[Congressional Record Volume 147, Number 91 (Wednesday, June 27, 2001)]
[Extensions of Remarks]
[Pages E1219-E1220]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1219]]



                 ``POSTAL SERVICE HAS ITS EYE ON YOU''

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                        Wednesday, June 27, 2001

  Mr. PAUL. Mr. Speaker, I am pleased to take this opportunity to draw 
my colleagues' attention to the attached article ``Postal Service Has 
Its Eye On You'' by John Berlau of Insight magazine, which outlines the 
latest example of government spying on innocent citizens. Mr. Berlau 
deals with the Post Office's ``Under the Eagle's Eye'' program which 
the Post Office implemented to fulfill the requirements of the Nixon-
era Bank Secrecy Act. Under this program, postal employees must report 
purchases of money orders of over $3,000 to federal law enforcement 
officials. The program also requires postal clerks to report any 
``suspicious behavior'' by someone purchasing a money order. Mr. 
Speaker, the guidelines for reporting ``suspicious behavior'' are so 
broad that anyone whose actions appear to a postal employee to be the 
slightest bit out of the ordinary could become the subject of a 
``suspicious activity report,'' and a federal investigation!
  As postal officials admitted to Mr. Berlau, the Post Office is 
training its employees to assume those purchasing large money orders 
are criminals. In fact, the training manual for this program explicitly 
states that ``it is better to report many legitimate transactions that 
seem suspicious than let one illegal one slip through.'' This policy 
turns the presumption of innocence, which has been recognized as one of 
the bulwarks of liberty since medieval times, on its head. Allowing any 
federal employee to assume the possibility of a crime based on nothing 
more than a subjective judgment of ``suspicious behavior'' represents a 
serious erosion of our constitutional rights to liberty, privacy, and 
due process.
  I am sure I do not need to remind my colleagues of the public's 
fierce opposition to the ``Know Your Customer'' proposal, or the 
continuing public outrage over the Post Office's proposal to increase 
monitoring of Americans who choose to receive their mail at a 
Commercial Mail Receiving Agency (CMRA). I have little doubt that 
Americans will react with the same anger when they discover that the 
Post Office is filing reports on them simply because they appeared 
``suspicious'' to a postal clerk.
  This is why I will soon be introducing legislation to curb the Post 
Office's regulatory authority over individual Americans and small 
business (including those who compete with the Post Office) as well as 
legislation to repeal the statutory authority to implement these ``Know 
Your Customer'' type policies. I urge my colleagues to read Mr. 
Berlau's article and join me in protecting the privacy and liberty of 
Americans by ensuring law-abiding Americans may live their lives free 
from the prying ``Eagle Eye'' of the Federal Government.

                   Postal Service Has Its Eye on You

                            (By John Berlau)

