Scott Ehlers, Drug Policy Foundation, http://www.dpf.org
The federal government's latest proposed weapon in the war on drugs is the "know your customer" (KYC) rules, which were proposed by the Federal Deposit Insurance Corporation (FDIC) and other financial regulators in December, and are set to go into effect in April 2000 unless regulators change their minds or Congress intervenes. The KYC rules are being promoted as a way to fight money laundering, much of which is generated by the illicit drug trade.

According to the FDIC's notice in the Federal Register, "the regulation would require each nonmember bank to develop a program designed to determine the identity of its customers; determine its customers' sources of funds; determine the normal and expected transactions of its customers; monitor account activity for transactions that are inconsistent with those normal and expected transactions; and report any transactions of its customers that are determined to be suspicious, in accordance with the FDIC's existing suspicious activity reporting regulation" (FR, Dec. 7, 1998, p. 67529-30). Critics have characterized the new banking surveillance system as "Big Brother Banking" that effectively deputizes bankers as law enforcement agents and informers.

One critic is Rep. Ron Paul (R-TX), who devoted his Nov.`30 weekly column to the issue; Rep. Paul's article, "Privacy Busters: Big Bank is Watching" is available online at http://www.house.gov/paul/tst/tst98/tst113098.htm. Also see Wired Online's story by Decan McCullaugh at http://www.wired.com/news/news/politics/story/17404.html.

Dr. Paul is on the House Banking Committee, and will soon be introducing three pieces of legislation designed to block implementation of the KYC rules and protect Americans' financial privacy. Under his "Know Your Customer Sunset Act," the KYC rules would cease to be effective upon passage. His "Bank Secrecy Sunset Act" would repeal the Bank Secrecy Act one year after passage. Finally, his "FinCEN Public Accountability Act" would allow citizens to have access to their records that are kept by the Financial Crimes Enforcement Network, which is part of the Treasury Department. Dr. Paul believes that, if citizens can see their FBI files and can correct their credit records, they should also be able to do the same with their FinCEN records.

The FDIC and other federal regulators are taking public comments on the KYC rules until March 8. A summary and text of the rules can be viewed online at http://www.bankinfo.com/compliance/newkyc.html. Comments can be sent to the following:

Board of Governors of the Federal Reserve System
Jennifer J. Johnson, Secretary
Attention: Docket # R-1019
Board of Governors of the Federal Reserve System
20th and Constitution Avenue, NW
Washington, DC 20551

Federal Deposit Insurance Corporation (FDIC)
Robert E. Feldman, Executive Secretary
Attention: Comments/OES
RIN 3064-AC19
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Fax: (202) 898-3838
e-mail: comments@FDIC.gov
http://www.fdic.gov/banknews/know.html

Office of Comptroller of the Currency (OCC)
Communications Office
Attention: Docket # 98-15
250 E Street, SW
Washington, DC 20219
Fax: (202) 874-5274
email: regs.comments@occ.treas.gov
http://www.occ.treas.gov/ftp/regs/98-55a.txt

Office of Thrift Supervision (OTS)
Manager, Dissemination Branch
Records Management and Information Policy
1700 G Street, NW
Washington, DC 20552
Attention: Docket # 98-114
Fax: 202-906-7755
email: public.info@ots.treas.gov (include one's name and telephone number)
http://www.ots.treas.gov/docs/73062.html

On other financial privacy issues generally:
Financial Crime Enforcement Network (FinCEN)
Mr. William Baity, Acting Director
Financial Crime Enforcement Network
2070 Chain Bridge Road, Suite 200
Vienna, VA 22182
http://www.treas.gov/fincen/

-- END --
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Issue #76, 1/29/99 Your Tax Dollars at Work: US Developing Fungi to Kill Narcotics Plants | Higher Education Act Student Reform Effort | Rep. Ron Paul to Introduce Financial Privacy Legislation to Block Intrusive "Know Your Customer" Banking Rules | Hemp for Victory | Israel to Set Standards for Medicinal Use of Marijuana | Life for Nonviolent Juveniles Proposed in Virginia | The Lindesmith Center Drug Policy Seminar Series, January through April | Conferences and Events | Harm Reduction Training Institute, Winter '99 Calendar | Report: Militarized Democracy in the Americas | Editorial: Strange Logic
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