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Postal Service Has Its Eye on You


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By John Berlau
[EMAIL PROTECTED]
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Since 1997, the U.S. Postal Service has been conducting a
customer-surveillance program, ‘Under the Eagle’s Eye,’ and reporting
innocent activity to federal law enforcement.

Remember “Know Your Customer”? Two years ago the federal government
tried to
require banks to profile every customer’s “normal and expected
transactions”
and report the slightest deviation to the feds as a “suspicious
activity.”
The Federal Deposit Insurance Corp. withdrew the requirement in March
1999
after receiving 300,000 opposing comments and massive bipartisan
opposition.
       But while your bank teller may not have been snooping and
snitching
on your every financial move, your local post office has been (and is)
watching you closely, Insight has learned. That is, if you have bought
money
orders, made wire transfers or sought cash cards from a postal clerk.
Since
1997, in fact, the window clerk may very well have reported you to the
government as a “suspicious” customer. It doesn’t matter that you are
not a
drug dealer, terrorist or other type of criminal or that the the
transaction
itself was perfectly legal. The guiding principle of the new postal
program
to combat money laundering, according to a U.S. Postal Service training
video obtained by Insight, is: “It’s better to report 10 legal
transactions
than to let one illegal transaction get by.”
       Many privacy advocates see similarities in the post office’s
customer-surveillance program, called “Under the Eagle’s Eye,” to the
“Know
Your Customer” rules. In fact, in a postal-service training manual also
obtained by Insight, postal clerks are admonished to “know your
customers.”
       Both the manual and the training video give a broad definition of
“suspicious” in instructing clerks when to fill out a “suspicious
activity
report” after a customer has made a purchase. “The rule of thumb is if
it
seems suspicious to you, then it is suspicious,” says the manual. “As we
said before, and will say again, it is better to report many legitimate
transactions that seem suspicious than let one illegal one slip
through.”
       It is statements such as these that raise the ire of leading
privacy
advocates on both the left and right, most of whom didn’t know about the
program until asked by Insight to comment. For example, Rep. Ron Paul,
R-Texas, who led the charge on Capitol Hill against the “Know Your
Customer”
rules, expressed both surprise and concern about “Under the Eagle’s
Eye.” He
says the video’s instructions to report transactions as suspicious are
“the
reverse of what the theory used to be: We were supposed to let guilty
people
go by if we were doing harm to innocent people” when the methods of
trying
to apprehend criminals violated the rights of ordinary citizens. Paul
says
he may introduce legislation to stop “Under the Eagle’s Eye.”
       The same sort of response came from another prominent critic of
“Know
Your Customer,” this time on the left, who was appalled by details of
the
training video. “The postal service is training its employees to invade
their customers’ privacy,” Greg Nojeim, associate director of the
American
Civil Liberties Union Washington National Office, tells Insight. “This
training will result in the reporting to the government of tens of
thousands
of innocent transactions that are none of the government’s business. I
had
thought the postal-service’s eagle stood for freedom. Now I know it
stands
for, ‘We’re watching you!’”
       But postal officials who run “Under the Eagle’s Eye” say that
flagging customers who do not follow “normal” patterns is essential if
law
enforcement is to catch criminals laundering money from illegal
transactions. “The postal service has a responsibility to know what
their
legitimate customers are doing with their instruments,” Al Gillum, a
former
postal inspector who now is acting program manager, tells Insight. “If
people are buying instruments outside of a norm that the entity itself
has
to establish, then that’s where you start with suspicious analysis,
suspicious reporting. It literally is based on knowing what our
legitimate
customers do, what activities they’re involved in.”
       Gillum’s boss, Henry Gibson, the postal-service’s Bank Secrecy
Act
compliance officer, says the anti-money-laundering program started in
1997
already has helped catch some criminals. “We’ve received acknowledgment
from
our chief postal inspector that information from our system was very
helpful
in the actual catching of some potential bad guys,” Gibson says.
       Gillum and Gibson are proud that the postal service received a
letter
of commendation from then-attorney general Janet Reno in 2000 for this
program. The database system the postal service developed with
Information
Builders, an information-technology consulting firm, received an award
from
Government Computer News in 2000 and was a finalist in the
government/nonprofit category for the 2001 Computerworld Honors Program.
