Free Congress Foundation's Notable News Now Excerpts from FCF Programming and Other FCF Projects May 21, 2001 Inside Stories Paul Weyrich's "Endangered Liberties" Commentary: Judicial Nomination Tug-of-War The Free Congress Commentary Threat of "Know Your Customer" Still Lingers by Lisa S. Dean >From the "Endangered Liberties" Television Program In 1999 Congress and the American people squashed a program proposed by the federal banking agencies known as "Know Your Customer." Over 300,000 Americans responded to the agencies during the public comment period expressing outrage. Members of Congress expressed outrage that such a proposal was even being considered. Even state banking associations strongly opposed the rule. Briefly, "Know Your Customer" would have deputized your banker by forcing him to collect your personal information and monitor your bank accounts to determine a pattern of banking activity. If he spotted what he considered to be unusual account activity, that is, if you deposited or withdrew a little more money per month than normal, or deviated from your usual pattern of activity, then your banker had to report you to the federal government, specifically, he had to file a Suspicious Activity Report with the Treasury Department's investigative arm, the Financial Crimes Enforcement Network or FinCEN, without your knowledge. FinCEN would then review your account activity and determine whether it should investigate you for possible money laundering or other financial crime. If your banker chose not to report you, he could have been subject to fines, imprisonment or loss of employment. Needless to say, that accounts for the overwhelming number of citizens and congressmen who complained about the rule. The agencies were forced to withdraw their proposal and mercifully, "Know Your Customer", as a proposed federal regulation, died and several attempts have been made in Congress to ensure that it does not return. However, those attempts just might be futile if the Organization for Economic Cooperation and Development has its way. The OECD is a Paris-based international organization charged with handling international money laundering and other financial crimes along with the Financial Action Task Force, also based in Paris. Its current proposal calls for each of the 28-member nations to increase bank surveillance on customers by instituting "Know Your Customer" practices. For an international organization to twist the arms of democratic nations in order to get them to adopt policies that conflict with the rights and freedoms of their citizens is no surprise. But the thought that these countries, including our own, are considering them is. Treasury Secretary Paul O'Neill has not calmed the fears of privacy advocates and other Americans who are concerned that this proposal could become a reality. While concerned about the tax implications involving e-commerce is a worthy one, privacy advocates strongly caution O'Neill not to sacrifice our Constitutional rights in the process, especially for a system that has proven itself both unpopular and inadequate. Larry Lindsey, the current White House Assistant for Economic Affairs, and former member of the Federal Reserve Board has repeatedly denounced "Know Your Customer" as an ineffective program. Last year The Financial Crimes Enforcement Network (FinCEN) estimated that one in five suspicious activity reports filed by banks on their customers are related to a serious crime. 45% of those reports involve amounts of money less than $10,000, the limit that is required by law enforcement to begin investigations against citizens. Which means that banks are forwarding personal financial records of citizens to federal agencies that couldn't legally investigate even if they wanted to. That information, which by nature is confidential between a bank and its customer, can be shared with other agencies as well as state and local law enforcement officials WITHOUT A WARRANT. This year alone banks are expected to file approximately a quarter of a million suspicious activity reports on their customers. If these statistics are any real indicator, tens of thousands of innocent bank customers will be reported to the federal government for alleged financial crimes and some might actually be investigated. Why? Because some relative left you some money or your boss gave you an unexpected bonus? Or perhaps because you needed a little more money for the weekend and withdrew from your account? Whatever the case, the bottom line is that this country needs a REAL victory over Know Your Customer rules and its methods of doing so must be conducted through our Constitutional process, and certainly not by international decree. Secretary O'Neill must part ways with the mindset that was so prevalent during the previous administration, namely, that our Constitutional rights are an obstacle to the law rather than the purveyor of it. Bush has so far been successful at restoring honor and dignity to the White House, let's hope he will be as successful in restoring our lost rights and sovereignty as well. Lisa Dean is Vice President for Technology Policy at the Free Congress Foundation. For media inquiries, contact Notra Trulock 202.546.3000 / [EMAIL PROTECTED] For other questions or comments, contact Angie Wheeler [EMAIL PROTECTED] Judicial Nomination Tug-of-War by Paul M. Weyrich >From the "Endangered Liberties" Television Program Executive Orders come and go. Bill Clinton promulgated many. George W. Bush has undone some of the same. Even regulations come and go. The appropriate hearings, the appropriate notification in the Federal Register, and a new administration can turn around federal regulations rather sharply. Depending on majorities in Congress, legislation can even be changed. It is much more difficult, but a determined majority, working with a president, can indeed change some of the laws, albeit often at the margins. The one LASTING impact which an administration has that lives beyond itself in any meaningful fashion is the federal judiciary. Presidents Ronald Reagan and George Bush put their imprint on the U.S. Supreme Court and especially on the Circuit Courts of Appeal. To a large extent, that imprint has held through the eight years of the Clinton Administration. Clinton appointed more than half of the federal judiciary, yet his impact in terms of policy was fairly minimal because he got precious few appointments on the appeals courts and they hear 80% of the critical cases anyway. These facts have begun to dawn on Democrats, who have now drawn lines in the sand regarding court appointments. The Democrats have told Bush that they want input on the naming of judges, that they want objections by their Senators to appointments within a circuit respected, and they want nominees, at least for the Supreme Court, who will guarantee that they will uphold Roe v. Wade, the decision that made abortion on demand the law of the land. If Bush could hold his Republicans in the Senate, he could tell these Democrats to take a flying leap. The problem for Bush is that there are four -- perhaps five -- Republicans who will join with the Democrats in voting against prospective Bush Appeals Court and Supreme Court nominees. On the other side there are no more than two Democrats who can be counted on to come in the other direction. That leaves a gap of two or three which will have to be made up somewhere, somehow. The left believes it can influence Senators on judicial nominations. That is what a march on Washington a few Sundays back was all about. Various pro-abortion and radical feminist groups have joined with environmentalists and labor unions to form a coalition to try to get commitments out of Senators to vote no on all of Bush's nominees from the Appeals Court to the Supreme Court. They want the courts to continue to write laws, rather than the people or their elected representatives. The Right has its own coalition aimed at getting these same judges confirmed. It consists of pro-family, law enforcement, taxpayer and local conservative groups who believe that courts should interpret, not write laws. The contest will be between these coalitions. The Senators will go with whichever coalition they fear the most. Right now, however, lines are being drawn so fast so early that the whole confirmation process may be down to the decision of three or four Senators at most. This is not what our Founding Fathers had in mind when they built advise and consent into the process. Paul Weyrich is president of the Free Congress Foundation. For media inquiries, contact Notra Trulock 202.546.3000 / [EMAIL PROTECTED] For other questions or comments, contact Angie Wheeler [EMAIL PROTECTED] Visit our website at http://www.freecongress.org This publication is a service of the Free Congress Research and Education Foundation, Inc. (FCF) and does not necessarily reflect the views of the Free Congress Foundation nor is it an attempt to aid or hinder the passage of any bill. Free Congress Foundation * 717 Second Street, NE * Washington, DC 20002 * 202.546.3000 * Fax: 202.544.2819 Project Manager: Angela Wheeler * Copyright * 2001 Free Congress Foundation - All Rights Reserved.
