From: "Vladimir Z. Nuri" <vznuri@netcom.com>
Date: Wed, 9 Dec 1998 10:32:34 +0800
To: cypherpunks@cyberpass.net
Subject: [CTRL] Feds And FDIC To Monitor All Your Personal Financial Activities
Message-ID: <199812090136.RAA21868@netcom8.netcom.com>
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From: DrErebus@AOL.COM
Subject: [CTRL] Feds And FDIC To Monitor All Your Personal Financial Activities
Date: Sun, 6 Dec 1998 10:11:25 EST
To: CTRL@LISTSERV.AOL.COM

 -Caveat Lector-

Feds And FDIC To Monitor
All Your Personal Financial Activities

12-1-98






The following is direct quote from the first page of FDIC document (6174-01)
(12 CFR Part 326) Notice of proposed rulemaking.

"SUMMARY: The FDIC is proposing to issue a regulation requiring insured
nonmember banks to adopt and maintain "Know Your Customer" programs. As
proposed, the regulation would require each nonmember bank to develop a
program designed to determine the identity of its customers; determine its
customers' sources of funds; determine the normal and expected transactions of
its customers; monitor account activity for transactions that are inconsistent
with those normal and expected transactions; and report any transactions of
its customers that are determined to be suspicious, in accordance with the
FDIC's existing suspicious activity reporting regulation. ---"


The things to be very concerned about in this case are the PROFILE PARAMETERS
that in turn define the various limits that when exceed, qualify as an
exception to the norm and thus must be reported to another federal agency, as
a suspicious transaction. There is virtually no limit to the number or type of
profile parameters that can be established. For example, is the customer an 8
foot tall white male weighing in excess of 400 pounds or is the customer a
four foot tall black female weighing less than 90 pounds. The question or
questions (and there are many questions) then becomes, who will be responsible
for establishing, defining and controlling the limitless number of possible
profile parameters? Who will be responsible for adding, changing and deleting
established profile parameters? Who will be responsible for insuring that this
awesome and massive capability will not be misused and abused by the various
departments of the Federal Government. In other words, is the 8 foot tall
white male an exception to the norm or is the 4 foot tall black female the
exception or, are both the upper limit and the lower limit considered as an
exception to the norm. How about all those in between?

As noted in the quoted SUMMARY of the document identified above, the "key
operative statements" are as follows;

1. Identify its customers. 2. Determine its customers' source of funds. 3.
Determine the normal and expected transactions of its customers. 4. Monitor
account activity for transactions that are inconsistent with those normal and
expected transactions. 5. Report any transactions of its customers that are
determined to be suspicious ---.

Before we briefly examine the five individual requirements noted above, and so
that you will understand where"I" am coming from, please be aware of the fact
that, in addition to being a Baptist Preacher, I have been a Data Processing
Systems Analyst for some 48+ years. At least half of that time was spent
working for the Federal Government, designing and installing total Data
Processing Facilities, from the Presidents Battle Staff, to the Congress, to
the Department of defense, to the local Church name and address data base. I
have written and taught several college courses: (a) Management of Data
Processing Facilities and (b) Systems Analysis. One of the first things that I
always tell the new students in my Systems Analysis class is "In the field of
electronic data processing, your only limitation is you own imagination. If
you can rationalize it in your mind, 'electronic' data processing can do it."

Now, given that background and qualifications let me tell you, in no uncertain
terms, -- I know exactly what the Federal Government is up to. I know exactly
what information they are looking for; I know exactly how to get that
information and I know exactly how they plan to eventually use that
information.

Requirement # 1: Identify its customers. I have no problem with this
requirement so long as that identifying information is limited to name,
mailing address and an account number generated by the "local" financial
institution and assigned to a particular account to provide unique
identification, but absolutely nothing more.

Requirement # 2: Determine its customers' source of funds. This I have a BIG
problem with. Even though the government would like for you to believe that
this requirement is related to identifying "possible" illegal money laundering
by drug traffickers, that is not the only reason they want to know the source
of your finances. Remember now, the ultimate objective of the vast majority of
government regulations and programs are directed at controlling the
"individual." This item required that you advise the bank of all the sources
that you will be receiving money from that you will be depositing in this
particular account. We will expand this item in more detail below.

Requirement # 3. Determine the normal and expected transactions of its
customers. For purposed of this discussion we will consider only four primary
parameters related to deposits and withdrawals against this particular
account.

First: When you established a new checking account you will be required to
identify the number of deposits you expect to make each month and the average
amount of each deposit. For example (a) military retirement pay = $2,000.00,
(b) Social Security Income = $400.00, (c) Rent from income property = $750.00,
(d) Interest from stocks & bonds = $ 300.00, and so on.

Second: You will be required to identify the number of withdrawals you expect
to make each month from this account and the estimated amount of each
withdrawal. For example; (a) Mortgage payment=$ 800.00, (b) Car Payment =
$250.00, (c) College tuition = $ 1,000.00).