An
Information Builders press release touts the system as “a standard for
Bank
Secrecy Act compliance and anti-money-laundering controls.”
       Gibson and Gillum say the program resulted from new regulations
created by the Clinton-era Treasury Department in 1997 to apply
provisions
of the Bank Secrecy Act to “money service businesses” that sell
financial
instruments such as stored-value cash cards, money orders and wire
transfers, as well as banks. Surprisingly, the postal service sells
about
one-third of all U.S. money orders, more than $27 billion last year. It
also
sells stored-value cards and some types of wire transfers. Although the
regulations were not to take effect until 2002, Gillum says the postal
service wanted to be “proactive” and “visionary.”
       Postal spokesmen emphasize strongly that programs take time to
put in
place and they are doing only what the law demands.
       It also was the Bank Secrecy Act that opened the door for the
“Know
Your Customer” rules on banks, to which congressional leaders objected
as a
threat to privacy. Lawrence Lindsey, now head of the Bush
administration’s
National Economic Council, frequently has pointed out that more than
100,000
reports are collected on innocent bank customers for every one
conviction of
money laundering. “That ratio of 99,999-to-1 is something we normally
would
not tolerate as a reasonable balance between privacy and the collection
of
guilty verdicts,” Lindsey wrote in a chapter of the Competitive
Enterprise
Institute’s book The Future of Financial Privacy, published last year.
       Critics of this snooping both inside and outside the postal
service
are howling mad that the agency’s reputation for protecting the privacy
of
its customers is being compromised. “It sounds to me that they’re going
past
the Treasury guidelines,” says Rick Merritt, executive director of
PostalWatch, a private watchdog group. The regulations, for example, do
not
give specific examples of suspicious activity, leaving that largely for
the
regulated companies to determine. But the postal-service training video
points to lots of “red flags,” such as a customer counting money in the
line. It warns that even customers whom clerks know often should be
considered suspect if they frequently purchase money orders.
       The video, which Gibson says cost $90,000 to make, uses
entertaining
special effects to illustrate its points. Employing the angel-and-devil
technique often used in cartoons, the video presents two tiny characters
in
the imagination of a harried clerk. Regina Goodclerk, the angel,
constantly
urges the clerk to file suspicious-activity reports on customers.
“Better
safe than sorry,” she says. Sam Slick, the devil, wants to give
customers
the benefit of the doubt.
       Some of the examples given are red flags such as a sleazy-looking
customer offering the postal clerk a bribe. But the video also
encourages
reports to be filed on what appear to be perfectly legal money-order
purchases. A black male teacher and Little League coach whom the female
clerk, also black, has known for years walks into the post office
wearing a
crisp, pinstriped suit and purchases $2,800 in money orders, just under
the
$3,000 daily minimum for which the postal service requires customers to
fill
out a form. He frequently has been buying money orders during the last
few
days.
       “Gee, I know he seems like an okay guy,” Regina Goodclerk tells
the
employee. “But buying so many money orders all of a sudden and just
under
the reporting limit, I’d rather be sure. He’s a good guy, but … this is
just
too suspicious to let go by.”
       Gillum says this is part of the message that postal clerks can’t
be
too careful because anyone could be a potential money launderer. “A
Little
League coach could be a deacon in the church, could be the most
upstanding
citizen in the community, but where is that person getting $2,800 every
 day?” Gillum asks. “Why would a baseball coach, a schoolteacher in
town,
buy [that many money orders]? Our customers don’t have that kind of
money.
If he’s a schoolteacher, if he’s got a job on the side, he’s going to
have a
bank account and going to write checks on it, so why does he want to buy
money orders? That’s the point.”
       Despite the fact that the Little League coach in the video was
black,
Gillum insists that the postal service tells its employees not to target
by
race or appearance.
       One thing that should set off alarms, the postal service says, is
a
customer objecting to filling out an 8105-A form that requests their
date of
birth, occupation and driver’s license or other government-issued ID for
a
purchase of money orders of $3,000 or more. If they cancel the purchase
or
request a smaller amount, the clerk automatically should fill out Form
8105-B, the “suspicious-activity” report. “Whatever the reason, any
customer
who switches from a transaction that requires an 8105-A form to one that
doesn’t should earn himself or herself the honor of being described on a
B
form,” the training manual says.
