OT: The Mind of America, 101 : there were people who *supported* know your customer

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Monday, April 12, 1999

Know-Your-Customer Had Its Fans -- 72 of Them


By Scott Barancik

WASHINGTON -- If a regulation hall of fame were ever built, the recently departed know-your-customer proposal would undoubtedly be crowned "Most Hated.''

More than 254,000 bitter letters rained down on the Federal Deposit Insurance Corp. during the four-month comment period, which ended in March, on the plan to fight money laundering. That's about 251,000 comments more than the agency had ever received on a proposed rule.

But know-your-customer did have a few fans -- 72, to be precise. A review of their letters to the FDIC reveals reasoning both clear and cloudy.

"As much as I don't like the government sneaking around, if this would catch the jerks that don't pay taxes . . . and [consequently] lower my taxes, then I'm all for it," Gary Lingenfelter of Iowa wrote.

"Sounds O.K. to me," said Della Summers of Michigan. "I get Social Security only. If I win the lottery, I'll let you know."

"There is a hidden benefit," said one of several supporters who did not provide a name or address. "If a criminal act is committed, you have proof that you were in the bank making financial transactions at the time of the alleged criminal offense, so there is no way you could have done it."

Much of the overwhelming opposition to the know-your-customer proposal stemmed from fears that it would make banks "spy" on their customers. Average citizens recoiled at the idea of banks scrutinizing their bonus checks or birthday gifts, and they reacted viscerally to Orwellian scenarios sketched by such groups as the Libertarian Party and the American Civil Liberties Union.

But many of the proposal's 72 supporters just didn't buy the privacy argument. Some called it fearmongering, while others said it was eclipsed by the need to wage war on drugs and other crime.

"I think people are unnecessarily paranoid about governmental monitoring," Jennifer Zilin wrote. "The bank might file a report ... but that does not mean the government is subsequently going to hunt you down and arrest you."

"Our society has an established history of requiring its citizens to relinquish their privacy in exchange for added protection against criminal activity," Candice L. Reed of Tennessee argued. She cited airport passenger searches and workplace drug testing as examples. "I am willing to surrender a minute portion of my privacy for the good of the cause."

"Please don't let the Libertarians and their ilk stop you," Mike Bolind wrote. "Let's get the legitimate banking community involved in doing the right thing."

"Conservatives yell 'privacy' when it is the same privacy that protects the criminals as well. Why should we give them an edge when they make more money than we can in a lifetime?" Dean Palladino asked.

Other supporters suggested the proposal's foes were crying "privacy" in order to conceal their own tax evasion or drug trafficking.

"People who have something to hide are going to scream the loudest," Forrest W. Smith wrote.

Said Frank Thompson, "Opposition to this passage is just what the drug dealers want."

"Pirates always needed sites to hide their plunder," Jack H. Peterson of Florida wrote.

"Implement the know-your-customer regs," said Ray E. Porter 3d. "Investigate those opposed."

Banks did not escape unscathed from the criticism.

"I believe that at least some of the banks which object do so because ... some of their major revenue sources are suspect," Richard Snyder of Colorado wrote.

"The know-your-customer concept is similar to a neighborhood watch program," said Steve Enlow. "It is a shame that [banks] are not willing to accept some inconvenience to promote law enforcement.... Banks are very profitable."

Despite opposition from bank trade groups, the know-your-customer proposal actually drew support from four current or former bankers.

"I believe that the proposed amendments will make the banking industry a more safe and sound profession for all involved," said Jennie Brewer of Peoples Bank, Waynesboro, Tenn. "Although Peoples Bank is located in a mall community and our asset size is $57 million, we are not immune to the problems that plague urban areas."

"As a retired banker with 37 years of dealing with people trying to hide income and assets from the IRS, I feel your proposed new regulations are in order," Earl King wrote. "Any way you can catch tax cheaters is O.K. with me."

Even with 254,000 comments streaming in, the FDIC was determined to read each one. Naturally, the agency's bleary-eyed staff was not always attuned to subtleties, and at least two negative letters were mistakenly identified as supportive.

In one, the editor of Caribbean Property List thanked the FDIC for boosting his business. "Many [U.S. subscribers] plan to expatriate," J. Ritter of Florida wrote. "When I ask why, some of them mention your new regulation. Keep up the good work."

Scott Meredith, a Microsoft employee in Washington State, encouraged the FDIC not to be swayed by the wave of negative letters. "Don't let those little people push your organization around. You know what's best," he wrote. "Go for it, and I'll see you in the place where there is no darkness" -- a reference to Room 101, the torture chamber, in George Orwell's "1984."

-- Arlin H. Adams (ahadams@ix.netcom.com), April 12, 1999


sheesh.... And some people think that a nuclear war is scary!

-- Ken Seger (kenseger@earthlink.net), April 12, 1999.

Arlin, Well...at least it was 254,000 to 72. (Always look on the bright side of life! -- Monty Python)

I love the implication that if you cherish your privacy you are a criminal. *sigh*

What a whacky article --- things just get curiouser & curiouser.

