[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[Extensions of Remarks]
[Page 2050]
[From the U.S. Government Publishing Office, www.gpo.gov]




     INTRODUCTION OF THE KNOW YOUR CUSTOMER PROGRAM ABOLISHMENT ACT

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                           HON. VAN HILLEARY

                              of tennessee

                    in the house of representatives

                        Monday, February 8, 1999

  Mr. HILLEARY. Mr. Speaker, on December 7, 1998, the Comptroller of 
the Currency, the Office of Thrift Supervision, Federal Reserve Board 
and the Federal Deposit Insurance Corporation published regulations 
which cut against the very foundations of individual liberties. Under 
the title of ``Know Your Customer'' regulations, the proposed rule 
intends to prevent money laundering. However, it instead intrudes on 
the privacy of law-abiding citizens.
  Under the proposed rule, all banks and thrifts in our country would 
be required to (1) identify their customers, (2) determine the source 
of income of its customers, (3) determine the ``normal and expected'' 
transactions of each customer, (4) monitor each customer's account 
activity to insure it is compatible with historical patterns, and (5) 
report any ``suspicious'' transactions.
  Thus, if your financial institution, in which you have placed both 
your finances and trust, feels that you have withdrawn or deposited an 
amount that could be interpreted as suspicious or outside the ``normal 
and expected'' transactions that you make, you could have your name 
sent to law enforcement authorities. All of us at one time or another 
have had to deposit or withdraw money that falls outside our ``normal'' 
transactional history. Whether putting a downpayment on a house, a car 
or even a wedding ring, it is not the FDIC, the FBI or our local bank's 
business on when and why we would want to make such a transaction or 
even from where we receive our income.
  One would think that if the federal government were to order 
financial institutions to comb over their customer's finances, they 
would at least take part of the burden off the financial institution. 
However, this regulation instead puts an onerous mandate on member 
banks and thrifts. These institutions must compile all the paperwork, 
put in all the man hours, and ultimately take all the heat for spying 
on their customers.
  I am all in favor of preventing money laundering; however, this 
regulation violates the basic privacy rights of American citizens. 
There are surely other ways to catch the drug dealers and other illegal 
money launderers that do not infringe on the personal liberties of so 
many innocent and law-biding citizens.
  Luckily the federal government's attack on personal freedom has not 
gone unnoticed. Already the FDIC has received more than 15,000 comments 
on these new regulations. All but 12 of these comments are negative.
  I am hopeful that by filing this bill today will further discourage 
the FDIC and other federal agencies from following through with this 
ill-conceived and shoddily designed rule.

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