996.
Hundreds of law enforcement agencies -- including the IRS, Drug Enforcement Administration, the Postal Service, bank regulators, and state law enforcement -- share access, sometimes via modem dialup. The FBI, Secret Service, and US Customs regularly download the data and import it into their own databases.
The reason for the complex and expensive system: illegal drugs. The Federal Reserve has defended surveillance programs as a vital weapon in the war on drugs and drug-related money laundering. In its annual report last April FinCEN said, "SARS reflects the philosophy that suspicious-transaction reporting is central to counter money-laundering policy, both in the United States and abroad."