       Since 1997, the U.S. Postal Service has been conducting a 
     customer-surveillance program, `Under the Eagle's Eye,' and 
     reporting innocent activity to federal law enforcement.
       Remember ``Know Your Customer''? Two years ago the federal 
     government tried to require banks to profile every customer's 
     ``normal and expected transactions'' and report the slightest 
     deviation to the feds as a ``suspicious activity.'' The 
     Federal Deposit Insurance Corp. withdrew the requirement in 
     March 1999 after receiving 300,000 opposing comments and 
     massive bipartisan opposition.
       But while your bank teller may not have been snooping and 
     snitching on your every financial move, your local post 
     office has been (and is) watching you closely, Insight has 
     learned. That is, if you have bought money orders, made wire 
     transfers or sought cash cards from a postal clerk. Since 
     1997, in fact, the window clerk may very well have reported 
     you to the government as a ``suspicious'' customer. It 
     doesn't matter that you are not a drug dealer, terrorist or 
     other type of criminal or that the transaction itself was 
     perfectly legal. The guiding principle of the new postal 
     program to combat money laundering, according to a U.S. 
     Postal Service training video obtained by Insight, is: ``It's 
     better to report 10 legal transactions than to let one 
     illegal ID transaction get by.''
       Many privacy advocates see similarities in the post 
     office's customer-surveillance program, called ``Under the 
     Eagle's Eye,'' to the ``Know Your Customer'' rules. In fact, 
     in a postal-service training manual also obtained by Insight, 
     postal clerks are admonished to ``know your customers.''
       Both the manual and the training video give a broad 
     definition of ``suspicious'' in instructing clerks when to 
     fill out a ``suspicious activity report'' after a customer 
     has made a purchase. ``The rule of thumb is if it seems 
     suspicious to you, then it is suspicious,'' says the manual. 
     ``As we said before, and will say again, it is better to 
     report many legitimate transactions that seem suspicious than 
     let one illegal one slip through.''
       It is statements such as these that raise the ire of 
     leading privacy advocates on both the left and right, most of 
     whom didn't know about the program until asked by Insight to 
     comment. For example, Rep. Ron Paul, R-Texas, who led the 
     charge on Capitol Hill against the ``Know Your Customer'' 
     rules, expressed both surprise and concern about ``Under the 
     Eagle's Eye.'' He says the video's instructions to report 
     transactions as suspicious are ``the reverse of what the 
     theory used to be: We were supposed to let guilty people go 
     by if we were doing harm to innocent people'' when the 
     methods of trying to apprehend criminals violated the rights 
     of ordinary citizens. Paul says he may introduce legislation 
     to stop ``Under the Eagle's Eye.''
       The same sort of response came from another prominent 
     critic of ``Know Your Customer,'' this time on the left, who 
     was appalled by details of the training video. ``The postal 
     service is training its employees to invade their customers' 
     privacy,'' Greg Nojeim, associate director of the American 
     Civil Liberties Union Washington National Office, tells 
     Insight. ``This training will result in the reporting to the 
     government of tens of thousands of innocent transactions that 
     are none of the government's business. I had thought the 
     postal-service's eagle stood for freedom. Now I know it 
     stands for, `We're watching you!' ''
       But postal officials who run ``Under the Eagle's Eye'' say 
     that flagging customers who do not follow ``normal'' patterns 
     is essential if law enforcement is to catch criminals 
     laundering money from illegal transactions. ``The postal 
     service has a responsibility to know what their legitimate 
     customers are doing with their instruments,'' Al Gillum, a 
     former postal inspector who now is acting program manager, 
     tells Insight. ``If people are buying instruments outside of 
     a norm that the entity itself has to establish, then that's 
     where you-start with suspicious analysis, suspicious 
     reporting. It literally is based on knowing what our 
     legitimate customers do, what activities they're involved 
     in.''
       Gillum's boss, Henry Gibson, the postal-service's Bank 
     Secrecy Act compliance officer, says the anti-money-
     laundering program started in 1997 already has helped catch 
     some criminals. ``We've received acknowledgment from our 
     chief postal inspector that information from our system was 
     very helpful in the actual catching of some potential bad 
     guys,'' Gibson says.
       Gillum and Gibson are proud that the postal service 
     received a letter of commendation from then-attorney general 
     Janet Reno in 2000 for this program. The database system the 
     postal service developed with Information Builders, an 
     information-technology consulting firm, received an award 
     from Government Computer News in 2000 and was a finalist in 
     the government/nonprofit category for the 2001 Computerworld 
     Honors Program. An Information Builders press release touts 
     the system as ``a standard for Bank Secrecy Act compliance 
     and anti-money-laundering controls.''
       Gibson and Gillum say the program resulted from new 
     regulations created by the Clinton-era Treasury Department in 
     1997 to apply provisions of the Bank Secrecy Act to ``money 
     service businesses'' that sell financial instruments such as 
     stored-value cash cards, money orders and wire transfers, as 
     well as banks. Surprisingly, the postal service sells about 
     one-third of all U.S. money orders, more than $27 billion 
     last year. It also sells stored-value cards and some types of 
     wire transfers. Although the regulations were not to take 
     effect until 2002, Gillum says the postal service wanted to 
     be ``proactive'' and ``visionary.''
       Postal spokesmen emphasize strongly that programs take time 
     to put in place and they are doing only what the law demands.
       It also was the Bank Secrecy Act that opened the door for 
     the ``Know Your Customer'' rules on banks, to which 
     congressional leaders objected as a threat to privacy. 
     Lawrence Lindsey, now head of the Bush administration's 
     National Economic Council, frequently has pointed out that 
     more than 100,000 reports are collected on innocent bank 
     customers for every one conviction of money laundering. 
     ``That ratio of 99,999-to-1 is something we normally would 
     not tolerate as a reasonable balance between privacy and the 
     collection of guilty verdicts,'' Lindsey wrote in a chapter 
     of the

