Internet Campaign Convinces Congress to Condemn "Know Your Customer," Battle Not Yet Over 3/12/99

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Public outcry against the proposed "Know Your Customer" banking rules prompted Congress this week to pass resolutions demanding that the rules be scrapped. In what has been hailed as an example of the power of the Internet as a tool for grassroots organizing, the Federal Deposit Insurance Corporation (FDIC) has received more than a quarter million e-mailed complaints from citizens who believe the rules would violate their privacy and Constitutional protections against search and seizure. The rules would require banks to keep detailed profiles on all customers, and report unusual or suspicious transactions to federal law enforcement agencies.

The vast majority of the complaints were lodged through, a special web site set up by the Libertarian Party. But Libertarian Party press director George Getz told DRCNet that opposition to "Know Your Customer" spans across all party lines. "I think the opposition is coming from Libertarians, and from the Left and the Right," he said. "I was at a press conference on Capitol Hill the other day, when someone stood up and said, 'We suspect this is just one big special interest effort behind killing Know Your Customer.' I stood up and said, 'Okay, I confess, I'm a member of a special interest group. I have a checking account. That's what special interest is here. If you have a bank account, this affects you. This 'spy on your customer' proposal is reprehensible to every free-thinking American, even if the politicians and bureaucrats seem to like it just fine."

As of Thursday, the number of complaints e-mailed through and other sites had passed 250,000, and more were pouring in as the reach of the Internet multiplied the effectiveness of organizer's efforts. Getz said the average number of complaints a new regulation receives is around 200. Politicians are taking notice, as evidenced by the Senate's 88-0 vote condemning the Know Your Customer rules. But the resolution is non-binding, and the FDIC, the Federal Reserve, and other regulatory agencies involved have not yet backed down. Getz said what's really needed are laws preventing the regulators from making rules like Know Your Customer in the first place. "The Republicans and Democrats on the Hill want to have it both ways," he said. "They want to pretend that they're outraged by Know Your Customer, but they don't want to do anything to really bury it."

Representative Ron Paul (R-TX) is sponsoring two bills that will place sunset clauses on Know Your Customer and the Banking Secrecy Act, respectively. Paul's spokesman, Michael Sullivan, told DRCNet the passage of bills like these are the only way to protect people's privacy in the long term. Already, he said, the regulators are considering simply repackaging Know Your Customer under new euphemisms. Sullivan said they are missing the point. "Unfortunately, what the regulators are not admitting is that what people are complaining about is not the offensive words, you know, 'profiling' and this kind of stuff," he said. "What people are complaining about is the principle of the thing. If the FDIC and the Federal Reserve think that simply changing the title and using different words will make these people happy, I think they've got another thing coming to them."

Sullivan said that Know Your Customer, intended to thwart money launderers, is another example of short-sighted policies with potentially disastrous consequences. "When the regulators put forward this stuff, it's because we're trying to fight the drug war, and we're trying to stop money laundering, and counterfeiting, and all these good reasons. We all agree that there are bad things out there. But is the best way to stop them to give these agencies the power to regulate every aspect of our lives? So that they will turn us all into criminals? No. Obviously not. So there has to be, at some point, a modicum of common sense which says that sometimes great evil is done in the name of doing good."

Will the Internet play an increasing role in the way vigilant citizens can make their voices heard? Sullivan said yes. "If this had been five years ago, six years ago, these regulations would be in effect now, and no one would be the wiser. Until people started being arrested, being investigated. People would not have know about this, because NBC wouldn't have carried it, ABC didn't carry it, CBS didn't carry it, CNN didn't talk about it, and on and on. This just really does show where this new, alternative source of information is really paying off for people."

George Getz said the Libertarian Party will maintain its web site. "We intend to keep the site up for future government privacy invasions. Whether we're talking about a national ID card, fingerprints on drivers licenses, different types of asset forfeiture laws -- we're going to be updating people through the site for the next several months."

Thanks to the many DRCNet subscribers who responded to our alert on Know Your Customer. Your voices made a difference! The official public comment period on KYC is over, but it's still worthwhile to drop by to catch up on the latest developments. And of course, DRCNet will continue to follow the story. Meanwhile, DRCNet urges its members to ask their Congresspersons to cosponsor Ron Paul's Know Your Customer Sunset Act and Bank Secrecy Sunset Act bills.

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Issue #82, 3/12/99 Announcements | Internet Campaign Convinces Congress to Condemn "Know Your Customer," Battle Not Yet Over | George Bush Jr. Hires Private Eye to Dig Up Own Past | Report: US Anti-Drug Forces Corrupted | Alaska Bill Introduced to Amend State's New Medical Marijuana Law | Drug Policy Campus Activism Conference | Washington State Bill Would Increase Judge's Discretion in Drug Cases | Judge Denies California AIDS Patient's Urgent Plea for Medical Marijuana | Federal Judge Allows Medical Marijuana Class Action Suit to Proceed, Questions Why Government Supplies Medical Marijuana to Some Patients, Not Others | Events | Online Petitions
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