NCPA - National Center for Policy Analysis

Banks' "Suspicious Activity Reports" Having Little Impact

April 3, 2000

Banks are passing along to the federal government a growing number of "suspicious activity reports" in an effort to catch money launderers. But the number of people sentenced in federal courts for money laundering hasn't grown much since banks started filing the reports in 1996.

Nevertheless, privacy advocates say the reports of unusual activity in individuals' personal accounts is unusually intrusive and they want to practice stopped.

  • During 1999, banks sent 116,884 of the reports to the Treasury Department's Financial Crimes Enforcement Network -- compared to just 80,652 two years earlier.
  • The reports include the account-holder's name, Social Security number, occupation and other personal information -- and customers cannot be told whether they have been reported on, even though the information sits in government files permanently and is shared with more than 60 other federal and state agencies.
  • By law, suspicious transactions of as little as $5,000 must be reported -- but one in six reports falls below the $5,000 limit.
  • Only half the reports involve money laundering -- although that was the reason given for justifying the practice in the first place, critics point out.

Some innocent people get harmed in the process. In one case, a Florida bank reported unusual activity and the police seized 1,100 bank accounts. Criminal charges weren't filed, but the customers waited months before getting their money back.

Source: Editorial, "Reports Catch Few Crooks But Trample Privacy," USA Today, April 3, 2000.

 

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