[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.
____________________