American Public Demands Financial Privacy Protections
FOR IMMEDIATE RELEASE
Wednesday, June 9, 1999
WASHINGTON — As a Senate panel held hearings on financial privacy, the American Civil Liberties Union today called on Congress to repeal existing anti-privacy laws and to enact new financial privacy protections.
The hearings before the Senate Banking Committee were called only a few weeks after bank regulators withdrew proposed “Know Your Customer” regulations. The proposed regulations would have made even more intrusive existing bank regulatory practices that require banks to monitor their customers’ financial transactions, develop customer profiles and report to the government large transactions.
“The 250,000 people who told bank regulators to withdraw the “Know Your Customer” regulations have demanded that their financial privacy be protected,” said Gregory T. Nojeim, an ACLU Legislative Counsel. “Congress has a clear mandate from the American public to protect their financial privacy.”
A survey by the American Bankers Association found that 86 percent of responding banks already had “Know Your Customer” programs or policies in place as of 1990. The Federal Reserve has pressured banks to “voluntarily” adopt such programs even if they are not required to do so, Nojeim said.
“Congress should repeal existing so-called Suspicious Activity Reporting requirements,” he added. “They are the statutory basis for the ‘Know Your Customer’ programs and hurt customers’ financial privacy.”
These requirements reportedly generate to the Treasury Department’s super-secret FinCEN nearly 100,000 Suspicious Activity Reports every year. Each report fingers bank customers as “suspects” and details the transactions the bank finds “suspicious,” all without the knowledge of the customers.
“The widespread sharing of these reports is a slap in the face to the millions of law abiding Americans who have entrusted their financial information to a bank — only for it to end up in a massive national database that 59 law enforcement agencies are free to troll through at will,” Nojeim said.
As mergers of large financial institutions become widespread, the ACLU said, there is a pressing need to enact legislation to prevent large conglomerates from distributing customers’ financial information to all of their subsidiaries. Information given to banks for one purpose may be used by an affiliated corporation for wholly unrelated reasons, even to the detriment of the innocent customer.
The ACLU also called for controls on sharing by banks of sensitive information about a customer’s financial transactions with companies affiliated with a bank.
“Customers should have the right to decide whether their financial information — such as what kind of medicine they purchase with their credit cards — is shared with all of the companies affiliated with their bank,” Nojeim said.
“The practice,” he continued, “of sensitive personal information being submitted for one purpose and then being used for another will become more widespread unless Congress acts to stop it.”
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