Treasury Goes After ISIS Funding, Doesn't Give a Hoot About Financial Privacy


U.S. Treasury, Wikimedia Commons

Sometimes, silence resounds even louder than the drums of war kinetic military action. At the House Committee on Financial Services hearing yesterday on the U.S. Treasury's strategy for disrupting ISIS funding, the silence was practically deafening: Except for some token remarks on remittances to ISIS-controlled territories, there was no mention of the costs that the Treasury's counterterrorism efforts would have on the financial industry and the financial privacy of Americans.

Undersecretary for Terrorism and Financial Intelligence David Cohen outlined the plans for carving away at the estimated $2 billion in wealth at the terror group's disposal. Broadly, the strategy hinges on imposing sanctions on the organization's financial base—predominantly black market oil sales—and restricting its access to the international banking system.

While theoretically this might sound just peachy, the plan will probably prove ineffective for a variety of reasons, not least of which the fact that ISIS is largely financially self-sufficient and doesn't rely on infusions of foreign support channeled through international financial networks. Nonetheless, Cohen assured the assembled congressmen that he's been "working very, very hard" to undermine the financial capabilities of ISIS.

But mum's the word on what his efforts mean for those large swathes of people engaging in legitimate business.

If history is any guide, the implications can't be good. U.S. efforts at wielding financial weapons to bring recalcitrant individuals and organizations to heel have a habit of trampling on the rights of many to catch the few—all at enormous costs in civil liberties and treasure for intangible benefits.

Over the past several decades, legislation initially aimed at curbing money laundering activities of drug dealers has morphed into a powerful arsenal of rules and regulations for government agencies to target large numbers of Americans for any number of supposed crimes—Americans who often don't even need to be charged with a crime to have their financial assets seized.

From the Banking Secrecy Act of 1970 to the Money Laundering Control Act of 1986 to the PATRIOT Act, efforts to crack down on various targets have systematically chipped away at the financial privacy everyone, all the while burdening financial institutions with onerous regulatory requirements. Thousands of individuals have had their assets seized under these vague rules. Whole industries have had their access to banking services restricted, particularly under the Department of Justice's Operation Choke Point. Financial businesses have to fork over billions in compliance costs in order to stay on the right side of vague laws.

That the payout of this panoply of intrusions has been negligible is driven home by the fact that ISIS is really quite rich. More than one congressman at the hearing wondered aloud what, exactly, we're getting for all the money spent on counterterrorism if we can't stop an organization such as ISIS from getting fabulously rich. Other than the feds breathing down our necks at every turn, of course.

The conversation we should be having is whether the benefits of our financial counterterrorism tactics outweigh the costs. But legislators seem more willing to rattle their sabers and abrogate civil liberties than to stop and ask: Is this really the best way to fight terror groups? And if so, is it worth it?