Thanks Arlin,


Yah, at least a bomb doesn't pretend to protect you.

-- Deborah (infowars@yahoo.com), April 12, 1999.

More proof the Constitution, and the Principles of Freedom the Founders set forth for this nation, are dead.

We are doomed.

Now it's only a matter of time.

Maybe a few months?

This nation of sorry-ass goose-stepping Socialists will get what's coming to them.

Unfortunately we who hold the founding principles, are going to suffer right along with them.

-- INVAR (gundark@sw.net), April 12, 1999.

What a sickening, disturbing article. Someday, all these "supporters" or their will wake up in their detention cells in between interrogations and wonder what the hell happened.

-- Nathan (nospam@all.com), April 12, 1999.

And look at how Clinton's media covered the story - this is more frightening than the actual regulation. Demeaning, ridiculing, embaressing the people who _opposed_ his plan. Minimizing and slighting their opinions - exaggerating their actual concerns, and blaiming political partisian (Libertarian, ACLU) attitudes for their crass, unfounded "Orwellian fears".

Complimenting, emphasizing, enhancing the 74 - quoting many with complimentary and applauding terms.

By the way, his people still want this passed - regardless of the public's very real opposition.

The Democrats in the Senate refused to vote it down. The Clinton appointees in the FDIC still want to implement it. So who wrote this? Isn't this a lesson in how "his" media will respond when/if he declares martial law next year? When/if he confiscates weapons next year "to protect the public" from unwarranted fear-monger's and right-wing zealots? When/if he declares a bank holiday next December to prevent "hoarding and panic?"

(The latter - frankly - will last only until the bankers figure out that people won't shop for Christmas presents if the banks are closed.)

-- Robert A Cook, PE (Kennesaw, GA) (Cook.R@csaatl.com), April 13, 1999.

"KNOW YOUR CUSTOMER" IS NOT DEAD!. It is merely deferred. If the government and banking system remains intact, they will try again -- and again -- and again, until it is implemented.

This was just a step back for them. But their dance is two steps forward, one step back. How do you think they got all the present "money laundering", bank reporting, travel reporting (carrying $ in and out of the country), asset forfeiture, search and seizure, "no-knock" home invasions by the pigs... It didn't just happen yesterday. Just a few items:

1860s, 1870s -- Establishment of the supremacy of the Federal Government over the state governments by force (Civil War). Conscription for the "war effort" ("national emergency")
1913 -- Establishment of the Federal Reserve System, allowing for a debased (fractional reserve) monetary sytem.
1920s(?) Prohibiition creates organized crime outfits and a large government buracracy to "fight" them.
1932 -- Confiscation of gold and abrogation of gold contracts -- in violation of the Constitution's contract clause.
1930s -- Narcotics / "illegal" drug laws established.
1941 -- Manipulation of Japan to attack so that U.S. could enter WWII.
1940s -- Rationing in the name of the "national emergency".
1940s -- Interring U.S. Citizens (Japanese Americans) into camps in the name of the "national emergency." (Didn't put German-Americans in camps, though -- maybe a little racism??)
1960s (through 1990s) -- Assault on financial privacy begins in earnest -- currency controls, reporting requirements increasing from this time on. So-called "Privacy" and "Bank Secrecy Acts" enacted.
1970s -- Gun controls -- registration and ex-post facto laws begin in earnest (though started in the 1930s -- see book "Unintended Consequences" by Johh Ross on Loompanics.com or Amazon.com)

Two steps forward, one step back. They've got all the time in the world -- THEY'VE GOT YOUR MONEY, WHICH YOU WILLINGLY COUGH UP, TO USE AGAINST YOU. And they've got nothing else to do except screw you and screw with you. (See http://goodbiz.com/tbks)

-- A (A@AisA.com), April 13, 1999.



1) FDIC & other agencies withdraw Know Your Customer rule -- but KYC lives on in the Bank Secrecy Act

2) Assistant Director of Federal Reserve Board says KYC is NOT dead

3) Flood of e-mail credited with stopping Know Your Customer

4) New online petition being launched to repeal existing Know Your Customer requirements

5) Quote of the week


Here's what's going on in the fight against "Know Your Customer" regulations:

1) FDIC & other agencies withdraw Know Your Customer rule -- but KYC lives on in the Bank Secrecy Act

As anticipated, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency, Office of Thrift Supervision, and the Board of Governors of the Federal Reserve (the "Agencies") officially voted on March 23, 1999 to withdraw their proposed Know Your Customer rule. This means that, thanks to your help, we have won Round One of the fight.

However, in a statement released after the meeting, the Agencies reaffirmed their "...long-standing support for the anti-money laudering provisions of the Bank Secrecy Act."

As it turns out, the Bank Secrecy Act compliance manual of the Federal Reserve still requires banks to implement a Know Your Customer program, even though the new KYC regulation has been withdrawn. (Check out the "spy manual" on their web site, http://www.bog.frb.fed.us/boarddocs/SupManual/)

According to a recent survey by the American Bankers Association, over 88 percent of US banks already have Know Your Customer policies in place. In early March, the ABA called on regulators to not only withdraw the proposed Know Your Customer rule, but to dismantle the existing requirements of the Bank Secrecy Act as well.