Once the average number of deposits and the average amount of each deposit has
been determined and the average number of withdrawals and the average amount
of each withdrawal has been established, it will be very easy to identify all
transactions, in and out, that exceed the established norms for this
particular account. For example should you find a paper bag on the side of the
highway containing 10,000 well used one dollar bills, or Aunt Sue passed away
and left you 10,000 well used one dollar bills and you deposited that windfall
in your checking or savings account, that would immediately be detected as
exceeding the established norms for your account.

Requirement # 4. Monitor account activity for transactions that are
inconsistent with those normal and expected transactions. This requirement
establishes the requirement that each financial institution establish a
procedure to monitor your financial accounts on a regular basis for any
transactions that exceed the established norms as illustrated above.

Requirement # 5. Report any transactions of its customers that are determined
to be suspicious ---. This requirement requires that all financial
institutions immediately report any and all suspicious transactions detected
as a result of deposits or withdrawals that exceed the established norms for
your account.

As I was reviewing the aforementioned FDIC document, as quoted above, I called
a long time friend of mine who is vice president of a local bank that I do
business with. I ask my vice president friend to identify the government
agency(s) to which he would report such a suspicious transaction. His response
was, the IRS and the FBI, at the national level.

My friends, as a long time ADP/EDP Systems Analyst I want you to pay
particular attention to the following.

Whenever a good and successful Information (Data) Processing Systems Analyst
designs a large scale information processing system, such as what we have been
talking about above, he will ALWAYS allow for future expansion of "existing"
applications and processing capabilities and his design work will also allow
for "additional" applications and processing capabilities to be added with a
minimum of additional effort and cost.

Based on my 48+ plus years in the business, let me tell you what you can
expect in the very near future if the proposed "rulemaking" provisions as
defined in the FDIC document identified above are allowed to be implemented.
Please, read the following very carefully because it lays out the route our
government is taking toward a cashless society as required by the design of a
one world government under the United Nations.

1. PRESENTLY ALL recipients of military retirement pay MUST have a bank
account into which their monthly retirement pay is electronically transferred.
The government will no longer pay individual retirees directly, or send their
retirement pay to a home address. This is part of an over all plan to extended
more absolute control over the individual. It has absolutely nothing to do
with economy as the government would have you to believe.

2. In the very near future look for legislation that will "require" ALL
government employees, federal, state and local, to have a bank account into
which their salary will also be electronically transferred, just like the
retired military. In as much as most government employees already have the
direct deposit option available, it requires only vary simple legislation to
complete this phase of the plan.

3. Next you will see legislation that will outlaw the direct payment of all
wages or salaries to any individual, by an employer. All employees who work
for a wage or salary, will also be required to have a bank account into which
the employer will be required to direct deposit their salary. And once again
the legislation necessary to accomplish phase of the plan is very simple and
easy to implement, simply because most business would welcome the reduced
payroll cost. The governments objective here is to eventually make the local
financial institution the only source of legal tender for the individual. At
this point and for the purpose of this paper, legal tender is defined as
dollars, debit cards or other credit cards. When objectives 2 & 3 above have
been fully accomplished, it will then be a very simple matter to implement the
rest of the plan.

Let me explain it this way. The total plan equates to $1.00 (One dollar) When
steps 2 & 3 have been fully implemented, as step 1 has already been
accomplished, that will equate to $ .95 cents of that $1.00. The rest of the
plan equates to only 5 cents out of that one dollar. And just what is the rest
of the plan? It's very simple.

After steps 1, 2 and 3 as noted above have been fully implemented, the only
thing left to do then would be to outlaw all cash transactions and require all
transactions now involving cash, be accomplished through the use of checks or
smart cards followed by the eventual elimination of the checks.

At that point the federal government can then trace, track AND CONTROL ALL
TRANSACTIONS, simply because all transactions will then be processed by
massive computer systems controlled by the federal government. Given the above
accomplishments and current electronic capabilities, the ability to exercise
absolute control over "individuals" provided by the additional five cents
noted above are absolutely mind boggling. There are many, many more reasons
that all Americans should and must oppose implementation of the five (5)
requirements identified above. There are TWO things that every American should
do, immediately. First: All Americans should send a letter to the FDIC
expressing their STRONG objection and opposition to the plan to PROFILE
individual bank accounts for what ever purpose. The FDIC will be accepting
public comments until December 27. Send your comments to:

Robert E. Feldman, Executive Secretary Attention: Comments/OES, FDIC 550 17th
Street, NW Washington, DC 20429

---

Spectre <temporal@earthlink.net
12-3-98


Hi Jeff:

Found this site about the new FDIC "Know your Customer" regulations:
http://www.bankinfo.com/compliance/newkyc.html

Seems to me the laws and regulations can be interpreted to mean a lot and I
wouldn't completely discount the article you posted on your web page as a
complete hoax, if you read the article.:

PARTS from that page below:

" By requiring banking organizations to determine the true identity of their
customers, as well as to obtain knowledge regarding the legitimate activities
of their customers, the proposed regulations will reduce the likelihood that
banking organizations will become unwitting participants in illicit activities
conducted or attempted by their customers."

