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Search of banking records raises privacy concerns

Most routine transactions barred, US says

WASHINGTON -- For most Americans, the confidentiality of their bank accounts and other financial holdings is a right to be cherished. The idea that government agents might be secretly scrutinizing the records of individuals arouses discomfort in people who view their wealth, income, and other financial information as nobody's business but their own.

So questions of privacy have arisen after revelations that the Bush administration has been tracking clues about terrorists by searching the records of a Belgium-based banking consortium that handles millions of financial transactions daily across inter national borders.

Bush administration officials said last week the newly disclosed program does not give them access to most routine banking transactions and has been designed to prevent abuse.

But some analysts said the revelations underscore the degree to which the government is obtaining more financial information that used to be treated as confidential, especially since the Sept. 11, 2001, attacks.

They cited, for example, the intensifying pressure on banks to submit reports to federal agencies when their customers engage in transactions that may be considered suspicious, such as withdrawing an unusually large amount of cash.

``Maybe in the end, the public will be fine with it," said John D. ReVeal, a lawyer who specializes in financial regulation at the Washington office of Powell Goldstein LLP. ``But it's always bothered me that the public has no idea about a lot of this.

Of special concern to privacy advocates and legal specialists is the lack of oversight for such surveillance programs.

``It's fair enough to say, we don't want to let the bad guys know that we're spying on them and disclose every detail of how that's being done," ReVeal said. ``But it's another thing to pull the wool over Americans' eyes and not disclose what end runs around the Fourth Amendment we may be doing."

The administration's assurances about the confidentiality of the newly disclosed program came in briefings and interviews last week.

Officials initially had hoped to keep the program under wraps because of its value in thwarting terrorism. They said they were forced to go public because The New York Times had made clear that it was publishing a major story about it.

In the first place, the officials said, the Belgian consortium, known by the acronym SWIFT, handles mostly transactions overseas, such as transfers of funds from a European country to a Middle Eastern country. Even when a transaction involves an American, a foreign national is typically overseas.

``As a general matter, [that database] does not contain the type of information on ordinary transactions that would be made by individuals in the United States, such as deposits, withdrawals, checks, electronic bill payments, and the like," said Stuart Levey, undersecretary of the Treasury for terrorism and financial intelligence.

Furthermore, the officials said, ever since the program was established, the government has taken elaborate precautions to ensure that the information is not used for any purpose other than catching and disrupting terrorists.

Under various bank secrecy laws passed by Congress over the past 35 years, US banks are forbidden to hand over information about individual customers' accounts, unless government agents obtain a court-authorized subpoena in the course of an investigation.

But at the same time, banks risk severe penalties if they do not comply with federal ``know your customer" requirements and fail to file ``suspicious activity reports" to the Treasury Department's Financial Crimes Enforcement Network about their customers' out-of-the-ordinary transactions.

Since 1996, when the rules were tightened, banks have filed more than 2 million such reports, and the pace stepped up significantly after Sept. 11, 2001, when failure to file began resulting in stiff fines.

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