ACLU Says Banks Continue to Spy on Customers

April 20, 1999 12:00 am

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ACLU Says Banks Continue to Spy on Customers;
Calls on Congress to Protect Privacy

Tuesday, April 20, 1999

WASHINGTON — The American Civil Liberties Union today said that banks across the country continue to spy on their customers even though banking regulators have withdrawn highly controversial proposed “Know Your Customer” regulations.

In testimony today before two House subcommittees, ACLU Legislative Counsel Gregory T. Nojeim said that the withdrawal of the regulations does not mean that the public is safe from privacy intrusions and called on Congress to prohibit bank spying and to take steps to increase privacy for all bank customers.

“Now that everyone is aware of the overwhelming public opposition to these practices, it is time for Congress to step forward and end them,” Nojeim told a joint hearing of the House Banking Committee subcommittees on General Oversight and Investigations and Financial Institutions and Consumer Credit.

Nojeim pointed to a survey by the American Bankers Association, which found that 86 percent of responding banks already had “Know Your Customer” programs or policies in place as of 1990. He also said that the Federal Reserve has pressured banks to “voluntarily” adopt such programs even if they are not required to do so.

The ACLU said that it was only seven years ago that Congress amended the Bank Secrecy Act to require that banks file so-called “suspicious activity” reports, which banks must file whenever a transaction of $5,000 or more is carried out by a customer.

What is particularly offensive, Nojeim added, is that the suspicious activity reports are made widely available — each report is made electronically available to each U.S. attorney’s office and 59 law enforcement agencies — without any judicial oversight or review.

“Instead of using normal law enforcement tools — such as warrants and subpoenas — many law enforcement agencies use a vacuum cleaner approach,” Nojeim told the committees. “They suck up everything.”

Nojeim concluded that banking regulators and law enforcement have over time put into place a “massive financial surveillance system that fails to properly balance the needs of law enforcement agents, financial institutions, and customer privacy rights.”

“When it comes to protecting the financial privacy rights of Americans, the buck stops with Congress,” Nojeim said. “Neither the courts, the bankers, nor the bank regulators can do what Congress must do to protect our privacy.”

The ACLU’s testimony

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