"While it is impossible to identify every transaction at a financial
institution that is potentially illegal or is being conducted to assist
criminals in the movement of illegally derived funds, it is fundamental for
safe and sound operations that financial institutions take every reasonable
measure to identify their customers, understand the legitimate transactions to
be conducted by those customers and, consequently, identify those transactions
conducted by their customers that are unusual or suspicious in nature. By
identifying and, when appropriate, reporting such transactions, in accordance
with existing suspicious activity reporting requirements, financial
institutions are protecting their integrity and are assisting the efforts of
the bank regulatory agencies and law enforcement authorities to thwart illicit
activities at financial institutions."

"The Board has long advocated that one of the most effective means by which a
financial institution can both protect itself from engaging in transactions
designed to facilitate illicit activities and ensure compliance with
applicable suspicious activity reporting requirements is for the institution
to have adequate "Know Your Customer" policies and procedures"

"In the Board's view, a financial institution should take the necessary and
reasonable steps to determine the true identity of its customers, their
sources of funds, and their normal and expected transactions and to identify
unusual or suspicious activities".
------



Please excuse my distress, but often times the best-intentioned people are
quick to jump and call something a "Hoax," which unfortunately misleads
people, when just the opposite is true. Being very familiar with legal
research, it was simple for me to determine if the the e-mail sent to you by
Mr. Gene Ingram [gene@cup.hp.com] declaring the post the "Feds and FDIC to
Monitor All Your Personal Financial Activities" a hoax; and to see if Mr.
Ingram was presumptively correct in his analysis.

The most impmrtant point you should know it was stated in the beginning of the
article in re the "Feds and FDIC" that this was a *proposed rule* being
submitted by the FDIC "...requiring insured nonmember banks to adopt and
maintain "Know Your Customer" programs." ALL proposed rules submitted by any
federal agency must first be sent to the Federal Register for publication
under the *notice* rules.

>From the wording of this "Sunshing Act Meeting" chaired by the Board of
Governors for the Federal Reserve System, the FDIC is "only following orders."
Please find below a replica of the *notice*:
________________________________________________________________
[Federal Register: September 28, 1998 (Volume 63, Number 187)]
[Notices]
[Page 51579]
>From the Federal Register Online via GPO Access
[http://www.wais.access.gpo.gov]
[DOCID:fr28se98-60]

-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM


Sunshine Act Meeting

Agency Holding the Meeting: Board of Governors of the Federal Reserve System.

Time and Date: 10:00 a.m., Thursday, October 1, 1998.

Place: Marriner S. Eccles Federal Reserve Board Building, C Street entrance
between 20th and 2lst Streets, N.W., Washington, D.C. 20553.

Status: Open.

Matters to be Considered: Summary Agenda: Because of its routine nature, no
discussion of the following item is anticipated. This matter will be voted on
without discussion unless a member of the Board requests that the item be
moved to the discussion agenda.

1. Publication for comment of proposed amendments to Regulation H (Membership
of State Banking Institutions in the Federal Reserve Qystem), Regulation K
(International Banking Operations), and Regulation Y (Bank Holding Companies
and Change in Bank Control) to require domestic and foreign banking
organizations to develop and maintain ``Know Your Customer'' programs. 2. Any
items carried forward from a previously announced meeting.

Discussion Agenda: None. No Discussion Items Are Scheduled For This Meeting.

Note: If an item is moved from the Summary Agenda to the Discussion Agenda,
discussion of the item will be recorded. Cassettgs will then be available for
listening in the Board's Freedom of Information Office, and copies can be
ordered for $6 per cassette by calling 202-452-3684 or by writing to: Freedom
of Information Office, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.

Contact Person for More Information: Lynn S. Fox, Assistant to the Board;
202-452-3204.

Supplementary Information: You may call 202-452-3006 for a recorded
announcement of this meeting; or you may contact the Board's Web site at
http://www.federalreserve.gov for an electronic announcement. (The Web site
also includes procedural and other information about the open meeting.)

Dated: September 24, 1998. Robert deV. Frierson, Associate Secretary of the
Board. [FR Doc. 98-25960 Filed 9-24-98; 11:19 am] BILLING CODE 6210-01-P
___________________________________________________________

The rule[s] will not be published in the Code of Federal Regulations (CFR)
until the proposed rule[s] is finalized. These rule changes will be to
Regulations H, K and Y pertaining to Banking administration procedures. The
proposed changes *may* be all inclusive within 12 CFR 326 - I wouldn't begin
to guess until the final rules are drafted. Perhaps this is the reason why Mr.
Ingram was unable to find what he was looking for. In the interim, I suggest
caution, research and a thoroughly checking your sources before labeling
anything a *Hoax* or stating something as fact if you don't know first hand or
from personal experience.

If anything, the obvious fact this determination was dictated by the Board of
Governors of the Federal Reserve System ...well, I'll leave that to your
readers to decide the relevancy or merit of the Board's decree.

If you would like additional information, please feel free to contact me.

Lynn Shaffer
fadaar@psn.net

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