[[Page E1220]]

     Competitive Enterprise Institute's book The Future of 
     Financial Privacy, published last year.
       Critics of this snooping both inside and outside the postal 
     service are howling mad that the agency's reputation for 
     protecting the privacy of its customers is being compromised. 
     ``It sounds to me that they're going past the Treasury 
     guidelines,'' says Rick Merritt, executive director of Postal 
     Watch, a private watchdog group. The regulations, for 
     example, do not give specific examples of suspicious 
     activity, leaving that largely for the regulated companies to 
     determine. But the postal-service training video points to 
     lots of ``red flags,'' such as a customer counting money in 
     the line. It warns that even customers whom clerks know often 
     should be considered suspect if they frequently purchase 
     money orders.
       The video, which Gibson says cost $90,000 to make, uses 
     entertaining special effects to illustrate its points. 
     Employing the angel-and-devil technique often used in 
     cartoons, the video presents two tiny characters in the 
     imagination of a harried clerk. Regina Goodclerk, the angel, 
     constantly urges the clerk to file suspicious-activity 
     reports on customers. ``Better safe than sorry,'' she says. 
     Sam Slick, the devil, wants to give customers the benefit of 
     the doubt.
       Some of the examples given are red flags such as a sleazy-
     looking customer offering the postal clerk a bribe. But the 
     video also encourages reports to be filed on what appear to 
     be perfectly legal money-order purchases. A black male 
     teacher and Little League coach whom the female clerk, also 
     black, has known for years walks into the post office wearing 
     a crisp, pinstriped suit and purchases $2,800 in money 
     orders, just under the $3,000 daily minimum for which the 
     postal service requires customers to fill out a form. He 
     frequently has been buying money orders during the last few 
     days.
       ``Gee, I know he seems like an okay guy,'' Regina Goodclerk 
     tells the employee. ``But buying so many money orders all of 
     a
       Gillum says this is part of the message that postal clerks 
     can't be too careful because anyone could be a potential 
     money launderer. ``A Little League coach could be a deacon in 
     the church, could be the most upstanding citizen in the 
     community, but where is that person getting $2,800 every 
     day?'' Gillum asks. ``Why would a baseball coach, a 
     schoolteacher in town, buy [that many money orders]? Our 
     customers don't have that kind of money. If he's a 
     schoolteacher, if he's got a job on the side, he's going to 
     have a bank account and going to write checks on it, so why 
     does he want to buy money orders? That's the point.''
       Despite the fact that the Little League coach in the video 
     was black, Gillum insists that the postal service tells its 
     employees not to target by race or appearance.
       One thing that should set off alarms, the postal service 
     says, is a customer objecting to filling out an 8105-A form 
     that requests their date of birth, occupation and driver's 
     license or other government-issued ID for a purchase of money 
     orders of $3,000 or more. If they cancel the purchase or 
     request a smaller amount, the clerk automatically should fill 
     out Form 8105-B, the ``suspicious-activity'' report. 
     ``Whatever the reason, any customer who switches from a 
     transaction that requires an 8105-A form to one that doesn't 
     should earn himself or herself the honor of being described 
     on a B form,'' the training manual says.
       But the ``suspicious'' customers might just be concerned 
     about privacy, says Solveig Singleton, a senior analyst at 
     the Competitive Enterprise Institute. And a professional 
     criminal likely would know that $3,000 was the reporting 
     requirement before he walked into the post office. ``I think 
     there's a lot of reasons that people might not want to fill 
     out such forms; they may simply think it's none of the post 
     office's business,'' Singleton tells Insight. ``The 
     presumption seems to be that from the standpoint of the post 
     office and the Bank Secrecy regulators every citizen is a 
     suspect.''
       Both Singleton and Nojeim say ``Under the Eagle's Eye'' 
     unfairly targets the poor, minorities and immigrants--people 
