Business in the Time of Terror

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Nice little piece from the San Jose Mercury News (via the Honolulu Advertiser) on some of the confusion and problems caused by PATRIOT Act regulations requiring businesses that the feds consider "financial institutions" to keep track of customers:

The Patriot Act already is in effect for casinos, mutual funds, credit-card firms, banks and "money service businesses" like the Bin & Barrel, which offer such things as check cashing and money transfers. Still others–jewelers, vehicle dealers, travel agents, loan companies, investment firms and people involved in real-estate closings–are waiting for the government to issue their regulations under the act.

As word about the law spreads, many business people don't like what they are hearing.

"A lot of our members are just starting to wake up to all of the things they are required to do," said Karen Penafiel, assistant vice president for advocacy for the Building Owners & Managers Association International. When the group's executive committee held a briefing on the act in November, she said, "there was a sense that, 'you've got to be kidding.'"

At least two indictments, according to this story, have resulted from tips from financial institutions in "terrorism-related" cases, though the Feds can have rather broad definitions of what that means. Still, only about 10 percent of money service businesses have registered with the government so far as required under PATRIOT.

Reason has been keeping an eye on these issues of how PATRIOT regulations are affecting the financial sectors. See, for example, Jeff Taylor's recent Reason Online column on how Section 314 bank regs may be impacting Muslim bank customers, and John Berlau's feature story from our Nov. 2003 issue, "Show Us Your Money: The USA PATRIOT Act lets the feds spy on your finances. But does it help catch terrorists?"

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  1. A slightly tangential but related anecdote: Last month a client needed to buy a new PC. He decided to get a Dell, but in the process of ordering it, the Dell person said he needed to know who would use the PC and what it would be used for. The client declined to provide that information (nothing sinister, it’s just a design shop), but the Dell guy insisted that information was required “by the Patriot Act.” (And no, the client wasn’t ordering a powerful server or having it shipped overseas or anything.) Client cancels order and is soon ranting to me about the descent of fascism in Bush’s Amerikkka, etc. I calm him, do some Googling, and find another account of someone being fed this line of b.s. by Dell. Apparently they want the info for marketing purposes, and are willing to lie about the Patriot Act to get it.

  2. Why do I have a feeling that will only be enforced on a very selective basis?

    A couple years ago Salon.com (yes, I know, they have a left-wing bias) ran a story about Garad Jama, a Somali immigrant, practicing Muslim, and naturalized US citizen who owned his own money transfer business. He was accused of helping terrorists wire money. His assets were frozen. His name was put on a list. He was barred from financial activity. For a while, even getting a job and collecting a paycheck, or taking money out of the bank to purchase groceries, was considered “financial activity”, assuming anybody would hire a guy on a list of terrorism sponsors. And this was done without any sort of judicial proceedings.

    Eventually the gov’t admitted that they had zero evidence that he’d been involved, knowingly or otherwise, with terrorism. However, his reputation and business were already damaged. I don’t know how well he’s managed to recover, but I do know that no US citizen should have to go through such a nightmare.

    Meanwhile, it is known that some of the 9/11 hijackers used Western Union to transfer funds. But Western Union’s executives don’t include many dark-skinned Muslims, and they can afford good lobbyists and lawyers.

  3. “… they received tips from various financial institutions about suspicious activity in 129 terrorism-related cases. That resulted in 648 grand jury subpoenas, nine arrests and two indictments.”

    Conspicuous by it’s absence is the number of convictions. I assume suppoenas, arrests and indictments are the goal of the system.

  4. Make that “subpoenas”

  5. Heh heh. He said “poenas.”

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