Ron Paul Dear Colleague on Know Your Customer and Repealing the Bank Secrecy Act
April 30, 1999
(J. Bradley Jansen was Ron Paul’s legislative staffer for these issues at this time)
“Riding the popular wave that defeated the Federal Reserve’s proposed Know-Your-Customer regulation, some lawmakers are suggesting that the Bank Secrecy Act should be eliminated altogether. And the American Bankers Association said last week that the act should at least be amended to cut some of the red tape and respect customers’ privacy.”
“Privacy: BSA Is Next Target”, Monday, April 26, 1999,
Financial Modernization Report, American Banker, Inc.
April 30, 1999
In light of the public outcry against the violation of financial privacy in the Know Your Customer rule, it is no small wonder that consumers are now protesting the existing Know Your Customer policies under the Bank Secrecy Act compliance manual and calling for the review or repeal of the Bank Secrecy Act itself. HR 518, the Bank Secrecy Sunset Act, meets that goal.
In a letter to financial regulators regarding the ill-fated Know Your Customer proposal, the Consumer Federation of America, Consumers Union and U.S. Public Interest Research Group wrote a joint letter urging not only the immediate withdrawal of the proposal but added, “we believe that, additionally, the underlying current regulations of the Bank Secrecy Act need review as well.”
Passing HR 518, the Bank Secrecy Sunset Act, would accomplish that goal by forcing a three-year debate of the issue. The group letter asked, “Why is the burden on the consumer to explain his or her life to the satisfaction of the bank’s inspector of the bank’s computer, when he or she has done nothing wrong? No warrant would be required, no court order, no probable cause.”
The American Association of Retired People (AARP) wrote about its concern with the “wholesale breach of the firewall protecting the individual’s right to financial privacy.”
Forcing bank tellers to spy on their customers undermines public confidence in the financial system and threatens its safety and soundness. Not reviewing the Bank Secrecy Act would be irresponsible. To cosponsor HR 516 or HR 518, please contact Bradley at 5-2831.