The government partnered with banks to monitor Americans’ financial data as a work-around for the laws that restrict them from violating individual rights.
December 16, 2024
By: Bobby Casey, Managing Director GWP
The regulatory state is an interesting game of cat and mouse. We’ve built full industries and businesses around finding the exceptions and loopholes.
In the case of taxes, we have everything from CPAs, to tax attorneys, to corporate structuring services to avoid taxes.
Just navigating the US tax system costs 6.5 billion hours and $260 Billion. So the government makes all these tax codes that demands payment. Then the people try to find ways not to pay it.
That’s if people bother to pay for the help, right? Some regulations just yield a gray or black market. People operate under the table because the rules are so ridiculous. Some people even go so far as to seek their services and goods from other countries because the regulations are so prohibitive.
The government does this too. It struggles to follow its own rules for itself (or perhaps it never intended to follow them!). And there’s no greater example of this than the persistent surveillance state. This time the government partnered with banks to monitor Americans’ financial data.
Government’s Track Record of Dodging Its Own Rules
The whole US Constitution is rules that tell the government what it cannot do. What was the work around for that? 100 mile “Constitution Free Zone” from any international border of a US territory! So if they can just suspend the rules altogether by fiat, then anything is technically possible.
We’ve covered a few of these cases here where the government works with private companies to gain access to individual information with their help.
The Government partnered with a large company, in this case AT&T, and invaded the private lives of law-abiding people in major ways.
You can even make the case that the White House has officially gone rogue (which means it doesn’t matter who is President):
[…] It was recently revealed that the White House, relying on a set of privacy loopholes, has been sidestepping the Fourth Amendment by paying AT&T to allow federal, state, and local law enforcement to access—without a warrant—the phone records of Americans who are not suspected of a crime.
It’s not just law enforcement agencies investigating drug crimes who are using Hemisphere to sidestep the Fourth Amendment, either. Those who have received training on the program reportedly include postal workers, prison officials, highway patrol officers, border cops, and the National Guard.
2. Section 702 of the FISA and the NDAA Rider
This is the mission creep of policies meant to “keep Americans safe from foreign terrorists” that ultimately got turned onto Americans.
The Electronic Privacy Information Center defines backdoor surveillance like this:
A warrantless backdoor search is a search of Americans’ communications “incidentally” collected under Section 702. Traditionally, the Fourth Amendment protects Americans against unreasonable and warrantless searches by domestic law enforcement agencies. Section 702 creates a loophole in the Fourth Amendment that allows the government, most notably the FBI, to keep the communications of Americans “incidentally” collected under Section 702 and search these communications without a warrant approved by a judge—even though these communications did not come from the targets of Section 702 surveillance.
While [Section 702] might sunset, the actual surveillance continues through April with or without the extension. So what gives with the extension? Defense One continues:
The biggest problem with the NDAA rider is not that it is unnecessary, but instead that it is a stealth longer-term extension that is dangerous for reform efforts. Although Section 702 supporters claim that the NDAA rider is only a four-month extension of the surveillance law, in practice, it will function as a 16-month extension—pushing this debate off until 2025.
3. Five-Eyes Shares Backdoor Access
If you’re reading this on a computer, there could be someone from one of the “Five Eyes” Nations listening in (U.S., UK, Canada, Australia, and New Zealand).
Not many people fully understand what that means. TechCrunch describes the secret memo aiming for exploitation of your privacy:
… known as the so-called “Five Eyes” group of nations — quietly issued the memo last week demanding that providers “create customized solutions, tailored to their individual system architectures that are capable of meeting lawful access requirements.”
These “customized solutions” allow access to your private encrypted call and message data, including your emails.
And if any provider doesn’t voluntarily create this backdoor into your computer, “Five Eyes” will work together on legislation that forces compliance.
In other words, encryption of your communications is fine, unless it keeps them from looking at your private stuff.
4. WhatsApp Worked with DoJ to Report Messages
The latest example is WhatsApp. Facebook owns WhatsApp, and they hired 1,000 employees to read messages sent on WhatsApp, and report the “inappropriate” ones to the Department of Justice.
Propublica exposed another metadata grab by the government, and Facebook Inc.’s willing cooperation in that effort. There’s quite a bit of metadata that can be shared, that isn’t part of their encrypted cache.
WhatsApp has for years downplayed how much unencrypted information it shares with law enforcement, largely limiting mentions of the practice to boilerplate language buried deep in its terms of service. It does not routinely keep permanent logs of who users are communicating with and how often, but company officials confirmed they do turn on such tracking at their own discretion — even for internal Facebook leak investigations — or in response to law enforcement requests.
Given this track record, it’s not surprising when I tell you the government partnered with banks to monitor Americans’ financial data.
Lawfare from the FBI’s Collaboration with Banks
We’ve talked a lot about bank SARs (Suspicious Activity Reports), but often in the context of civil asset forfeiture. But these reports are standard fair for banks.
Banks must file an SAR if any transaction is suspicious or unusual. They must also file an SAR if they suspect:
- Insider abuse
- Transactions of $5,000 or more where a suspect can be identified
- Transactions of $25,000 or more regardless of potential suspects
- Computer hacking
- An unlicensed money services business
These SARs are submitted to the Department of Treasury’s FinCEN. But the very nature of these reports is conjectural and often at the discretion of the bank. Because it’s such a soft policy, it’s also a very soft guardrail against government abuse. The FBI has been using it to access Americans’ financial data, and avoiding the inconvenience of things like warrants or probable cause.
The House Judiciary Committee launched an investigation into this and found several things.
“With narrow exception, federal law does not permit law enforcement to inquire into financial institutions’ customer information without some form of legal process,” the report states. “The FBI circumvents this process by tipping off financial institutions to ‘suspicious’ individuals and encouraging these institutions to file a SAR — which does not require any legal process — and thereby provide federal law enforcement with access to confidential and highly sensitive information.”
“Documents show that federal law enforcement increasingly works hand-in-glove with financial institutions, obtaining virtually unchecked access to private financial data and testing out new methods and new technology to continue the financial surveillance of American citizens,” the report states.
Banks were given “keywords” to search such as “Dick’s Sporting Goods”, “Cabella’s”, and “MAGA”. A whistleblower came forward from Bank of America because the requests persisted long after the January 6th investigations.
The case against Central Bank Digital Currency is obvious when you aggregate all of these issues. The government partnered with banks to monitor Americans’ financial data and so long as these private corporations offer backdoors to the data, your rights to due process fade away into irrelevance.
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