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Suspicious Activity Reports and security

Thomson Reuters Foundation - Thu, 26 May 2011 12:29 GMT
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By Tom Cardamone

The U.S. Senate will on Thursday debate the pros and cons of extending key provisions of the USA PATRIOT Act, which broadened the ability of law enforcement to search financial, telephone, medical and electronic communication records following the 9/11 attacks. Despite a bipartisan vote of 74 senators to end debate on the bill, Senator Rand Paul has offered eight amendments that he hopes will be included in the final version, which is expected to come to a vote on Friday.                        

Two of the Paul amendments deal with Suspicious Activity Reports (SARs) that money services businesses are required to submit to the Treasury Department when terrorist financing, money laundering or other illegal financial activity is suspected. Paul sees this requirement as a violation of the fourth amendment to the constitution, which protects Americans against illegal search and seizure.  He explained this position during a speech on the Senate floor on Tuesday. 

While Paul believes that the Patriot Act makes it “incumbent upon the bank to spy on their customers,” in reality the SARs requirement is a judicious use of government power directed specifically at activities that could be harmful to U.S. national security and innocent citizens. If Paul’s amendments pass, they will severely undermine the ability of law enforcement to investigate suspicious financial movements that are consistent with activity known to be used with criminal intent. Indeed, money services businesses are required to file a SARs when the firm “knows, suspects or has reason to suspect” illegal activity. 

Paul’s anti-SARS amendments would require law enforcement officials, rather than banks, “to initiate requests for SARs” and would further require that district courts issue a finding that “probable cause exists to obtain the information.”  Not only would this clog an already overburdened court system (1 million SARs are filed each year), but it would put an undue burden on law enforcement to ask for information it does not know exists.

The logic of the current SARs requirement is that the very people who intimately understand the movement of money are the ones most likely to detect suspicious activity at an early stage.  If used properly, SARs are an early warning device in the fight against terrorist financing. It is a reasonable expectation to have banks provide a form to the Treasury Department that might lead to the prevention of a crime. This may mean slightly less privacy for some, but potentially far more security for many. 

Tom Cardamone is the managing director of Global Financial Integrity, a Washington, DC-based research and advocacy organization

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