From: tcmay@got.net (Timothy C. May)
Date: Wed, 6 Dec 95 08:50:35 PST
To: cypherpunks@toad.com
Subject: Compliance Audits
Message-ID: <aceb087813021004e525@[205.199.118.202]>
MIME-Version: 1.0
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(This is just a tangential thought, inspired by someone's commentary. Not a
substitute for first principles argument.)

At 3:53 PM 12/6/95, Brad Dolan wrote:

>Firearms dealers are requred to keep records of purchases.  In theory
>(and by law) they don't pass these records along to the authorities
>except in response to specific inquiries.
>
>However, in the last couple of years there have been numerous reports of
>mass copying of records by BATF or surrogates (specifics on request).
>
>And when a firearms dealer goes out of business, all records go to the BATF.
>
>So there is something of a precedent.

One FFL holder reported someplace (?) that when he drops out of the
business--soon, as the licensing and reporting requirements, plus the fees,
have risen a lot--he expects to have an accidental "office fire" to destroy
the boxes of records he's kept for the last 20 years.

I think BATF is currently too preoccupied with other more pressing matters
to go around and conduct "compliance audits," but such audits are likely to
increase in the future. (Especially as the new FFL licensing rules and fees
squeeze the number of FFL holders down to a "manageable" level, which was
one of the stated reasons for cranking up the fees and tightening the
reporting requirements a while back.)

The connection with crypto and key escrow is that licensed escrow agents
(Big Brother Inside) will likely face compliance audits. Some random amount
of traffic may even be opened to ensure compliance.

(More speculatively, the rules may be written so that compliance audits are
done on the traffic of end-users, with some fraction opened and the
contents measured to ensure they are readable. The old "Use a random
number, go to jail" scenario.)

--Tim May

Views here are not the views of my Internet Service Provider or Government.
---------:---------:---------:---------:---------:---------:---------:----
Timothy C. May              | Crypto Anarchy: encryption, digital money,
tcmay@got.net  408-728-0152 | anonymous networks, digital pseudonyms, zero
Corralitos, CA              | knowledge, reputations, information markets,
Higher Power: 2^756839      | black markets, collapse of governments.
"National borders are just speed bumps on the information superhighway."