Pubdate: Sun, 03 Oct 1999 Source: Tampa Tribune (FL) Copyright: 1999, The Tribune Co. Contact: http://www.tampatrib.com/ Forum: http://tampabayonline.net/interact/welcome.htm Source: Tampa Tribune(FL) Section: Editorial BANKERS CAN'T BE POLICE OFFICERS In December 1998, the Federal Deposit Insurance Corp. posted for comment a notice of a proposed federal banking regulation, the ``Know Your Customer'' rule. The rule ``would require each ... 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.'' Three months later, after receiving some 225,000 e-mail messages and letters, nearly all opposing the rules, banking regulators scrapped the proposal. While the banking public was willing to acknowledge the need to track money-laundering practices, which hide profits from criminal activities, the public outcry over privacy concerns won out. Now the Clinton administration, in response to allegations involving Russians and a major U.S. bank, has proposed a strategy to fight money laundering that looks as intrusive as the ``Know Your Customer'' rule. It would impose tighter regulations on banks and other financial institutions and includes a requirement that storefront check cashiers, brokerage firms and casinos notify authorities of suspicious activities the way banks do. Banks have been to some degree in the squealing business since the passage of the Bank Secrecy Act of 1974, which obligates them to report to the government cash transactions of $10,000 or more. It was passed to combat money laundering and the drug trade; it meant bankers could not ignore what they knew was wrong. But this latest effort would vastly increase the government's efforts and would force financial institutions to delve deeply into the private lives of customers. This comes just a month after the Clinton administration directed federal law enforcement agencies to collect information to determine the extent to which their officers were considering race in searches. Now a strategy is unveiled that would demand banks ``profile'' anyone deemed ``suspicious.'' And that is just on the federal level. At a meeting last week of a task force formed to combat escalating money laundering in Florida, representatives of state agencies proposed such things as tougher reporting requirements for any business that ``transmits'' cash and a new law allowing authorities to freeze bank accounts suspected of being used for money laundering, according to Tribune reporter Michelle Pellemans. But the most draconian recommendation was one to require fingerprints of anyone opening a bank account. One Tampa businessman told Pellemans the proposals evoke a ``police state type feeling'' and would put unfair burdens on small businesses. It is wrong to ask financial institutions to become investigators for law enforcement by keeping files on customers and reporting ``suspicious'' activity. Bankers are not police officers. Money laundering is an international problem that must be curtailed. But as with all our efforts to fight crime, we should not trample civil liberties in the process. - --- MAP posted-by: Derek Rea