Pubdate: Wed, 12 Mar 2008
Source: USA Today (US)
Page: 5A
Copyright: 2008 USA TODAY, a division of Gannett Co. Inc
Contact:  http://www.usatoday.com/printedition/news/index.htm
Details: http://www.mapinc.org/media/466
Author: Thomas Frank, USA TODAYC\
Cited: Financial Crimes Enforcement Network http://www.fincen.gov/
Cited: American Civil Liberties Union http://www.aclu.org/privacy/
Bookmark: http://www.mapinc.org/topic/money+laundering

RIGHT NOW, FEDS MIGHT BE LOOKING INTO YOUR FINANCES

Banks Tip Off Government to Possible Money Laundering, Fraud

WASHINGTON -- Each year, federal agents peek at the financial 
transactions of millions of Americans -- without their knowledge.

The same type of information that raised suspicions about New York 
Gov. Eliot Spitzer is reviewed every day by authorities to find 
traces of money laundering, check fraud, identity theft or any crime 
that may involve a financial institution.

As concerns about fraud and terrorist financing grow, an increasing 
number of suspicious deposits, withdrawals and money transfers are 
being reported by banks and others to the federal government. Banks 
and credit unions as well as currency dealers and stores that cash 
checks reported a record 17.6 million transactions to the Financial 
Crimes Enforcement Network in 2006, according to a report from the 
network, a bureau of the U.S. Treasury Department.

"I don't think Americans understand that their financial transactions 
are being reported and routinely examined," said Barry Steinhardt of 
the American Civil Liberties Union.

The Treasury Department's database now contains records of more than 
100 million financial transactions going back to at least 1996, said 
network spokesman Steve Hudak.

Teams of agents from the FBI, IRS, Drug Enforcement Administration 
and other agencies regularly review newly filed financial reports and 
launch investigations. Federal and local authorities search the 
database to find information about people that can help ongoing 
probes. Treasury Department analysts study the reports to detect 
trends in fraud and issue reports alerting financial institutions.

"The government has access to untold volumes of records and can draw 
all sorts of conclusions about us, and many are going to be wrong," 
Steinhardt said.

Bankers disagree. "For the typical bank customer, this means very 
little because there's nothing they're doing that's likely to be 
viewed as out of the ordinary," said Richard Riese, head of 
regulatory compliance for the American Bankers Association.

The reporting system dates to the early 1970s when federal agents 
sought to pinpoint drug dealers by looking for people making large 
cash deposits.

Financial institutions have long been required to report cash 
transactions over $10,000. Those reports -- simple notices of a 
deposit or withdrawal -- account for more than 90% of the records the 
enforcement network gets each year.

Far more controversial are secret "suspicious activity reports" filed 
by financial institutions and reviewed by teams of agents spread 
around the country. The investigation of Spitzer began when a bank 
spotted potentially suspicious transfers from several accounts and 
filed reports with the IRS, according to a federal official who spoke 
on condition of anonymity. The official did not want his name used 
because he's not authorized to discuss the case publicly.

The number of suspicious activity reports soared from 413,000 in 2003 
to 1 million in 2006, according to the enforcement network.

Federal law requires the reports to remain secret. They are written 
by officers at financial institutions who specialize in detecting 
suspicious activity, such as a series of large transactions.

The analysis can protect customers by spotting unusual withdrawals 
that may indicate fraud, said Robert Rowe, senior regulatory counsel 
of the Independent Community Bankers of America.

Many of the reports are a waste, said Riese of the bankers 
association. "We're reporting on a lot of things everybody knows law 
enforcement doesn't have the resources to pursue," he said.

Hudak said the "vast majority" of reports "are filed for a good 
reason. ... There are law enforcement officials and investigators who 
use these reports and read them every day." 
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MAP posted-by: Richard Lake