Ron Paul Dear Colleague on Know Your Customer as Big Brother Banking
Ron Paul Dear Colleague on Know Your Customer as Big Brother Banking
January 20, 1999
(J Bradley Jansen was Ron Paul’s legislative staffer for these issues at the time)
“Know Your Customer” = Big Brother Banking
January 20, 1999
Dear Colleague,
I am writing to draw your attention to a proposed rule that would violate financial privacy and impose a huge unfunded mandate on the financial sector. The FDIC, Federal Reserve, and Treasury’s OCC and OTS issued a “Know Your Customer” rule with a comment period ending March 8, 1999 that takes effect April 1, 2000 requiring the financial institution to design a program which would:
∙determine the identity of the customer,
∙determine the customers’ source of funds for all transactions,
∙determine “normal and expected” profile of its customers, and
∙report unusual transactions to regulators as “suspicious”.
Here’s the reaction:
“It turns banks into cops, into police spies for the government…“[and requires banks to] create dossiers on their customers,” Barry Steinhardt (American Civil Liberties Union).
Going beyond the existing procedures would be “costly, burdensome and an invasion of our customers’ privacy,” John Byrne ( American Bankers Association).
“Using ‘Big Brother watching’ [to crack down on money laundering is akin to using] a sledgehammer to handle a gnat,” Robert Rowe (Independent Bankers Association of America)
Working with the Ad Hoc Coalition for Financial Privacy, I will be introducing legislation:
Know Your Customer Sunset Act: would bar agencies from following through on the plan.
Bank Secrecy Sunset Act: would repeal the existing law one year after the date of enactment that gives bank regulators monitoring authority and devolve this power back to the states or force a formal congressional review of the loosely-written act.
FinCEN Public Accountability Act: would let consumers check their own files and challenge information they believe to be false similar to FBI files and the Fair Credit Reporting Act. Responsible congressional oversight requires us to guard against the possibility of constituents suffering asset forfeiture due to erroneous information.
In addition, I have already introduced H.R. 220, the Freedom and Privacy Restoration Act, which limits the use of the Social Security Number to its intended purpose.
To be an original cosponsor, please contact Bradley Jansen by email or at 5-2831.
Sincerely,
Ron Paul