« Portrait Of The Artist As A Lone Wolf | Main | Lagniappe »

March 07, 2006

Comments

the system is broken. reboot, or reinstall.

Effective oversight is more of the same, I'm afraid, and would likely take up so much time and energy that Congress would no longer be able to declare National Stamp Collector's Day. Trash DHS. Reform and/or add on to the FBI if you have to, but leave law enforcement and interdiction to trained professionals.

This is almost diametrically opposed to any sane model of conservatism, isn't it? Aren't there a lot of other DHS horror stories (I mean that in the sense of object lessons in how screwed up DHS is) floating around? I've hated pretty much everything about DHS (not least of which: the name) since its inception, and it just keeps getting worse.

Slart, it's diametrically opposed to any sane model of anything.

And I agree re the trained professionals part. Unfortunately, the administration doesn't.

I recently was looking at Banking regulations regarding the anti-money-laundering provisions of the Patriot Act. The regulations which require financial institutions to report "suspicious" account activity do not define what exactly is "suspicious." It's absolutely infuriating. That's left to the financial institutions themselves, who will spend billions so that no one can say they weren't taking it seriously enough.

The blame here for once isn't on DHS, it's the credit card company being stupid when being asked to something vague.

The blame here for once isn't on DHS, it's the credit card company being stupid when being asked to something vague.

It's the CYA solution. I can't say that I blame them, particularly if there's consequences for failing to comply with nonspecific regs.

Sorry – this story is complete bunk. Primarily because the financial institution can not disclose, by law, that a SARS has been filed. Not the content, not even the existence of the report. The Banking Secrecy Act specifically prohibits disclosure to the subject. Any employee saying anything about it would be in serious hot water. And they certainly would not get it in more detail “as they moved up the managerial ladder at the call center”.

Next, for the most part these are very old laws and statutes. Much of it goes back to fighting organized crime and money laundering. Don’t blame it all on the Patriot Act.

I paid off a mortgage a couple years ago. I knew beyond a doubt that a SARS was filed due to the amount and nature of the transaction. Most people know this.

And you would not generally see any kind of hold on the monies involved.

The story is bunk. What I do think is happening is that more companies today are quick to spout off some kind of Homeland Security excuse to demand more information from customers than they are entitled to, or to cover up their own screw up.

“government that thinks that paying off credit card bills is an indication of terrorism” – come on. You can do better than that.

"The story is bunk."

That's interesting. I haven't seen that claimed anywhere else, but you make it sound plausible ... any other debunkings of the story out there?

Shorter OCSteve: Nothing to see here, move along.

In seriousness, the fact that the government can do this should really come as a surprise to no one. The fact that it (reportedly) is, is much more disturbing. Honestly, I think the CYA explanation is the probably the right one, but if enough of that starts going around, "Enemy of the State" starts to look less and less preposterous.

That's interesting. I haven't seen that claimed anywhere else, but you make it sound plausible ... any other debunkings of the story out there?

I haven't seen anybody mention anything about the unlikiness of this story anywhere, and I read way too many blogs. Do we have an Obsidian Wings comment thread exclusive here?

Shorter OCSteve: Nothing to see here, move along

I haven't seen anybody mention anything about the unlikiness of this story anywhere, and I read way too many blogs. Do we have an Obsidian Wings comment thread exclusive here?


First I’ll repeat that it is common knowledge that financial institutions are required to report large and or suspicious transactions. Common knowledge to us older folks who were around at the height of the crackdown on the mob. Younger folks have certainly heard about it as well – Limbaugh, terrorism, Patriot Act provisions on money laundering. In any case it’s all about money laundering.

This is a safe harbor reaffirmation, but you will see here at the top of Page 2:

“The individuals did not seek a copy of the SAR because a clear provision of the Bank Secrecy Act prohibits such disclosure to the people who are reported in the SAR...

That site is probably the best (official) source for info on this.

The financial institution can not tell you they have filed a report. It would open them up to serious trouble. So while it’s possible a low level employee might let something slip, managers “up the chain” are not going to tell you something like this – they get regular training on this stuff and with the Patriot Act renewal it’s not like people aren’t thinking about it.

They also don’t put a hold on the money – again, the subject is not supposed to know that they may be under suspicion.