     outside of the traditional banking system. ``A large 
     proportion of the reports will be immigrants sending money 
     back home,'' Nojeim says. Singleton adds, ``It lends itself 
     to discrimination against people who are sort of marginally 
     part of the ordinary banking system or who may not trust 
     things like checks and credit cards.''
       There's also the question of what happens with the 
     information once it's collected. Gillum says that innocent 
     customers should feel secure because the information reported 
     about ``suspicious'' customers is not automatically sent to 
     the Treasury Department's Financial Crimes Enforcement 
     Network (FinCEN) to be shared with law enforcement agencies 
     worldwide. Although he says FinCEN wants the postal service 
     to send all reports along to it, the postal authorities only 
     will send the clerks' reports if they fit ``known 
     parameters'' for suspicious activity. ``We are very sensitive 
     to the private citizenry and their rights,'' Gillum insists. 
     ``For what it's worth, we have every comfort level that, if 
     we make a report, there are all kinds of reasons to believe 
     that there is something going on there beyond just a 
     legitimate purchase of money orders.''
       But Gillum would not discuss any of the ``parameters'' the 
     postal service uses to test for suspicious activity, saying 
     that's a secret held among U.S. law-enforcement agencies. And 
     if a clerk's report isn't sent to the Treasury Department, it 
     still lingers for some time in the postal-service database. 
     Gillum says that by law the postal service will not be able 
     to destroy suspicious-activity reports for five years.
       Gillum says the postal service is very strict that the 
     reports only can be seen by law-enforcement officials and not 
     used for other purposes such as marketing. A spokeswoman for 
     the consulting company Information Builders stated in an e-
     mail to Insight, ``Information Builders personnel do not have 
     access to this system.''
       Observers say problems with ``Under the Eagle's Eye'' 
     underscore the contradiction that despite the fact that the 
     postal service advertises like a private business and largely 
     is self-supporting, it still is a government agency with law-
     enforcement functions.
       Gibson says his agency must set an example for private 
     businesses on tracking, money orders. ``Being a government 
     agency, we feel it's our responsibility that we should set 
     the tone,'' he said. The Treasury Department ``basically 
     challenged us in the mid-nineties to step up to the plate as 
     a government entity,'' Gillum adds.
       In fact, Gillum thinks Treasury may mandate that the 
     private sector follow some aspects of the postal-service's 
     program. He adds, however, that the postal service is not 
     arguing for this to be imposed on its competitors.
       In the meantime, the private sector is getting ready to 
     comply with the Treasury regulations before they go into 
     effect next January. But if 7-Eleven Inc., which through its 
     franchises and company-owned stores is one of the largest 
     sellers of money orders, is any guide, private vendors of 
     money orders probably will not issue nearly as many 
     suspicious-activity reports as the postal service. ``'Our 
     philosophy is to follow what the regulations require, and if 
     they don't require us to fill out an SAR [suspicious-activity 
     report] . . . then we wouldn't necessarily do it,'' 7-Eleven 
     spokeswoman Margaret Chabris tells Insight. Asked 
     specifically about customers who cancel or change a 
     transaction when asked to fill out a form, Chabris said, ``We 
     are not required to fill out an SAR if that happens.'' So why 
     does the U.S. Postal Service?
       That's one of the major issues raised by critics such as 
     Postal Watch's Merritt. He says that lawmakers and the new 
     postmaster general, Jack Potter, need to examine any 
     undermining of customer trust by programs such as ``Under the 
     Eagle's Eye'' before the postal service is allowed to go into 
     new businesses such as providing e-mail addresses. ``Let's 
     hope that this is not a trend for the postal service, because 
     I don't think the American people are quite ready to be fully 
     under the eagle's eye,'' he says.

     

                          ____________________