Main Street’s financial spies

Among its other provisions, the USA Patriot Act enacted into law sweeping authorization for the federal government to require “financial institutions” — which, it turns out, can include auto dealers, jewelry stores and other retailers — to file confidential law enforcement reports when customers display buying patterns that might suggest them to be in possession of illicit funds. (The businesses are also forbidden from telling their customers that they have informed on them to the feds.) “Know your customer” rules, rationalized as part of the ever-widening fight against money-laundering, had previously been highly controversial — see our Mar. 1999 piece in Reason — but after Sept. 11 were dusted off and enacted with an antiterrorism rationale. Recently (Dec. 1) Michael Isikoff reported in Newsweek that in two-thirds of federal law enforcement searches using the confidential reports, there has been no evident connection with terrorism at all. John Berlau has the details, in Reason Online (“Dangerous Deputies”, Dec. 5; “Show Us Your Money”, Nov.).

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