Your Financial Data is Now an Open Book

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Financial information privacy

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It’s not the latest hacker or identity theft ring that’s now gained access to every bit of your financial existence, but there’s another body that’s trying to get a long, hard look into your financial records – and you might not agree that it’s necessary. Actually, it’s the U.S. government.

Frankly, we did a double take when Reuters released its exclusive story on Wednesday. The headline was disturbing and the information under the headline was just as much.

Full and Complete Access

According to Reuters, all United States spy agencies are about have full and complete access to your financial information, courtesy of the Obama administration. Plans are now underway that will allow a massive database to be designed that will contain any kind of financial information on every single American, according to the Treasury Department’s document that was obtained by Reuters. It sounds alarming, but once you realize how much information is already available to different government agencies, it would appear it’s just expanding what’s allowed. Others disagree and say the laws are already pouncing on the rights of American consumers.

It’s being referred to as a “major step by U.S. intelligence agencies” and its being justified by saying terrorists and and crime rings will be easier to identify via the database. The thinking is that if you bring together all of the financial entities – and their records – the illegal activities will stick out like a sore thumb. And speaking of the legalities – it’s absolutely legal, according to experts. But make no mistake, privacy advocates are watching closely.

Suspicious Activities

Already, our banks, credit card companies and other financial entities are required to file reports anytime they believe suspicious activity is occurring. These might include questionable money transfers, massive deposits, etc. What’s being proposed is more leeway in both identifying and then investigating them – even if it means plundering through any citizen’s information. This will not only put all financial information together, but it would also bring with it criminal records, military intelligence and other sources. Already, the FBI has this kind of access, but these new efforts would allow other government agencies to make requests for the information with very little justification, according to the Treasury.

It all sounds very “cloakish”, but is it really as bad it seems? Maybe not. Again, it’s not like there is no agency that doesn’t already have it. The data is raw, but would allow for easier identification of certain criminal patterns. And already financial institutions file more than 15 million “suspicious activity reports” annually. This, according to the Treasury, means banks are already filing reports on personal cash transactions exceeding $10,000 and any instances the banks feel are suspicious and could prove money laundering, loan fraud, computer hacking or counterfeiting. The plan is to widen what the agencies already have.

Valuable Reports

The documents read, in part,

For these reports to be of value in detecting money laundering, they must be accessible to law enforcement, counter-terrorism agencies, financial regulators, and the intelligence community.

The document also says that current laws allow for the sharing of information with any number of intelligence agencies provided they are in compliance with the Bank Secrecy Act. Those safeguards will remain in place and any agencies with the information will still be required to adhere to them.

There’s one bigger problem though: there’s no way to safeguard this information, not really. Consider what’s going on today: the denial of service attacks, the successful hacks into the three major credit bureaus – both of these criminal outfits this week have successfully proven they can outsmart security. While that might seem petty in comparison to what’s being requested, there’s no denying the very real repercussions of these current security breaches. Ask anyone who’s spent months trying to recover from an identity theft.

Privacy Concerns

So what do the privacy advocates and consumer watchdog groups have to say? A senor attorney with the Rule of Law Program at the Constitution Project says these plans raise concerns about whether innocent consumers could find themselves being falsely accused of terrorism or other crimes. There are also concerns over whether or not the USA Patriot Act and other laws would be enough to protect those citizens even as those who support it say it will only enhance their abilities to do their jobs so that those who are planning against the country can be identified sooner.

It’s a war on money, war on corruption, on politically exposed persons, anti-money laundering, organized crime,

said Amit Kumar, who advised the United Nations on Taliban sanctions and is a fellow at the Democratic think tank Center for National Policy.

Complete Cooperation

The plan calls for across the board cooperation between various agencies. Currently, there are more than 25,000 financial entities this could apply to, including casinos and wire transfer agencies – all of which must adhere to strict compliance laws already. In fact, some say the laws already so strict that these entities over-report, preferring to err on the side of caution. But it also raises the question over whether too much is being released to the point that innocuous activities will be reported to these other agencies. For some time now, efforts have been underway to limit what’s already allowed. To open up the potential seems incredulous to some, including Stephen Vladeck, who is a professor at American University’s Washington College of Law,. He says privacy advocates have long since made efforts to limit data sharing and that by increasing it will only result in a loss of freedom for Americans.

One of the real pushes from the civil liberties community has been to move away from collection restrictions on the front end and put more limits on what the government can do once it has the information.

What are your thoughts? Is this OK provided the information is used to better protect the country from terrorist attacks? Does it worry you that the government doesn’t have the best track record in protecting its citizens and their financial information? Do you feel as though your privacy or rights are being compromised? Share your thoughts with us on this very important issue.

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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