What does your bank know about you and when did it know it? More and sooner than you think. In the late 1990s, the Federal Deposit Insurance Corporation proposed regulations that would have required banks to tell the Feds about any "unusual" financial activity in the accounts of individual customers. These so-called "Know Your Customer" regulations were chiefly aimed at helping the Feds prosecute the Drug War. Civil libertarians of all stripes denounced the regulations and they were shelved.

That was then, this is now. What the Drug Warriors couldn't enact was hastily revived as a "tool" to fight the War on Terrorism. "Perhaps surprisingly, given that the press reports have focused upon the electronic surveillance, 'sneak and peak' warrants and other anti-privacy provisions of the Patriot Act, in fact, the money laundering provisions of Title III [of the USA PATRIOT Act] comprise its bulk," writes David Russell, who practices international law at Bose McKinney and Evans in Indianapolis. "The breadth and depth of the provisions is staggering."

What kind of information do the Feds want to know about financial clients? The new regulations require financial institutions to obtain extra information about clients who are non-US citizens who deposit more than a $l million or who operate businesses in countries blacklisted as money laundering havens. But they are not the only automatic terror suspects. For example, Merrill Lynch's retail account profile form requires that brokers collect and report information about new customers who engage in such shady businesses as selling leather goods, used automobiles, trucks or jewelry, running auctions, operating pawnshops or telemarketing firms, or dealing in arts and antiquities. Admittedly, new clients who operate more suspect businesses such as check cashing and deposit taking facilities, import/export companies and non-US charities also trigger deeper inquiries.

However, I wonder if my friend, who operates a high-end art business importing and selling early 19th and 20th century French paintings, knows he could be on the Fed's watch list? Or does another friend know that her financial institution's office of compliance checked up on her because she recently deposited several hundreds of thousands of dollars that she inherited from her father?

If you're in one of these suspect professions, bankers and brokers are required to file a "Retail Enhanced Due Diligence form" which asks, among other things, does the client express any unusual interest in confidentiality, is he in a hurry to open an account; what is the source of the client's income and wealth; and perhaps most damningly, does he appear unconcerned about such things as commission charges and investment goals. These forms are not submitted directly to the Feds, but the new client's identification number, either a social security number or passport number, is checked against a list of suspicious characters.

Perhaps these new measures are needed to protect our homeland from terrorist attacks. But what this saga of growing Federal financial snooping also shows is that no proposed regulation ever dies—its proponents just lie in wait for another crisis to justify ramming it down the throats of a temporarily alarmed populace. Thus do our liberties erode imperceptibly over time.