I am not saying the company did not tell these folks something as CYA that intentionally or not made them believe DHS had something to do with it. But as far as a bank filing a SAR, DHS saying freeze that account, then the bank telling the customer that – no way.

OCSteve's argument sounds plausible, at least, to me. I'd like to know just how long the check was held before credit was granted, and who exactly held it. Was it the bank or the credit card company? It's not clear to me from the story.

It wouldn't surprise me if the CC company wanted to wait until the check cleared, or if the CC company's bank was cautious because of the amount. It also wouldn't surprise me if some idiot made up a story about Homeland Security to keep the Soehnges quiet.

First I’ll repeat that it is common knowledge that financial institutions are required to report large and or suspicious transactions.

I dunno...is $6,522 "large and suspicious"? If you take:

And if the increase hits a certain percentage higher than that normal payment, Homeland Security has to be notified.

Then it sounds like any amount, so long as it's higher than your normal payment, triggers interest. The lesson for terrorists: always pay off your credit card immediately.

There was a Daily Kos diary on this topic Friday. It's pretty long, but do a search for the comments by Truza and d3n4l1.

Banks have always flagged large transactions due to money laundering laws, but in recent years the threshold has apparently dropped from $10k to $5k and even to $1k in some jurisdictions. Unusual activity is also monitored, so if you usually carry debt on your credit card and suddenly pay it off one billing period, that would be flagged as unusual, but if you've always been conscientious about paying off your credit card, no one would bat an eye.

It also sounds like the extent to which enforcement has been inappropriately intensified, that's due to poor training of bank examiners, not to nefarious government paranoia. Especially since banks are absolutely not supposed to tip customers that an SAR has been filed.

OCSteve,

I apologize for my earlier snark. Thanks for the clarification, and that does indeed sound plausible. Though I will say that $6k sounds awfully low for a 'trigger' (IIRC it's $10k, or a series of transactions that appear to be made in order to avoid the $10k trigger, right)?

That being said, I think the story as presented by Hilzoy is also plausible.

OCSteve,

Two questions.

1) Don´t you have any "threshold" (is that the right spelling?) in your American laws? Meaning that a bank is only required to report a money transaction once it´s over a certain amount of money. Say, above $10,000?
I seriously doubt that organized crime would be interested in laundering money in the amounts of only "thousands" of dollars per year?

Not to mention that just being over a "certain percentage higher than that normal payment" doesn´t make sense. If I would pay back $100 instead of my "normal" §20, I´d exceed my "normal" percentage by 500%?

2) Is there no plausibility regulation available to the banks? I mean if I would own a large amount of money to a credit card company with high interest rates, it would make financial sense to pay it back. Even if it would involve getting a regular bank credit with fixed rates? Or using some savings?

All in all, if your "Banking Secrecy Act" or whatever regulation requires that banks report any transaction that is above a "certain percentage higher than that normal payment", you´re in trouble of being overwhelmed with reports.

And I don´t understand this case?
I mean, transferring thousands of dollars to "some" bank account might be one thing but trying to balance a credit card or paying back a mortgage? How could that help terrorists? That money goes to a credit card company or bank, not to some "anonymous" bank account?

Consider me puzzled?

This one is weird all around. I have worked in a bunch of call centers and have been that person that handles all the problem calls when they can go no further. I have not known anyone at the top tier in a call center who would lie like that just to keep someone quiet. That gets you fired and gets the company in all sorts of legal trouble.

I could see it happening at the lower level. Bottom tier in a call center is completely hit or miss. Some of those people would also transfer the caller over to a friend who would pretend to be a manager in order to shut them up and get them off the line.

But as far as it goes, I can very well see how someone somewhere between the first tier and the top could see a notation in the file stating that the funds were on hold for security review and tell the caller about that, not knowing that the law forbids disclosure. Stuff like that happens all the time because documentation of all of the details get strung out across a database and only a handful of people in the department know the ins and outs of what can and cannot be disclosed, and those people are always on another call or in a meeting. And the Sohenges would never know how far up the call center chain they went to get that info because the name of the person at the top is never a real name. Marketing picks a unisex name and one or more people get dumped into that phone queue to act as "Blake" or "Pat" or "Britt" or whatever.

Yeah, this could happen.

