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1Written statement of J. Bradley Jansen, CFPHR Director Eminent Jurists Panel"Terrorism, Counter-Terrorism and Human Rights""The Impact on Privacy in the United States"International Commission of JuristsAmerican UniversityWashington, DCSeptember 8, 2006
 
2Thank you for the opportunity to present my thoughts on these important issues toyou. I will focus my comments more specifically on our anti-money laundering policiesin the war on terrorism.The Center for Financial Privacy and Human Rights (CFPHR) is one part of theLiberty and Privacy Network, a 501(c) (3) organization, which was established in 2005.The CFPHR has submitted regulatory comments on relevant issues (including commentsconsidering reporting requirement thresholds for wire transfers disproportionatelyaffecting immigrant workers), publishes the Financial Privacy Weekly, is organizing afinancial privacy working group for DC-based policy organizations, is preparing a reporton the effects of the anti-money laundering laws (especially concerning the unbanked)and other projects.The CFPHR aims to address the legitimate security concerns of our anti-moneylaundering laws while protecting consumer financial privacy, improving effectiveness of  policies and protectin access to financial services (especially for the unbanked) byaddressing disproportionate regulatory burden, identification verification programs, andother policies that limit the poor, minorities and immigrants access to financial services.
A brief history of our federal anti-money laundering laws
While some states had their respective state laws prior to any federal law, the U.S. passed the first Federal law, the misnamed Bank Secrecy Act, in 1970 as part of the war on drugs. The BSA instituted our reporting requirements on financial institutions for thefirst time; it was argued that the act would “have a high degree of usefulness in criminal,tax, or regulatory investigations or proceedings.” Over the next three decades, the scopeand severity of our AML has been expanded greatly. Money laundering became a crimein 1986. Title III of the USA PATRIOT Act was the latest great expansion of our AMLlaws.Trying to maintain the confidence of their customers, bankers challenged theconstitutionality of the BSA all the way to the Supreme Court that ultimately ruledagainst them. The court held that the government could require record keeping by banksand that individuals did not have a right to privacy of their private, personal informationin those bank records.When Congress passed the Bank Secrecy Act in 1970--and it should be pointedout that the act undermines, not protects, consumer financial privacy, it was argued thatthe act would “have a high degree of usefulness in criminal, tax, or regulatoryinvestigations or proceedings.” When its Constitutionality was challenged in CaliforniaBankers Assn.. v. Shultz, 416 U.S. 21 (1974), Supreme Court Justice William O. Douglasfound the Bank Secrecy Act unconstitutional, writing:
 
3“It is, I submit, sheer nonsense to agree with the Secretary that all bank records of every citizen ‘have a high degree of usefulness in criminal, tax, or regulatoryinvestigations or proceedings.’ That is unadulterated nonsense unless we are to assumethat every citizen is a crook, an assumption I cannot make,” Justice Douglas concluded.He added, “A mandatory recording of all telephone conversations would be better thanthe recording of checks under the Bank Secrecy Act, if Big Brother is to have his way.”Supreme Court Justice Thurgood Marshall in the same case warned of the gradualerosion of our Constitutional rights and added, “[The] crucial factor is that theGovernment has shown no need, compelling or otherwise, for the maintenance of suchrecords. Surely the fact that some may use negotiable instruments for illegal purposescannot justify the Government's running roughshod over the First Amendment rights of the hundreds of lawful yet controversial organizations like the ACLU. Congress may wellhave been correct in concluding that law enforcement would be facilitated by the dragnetrequirements of this Act. Those who wrote our Constitution, however, recognized moreimportant values.” In U.S. v. Miller, the Supreme Court held that individuals have no FourthAmendment expectation of privacy in their financial records while those records are inthe hands of third parties. In response to this decision, Congress adopted the financial privacy provisions codified in 12 U.S.C., ss3401, et seq., which limit access to financialrecords held by a bank. Under these laws, federal agencies may obtain bank records onlyvia subpoena or judicial process.
Effect of BSA on privacy
The constitutionality of the Bank Secrecy Act was challenged all the way to theU.S. Supreme Court. The effect of a pair of decisions (the
California Bankers Association v Shultz 
and
Miller v U.S.)
was that bank customers do not have standing tochallenge a regulation on banks (nor the banks on our behalf) and that we have no“expectation of privacy” of information shared with third parties. These rulings haveushered in our epidemic of identity fraud--a practice used by in terrorism financing.This act has shown that it does not have a high degree of usefulness and violatesconsumers’ expectations of privacy rights. In fact former Federal Reserve BoardGovernor Larry Lindsey and the banking industry--as well as consumer and privacyadvocates-- have questioned the efficacy of the reporting requirements. Mr. Lindsey haslabeled the success of this approach of unreasonable searching without a warrant or  probable cause akin to finding a needle in a haystack; such a rate of success lampoons theclaims that the reporting requirements have a “high degree of usefulness” and runscounter to our fourth amendment Constitutional rights. Prior to the Bank Secrecy Act(BSA) that Congress passed in 1970, the U.S. Constitution and common law generallysafeguarded one's financial privacy against indiscriminate privacy violations; there was
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