Rep. Ron Paul (R-TX) has introduced HR 518, The Bank Secrecy Sunset Act, which would repeal the existing Bank Secrecy Act reporting requirements that led to Know Your Customer. (See #4 below.)

2) Assistant Director of Federal Reserve Board says Know Your Customer is NOT dead.

A banker who attended the Mid Atlantic Compliance Conference March 18-19 reported the following comments by Richard Small, Assistant Director of the Federal Reserve System, at a session on KYC:

"Is Know Your Customer dead? No, I don't think it is dead. Do I think there will be a regulation? No. I would like to develop some broad based guidance [but] no one is going to let me talk about it for six months."

Small went on to say that they would have to repackage it differently, such as "Enhanced guidance for reporting suspicious activity." He said they'll have to be careful how they re-package it, saying, "It's a marketing issue." He indicated that any future proposal would not be called "Know Your Customer" and would not use the phrase "customer profiling."

3) Flood of e-mail credited with stopping Know Your Customer

"The FDIC's chairman, Donna Tanoue, said the huge volume of e-mail drove the decision to withdraw the [KYC] proposal," reported Rebecca Fairley Raney of the New York Times in a March 24, 1999 story (please see http://DefendYourPrivacy.com/nyt_2.htm). This suggests that the influence of e-mail on public policy decisions is growing. Some other quotes from the article:

"It's important to note that a number of these e-mails were customized." Tanoue said. "They came from the heart."

"Typically the comments we hear are packaged in Washington -- and these [e-mail comments] came from all over America," said Steve Katsanos, a spokesman for the FDIC. "We think it's pretty neat," he said of the Internet-based interaction. "You might well count on this being a standard procedure."

"The e-mail and the traffic to the FDIC's Web site was driven through media reports on the issue in traditional media and through an online advocacy campaign [http://www.DefendYourPrivacy.com] sponsored by the Libertarian Party."

"Ultimately ... people used the party's advocacy site to send 171,000 comments to the FDIC -- about 83% of the e-mail that was sent." The success of this cyber-campaign has also been noted in articles and editorials in other major print publications such as The Washington Post, The Chicago Sun-Times, the Kansas City Star and The Arizona Republic as well as in leading online publications such as WorldNetDaily.com, Wired.com and CBS.MarketWatch.com. Visit the Media Coverage page at http://www.DefendYourPrivacy.com for links to these and other articles about the campaign and Know Your Customer.

4) New online petition being launched to repeal existing Know Your Customer requirements

DefendYourPrivacy.com is preparing to launch a new online petition to repeal existing Know Your Customer requirements. The petition will be directed to individual members of Congress and will ask them to co-sponsor the Know Your Customer Sunset Act (HR 516) and the Bank Secrecy Sunset Act (HR 518). HR 516 already has over 50 co-sponsors.

Passage of these bills would repeal all existing Know Your Customer reporting requirements, and prevent similar regulations from being imposed in the future. For more information on both bills, check out our new "Legislation" page at http://www.DefendYourPrivacy.com.

An announcement and pass-along message for friends and family will be sent out as soon as the petition page is up and running, which will probably be in about a week.

5) Quote of the week - Editorial, Indianapolis Star

"That such a rule [KYC] would even have been proposed should be of great concern to every freedom-loving American.

"These are the tactics employed in socialist countries such as China and the old Soviet Union where the denial of personal privacy, individual property and freedom of speech are fundamental tools for the economic and political control of large captive populations.

"Fortunately, many Americans were outraged at this proposal. Much of the credit must go the the Libertarians. Of some 253,000 e-mail messages, letters, and faxes to the FDIC, more than 170,000 were ... generated by the party's DefendYourPrivacy.com Web site."


DefendYourPrivacy.com is provided as a public service by the Libertarian Party.

To request information about the Libertarian Party, please visit http://www.lp.org/lp-membership-iform.html?

To support this website financially, please visit http://www.lp.org/lp-kyc-contrib.html

To join the Libertarian Party please visit http://www.lp.org/lp-membership.html

-- a (a@a.a), April 13, 1999.

Other A: thanks for the post; I thought I had bookmarked
previously, but couldn't find it.

All: I hope the following makes you mad:
Your rulers/"leaders" will not be satisfied until we are all niggers (regardless of race) on the federal plantation. You thought the Civil War was fought to free the slaves? Wrong! It was fought, successfully, to establish the superemacy of the federal government, by force, in violation of the Constitution. Lincoln is lionized as a hero (in the public -- government - schools), but he was a TRAITOR. (BTW, I have never even lived in the South, so don't accuse me of being a disgruntled "Johnny Reb".) The Civil war and the Constitutional amendments following (passed by northern and "carpetbagged" southern states) made us ALL slaves; it turned the flow of power from people->states->federal to federal->states->people.


"Unintended Consequences" John Ross (www.Loompanics.com or www.Amazon.com)

-- A (A@AisA.com), April 13, 1999.

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