Bernard Yomtov,

OCSteve's argument sounds plausible, at least, to me. I'd like to know just how long the check was held before credit was granted, and who exactly held it. Was it the bank or the credit card company? It's not clear to me from the story.

I´d also like to know who is going to pay for the "extra days interest payments" while the check was held?

I don´t know how high their interest payments were but I do know that I would be as mad as h*ll if someone would ask me to pay interest days after I paid the balance?

Detlef,

I can't answer your question, but I suspect that there is no interest charged once the check is received by the CC company. I think that is the usual procedure. Can't say for sure.

nous_athanatos' comment raises another quite plausible explanation: the check was held for "security" purposes and somewhere along the line that got translated into "Homeland Security."

Note that there are three financial institutions involved here: the CC company, its bank, and the Soehnges' bank. Any of these three might plausibly have delayed things to be sure the check was valid. Banks don't routinely examine individual checks, but might do so for exceptionally large ones. How would the Soehnges feel if a forged $6500 check were paid against their account?

None of these possibilities involve any government rules, all could be said to fall under the general heading of "security," andtheer would be nothing remotely illegal about telling the Soehnges that the delay was for security purposes.

Senate Intelligence Committee votes, on partisan lines, not to investigate the NSA sping. So much for the myth of 'independent' Republicans. Apparently 34-40% approval rates are not low enough to make Senators unwilling to stick with the Cheney-Bush administration.

If Congress will not do its job, then we have a dictatorship. Let's pass an enabling law and make it official; clearly the votes are there.

Regarding the anthrax powder portion of the DHS story, this 2004 http://www.govexec.com/dailyfed/0904/091004dk1.htm>article says:

The Postal Service now irradiates mail headed for federal agencies and has begun testing biohazard detectors in 15 facilities.
That doesn't cover the rest of the complaints, but does probably explain the treatment of the white powder.

I share Nell's profound disappointment in the Senate Intelligence Committee. http://intelligence.house.gov/Media/PDFS/Release030206v2.pdf>This House Permanent Select Committee on Intelligence Chairman Pete Hoekstra's (R-Mich) 03/02/06 statement on FISA oversight. http://intelligence.house.gov/SubCommittees.aspx?ID=2>This is the HPSCI Subcommittee on Oversight members list. Heather Wilson (R-NM) has spoken a little on this (of course, Snowe and Hagel did too, before caving).

GOP politicians always cave to the King. They talk like Americans, sometimes, but when push comes to shove, they're loyal little monarchists.

I think I now understand Ashcroft's otherwise uncharacteristic unwillingness (if not refusal) to sign off on the NSA surveillance program. He's the one who said, "We have no king but Jesus." Oddly enough, it seems he might have meant that. Puts a whole new spin on his resignation, doesn't it?: the Bush Admin had become too RW even for him.

I can't confirm anything about the details of the story, but I can personally confirm that plenty of banks have latched onto the "homeland security" excuse as a catch-all justification to deflect criticism for crappy policies.

Case in point: when I was attempting to add Jess to my checking account, Bank of America claimed that due to the Patriot Act they required one of a limited group of IDs. Jess had a valid Florida driver's license and a social security card, but this wasn't good enough for them. Everything else they wanted (military ID, tribal ID, credit card with photo) were things she simply had no way to get.

We took our complaint pretty far, and it was with a certain amount of satisfaction that I was able to not only tell the branch manager that she was mistaken and that the Patriot Act did not mandate any specific ID cards, that this was a BOA corporate policy--but that under those same policies she was capable of exercising discretion in the matter and that I would take a failure to exercise that discretion in our favor as a declaration that she no longer desired me to keep my account there.

Similarly, when her student loan was disbursed we used it to open an account at Wells Fargo to hold the money. They were happy to take the money, but a week later when we went to pay her tuition, we found the account closed. They claimed that they had run a credit check of some sort after the fact and found that she'd had a bank account closed in the past due to overdraft, and that under the Patriot Act they could not give her an account. It mandates no such thing. It took the magic word (lawyer) to get them to release a cashier's check for our account balance instead of mailing it to us, which we were informed would take three to six weeks.

The moral of the story, aside from never doing business with Wells Fargo: don't take anyone's word when they say that X is because of the Patriot Act. Ask for the specific cite from the Act, and look it up. Chances are pretty good they're lying or misinformed.

The comments to this entry are closed.

Blog powered by Typepad