       But the “suspicious” customers might just be concerned about
privacy,
says Solveig Singleton, a senior analyst at the Competitive Enterprise
Institute. And a professional criminal likely would know that $3,000 was
the
reporting requirement before he walked into the post office. “I think
there’
s a lot of reasons that people might not want to fill out such forms;
they
may simply think it’s none of the post office’s business,” Singleton
tells
Insight. “The presumption seems to be that from the standpoint of the
post
office and the Bank Secrecy regulators every citizen is a suspect.”
       Both Singleton and Nojeim say “Under the Eagle’s Eye” unfairly
targets the poor, minorities and immigrants — people outside of the
traditional banking system. “A large proportion of the reports will be
immigrants sending money back home,” Nojeim says. Singleton adds, “It
lends
itself to discrimination against people who are sort of marginally part
of
the ordinary banking system or who may not trust things like checks and
credit cards.”
       There’s also the question of what happens with the information
once
it’s collected. Gillum says that innocent customers should feel secure
because the information reported about “suspicious” customers is not
automatically sent to the Treasury Department’s Financial Crimes
Enforcement
Network (FinCEN) to be shared with law-enforcement agencies worldwide.
Although he says FinCEN wants the postal service to send all reports
along
to it, the postal authorities only will send the clerks’ reports if they
fit
“known parameters” for suspicious activity. “We are very sensitive to
the
private citizenry and their rights,” Gillum insists. “For what it’s
worth,
we have every comfort level that, if we make a report, there are all
kinds
of reasons to believe that there is something going on there beyond just
a
legitimate purchase of money orders.”
       But Gillum would not discuss any of the “parameters” the postal
service uses to test for suspicious activity, saying that’s a secret
held
among U.S. law-enforcement agencies. And if a clerk’s report isn’t sent
to
the Treasury Department, it still lingers for some time in the
postal-service database. Gillum says that by law the postal service will
not
be able to destroy suspicious-activity reports for five years.
       Gillum says the postal service is very strict that the reports
only
can be seen by law-enforcement officials and not used for other purposes
such as marketing. A spokeswoman for the consulting company Information
Builders stated in an e-mail to Insight, “Information Builders personnel
do
not have access to this system.”
       Observers say problems with “Under the Eagle’s Eye” underscore
the
contradiction that despite the fact that the postal service advertises
like
a private business and largely is self-supporting, it still is a
government
agency with law-enforcement functions.
       Gibson says his agency must set an example for private businesses
on
tracking money orders. “Being a government agency, we feel it’s our
responsibility that we should set the tone,” he said. The Treasury
Department “basically challenged us in the mid-nineties to step up to
the
plate as a government entity,” Gillum adds.
       In fact, Gillum thinks Treasury may mandate that the private
sector
follow some aspects of the postal-service’s program. He adds, however,
that
the postal service is not arguing for this to be imposed on its
competitors.
       In the meantime, the private sector is getting ready to comply
with
the Treasury regulations before they go into effect next January. But if
7-Eleven Inc., which through its franchises and company-owned stores is
one
of the largest sellers of money orders, is any guide, private vendors of
money orders probably will not issue nearly as many suspicious-activity
reports as the postal service. “Our philosophy is to follow what the
regulations require, and if they don’t require us to fill out an SAR
[suspicious-activity report] … then we wouldn’t necessarily do it,”
7-Eleven
spokeswoman Margaret Chabris tells Insight. Asked specifically about
customers who cancel or change a transaction when asked to fill out a
form,
Chabris said, “We are not required to fill out an SAR if that happens.”
So
why does the U.S. Postal Service?
       That’s one of the major issues raised by critics such as
PostalWatch’
s Merritt. He says that lawmakers and the new postmaster general, Jack
Potter, need to examine any undermining of customer trust by programs
such
as “Under the Eagle’s Eye” before the postal service is allowed to go
into
new businesses such as providing e-mail addresses. “Let’s hope that this
is
not a trend for the postal service, because I don’t think the American
people are quite ready to be fully under the eagle’s eye,” he says.







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This document was printed out from InsightMag.com.
You can find the original at
http://www.insightmag.com/archive/200107033.shtml

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