by Tim O'Brien
February 2, 1999
In one of what has become a seemingly unending series of assaults on our traditional, American way of life in the name of the War on Drugs, a new federal database of banking transactions first went on-line right here in Detroit in April of 1996.
Called the Suspicious Activity Reporting System, banks are now required to submit five pages of information to the federal government on any cash transaction over $10,000 -- including the "suspicious" individual's name, address, date of birth, social security number, drivers license, and justifications for the transaction.
A moment's reflection will show that, if we are to prohibit what Robert Nozick (in a wonderfully pithy phrase) called "capitalist acts between consenting adults," such measures are all but unavoidable. Prohibition laws, after all, criminalize transactions in which there is no party coming forward to make a complaint.
The problem for law enforcement in this is that we have in essence expanded the definition of "crime" (an act which harms another) to include vice (an act which harms oneself). Whether the prohibition is of gambling, prostitution, pornography, drugs or anything else, there simply is no way to defeat such commerce other than by utilizing undercover agents, eavesdropping, in short, domestic espionage.
Next come decoys, police profiles, checkpoints, stop-and-frisk, warrantless searches, no-knock laws, and so forth. Virtually the entire Bill of Rights and all of the cherished freedoms and protections that have made American society unique and the envy of the world have fallen before the all-corrosive War on Drugs.
Ultimately, limiting the spying to only suspects becomes problematic when virtually everyone is a potential suspect. The scope of surveillance must be expanded to include everyone. It is inevitable.
And it necessarily follows from this that the final protection which must be sacrificed is the one that is foremost in the centuries-old common law: presumption of innocence. If voluntary trade is to be restricted, all of us must be considered guilty and required to prove to authorities that we aren't. The goal cannot possibly be achieved by any lesser means.
Thus, the Suspicious Activity Reporting System.
Now, those who are engaged in an illicit trade are not successful at it by being fools. And it wouldn't take a Bill Gates or a Donald Trump of the cocaine business to figure out that he should limit cash transactions through the banking system to less than five figures.
So the government has found the current reporting system, though not yet three years in effect, insufficient.
Last month the Federal Deposit Insurance Corporation published proposed new regulations in the Federal Register called "Know Your Customer."
These will compel all financial institutions to develop complete customer profiles in which everyone will be required to disclose all of his or her sources of income (employer, pension, social security, interest and dividends, etc.) and "customary" expenditures (mortgage or rent, utility payments, auto or other loan and credit card payments, insurance premiums, etc.)
All of your financial transactions will then be continuously monitored. If you deviate significantly from your usual banking patterns -- say, for instance, by depositing the proceeds of a Christmas bonus, an inheritance or from selling a used car -- your name will be sent to federal authorities who will be calling on you to account for your suspicious financial activity.
Such is the orwellian world that must follow when society attempts to use its police powers in a quixotic quest to save the terminally stupid from the consequences of their own bad habits.
The truly tragic irony in all of this is that while our liberties are in tatters, there is not a single shred of evidence anywhere in recorded history that this crusade to save people from themselves can be anything but utterly futile.
Just how far can it go? No one knows. However, based on the rampant drug trafficking that goes on there, we can say for certain that matching the level of security inside a prison will not be enough.
Meanwhile, some few of us would readily risk losing our money in a bank failure and trade the federal deposit insurance in exchange for keeping some modicum of the little privacy that we have left.
I know that between now and April 1st when the new Know Your Customer rules take effect, I'll be watching for bank ads that end with the disclaimer: "Non-member FDIC."
Unfortunately, I'm told that other federal rules have already effectively mandated participation in this federal "insurance" program and there are no such financial institutions remaining.
So maybe I'll just have to learn how to sleep on a lumpy mattress.
Tim O'Brien is the Executive Director of the Libertarian Party of Michigan.