"National Security Letters" Used To Examine Americans' Financial Records

White House Defends Practice, Critics Call It Illegal

By Martin H. Bosworth
ConsumerAffairs.com

January 15, 2007

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Besides wiretapping civilians' phones and going through Americans' mail, now the Pentagon and CIA can demand access to your bank transactions and credit reports at any time, in the name of "national security."

The New York Times reported on January 14th that both agencies were using powers granted them by the PATRIOT Act to request investigations into financial transactions or activities they deem "suspicious."

Both agencies are barred by law from any domestic law enforcement activity.

Vice-President Dick Cheney defended the practice as necessary to fight terrorism, but critics said the letters violate civil liberties and could be used to keep tabs on individuals with no connections to terrorist groups.

Caroline Frederickson, director of the American Civil Liberties Union's (ACLU) legislative office in Washington, said the practice "raises a host of questions that need to be answered."

"What is the legal basis for the government's action?" Fredrickson asked in a statement. "What safeguards are in place to protect basic privacy rights? How often have the Pentagon and CIA used this claimed authority ... and was compliance truly "voluntary" or effectively coerced?"

Bank Secrecy

The traditional basis for government investigation of financial transactions was to stop money laundering for organized crime.

In 1970, the Bank Secrecy Act (BSA) gave the Treasury Department the power to demand "suspicious activity reports" on individuals from financial institutions.

No targeted individual is ever aware that the reports are created or distributed, and traditionally the reports are provided with very little oversight.

The information is shared across multiple government agencies, all of which participate in the Financial Crimes Enforcement Network (FinCEN).

The passage of the PATRIOT Act in 2001 gave FinCEN even more power to enforce the BSA, leading critics to charge that the Act was being used to spy on innocent citizens with no real justification, and that customers with Arabic names or ethnic origins were being unfairly targeted as possible terrorists.

The Government Accountability Office (GAO) criticized the IRS for not providing adequate security protection for personal information it provides to FinCEN. According to the GAO report, the IRS could access personal identifying information such as names and Social Security numbers, with little or no security protection.

Turf War

Although use of the BSA to generate national security letters is legal, the actions of the Pentagon and the CIA are more questionable.

ABC News reported that the FBI continues to issue the vast majority of these letters, with the CIA doing so in much more limited circumstances.

Although none of the defense agencies involved would comment about the number of letters they issue, the Times reported that the Defense Department may have issued letters for as many as 500 investigations in the last few years.

While the Pentagon and CIA may be seen as horning in on the traditional turf of the FBI, Vice President Cheney, a staunch supporter of centralizing intelligence efforts through military agencies, claimed that "the Department of Defense has a legitimate authority in this area."

In an interview on FOX News on Jan. 14th, Cheney said, "This is an authority that goes back three or four decades ... It's a perfectly legitimate activity. There's nothing wrong with it or illegal. It doesn't violate people's civil rights."

Cheney's assurances aside, many observers were troubled by what seems to be a usurpation of domestic investigatory power by the military, amounting to even more surveillance of Americans without judicial oversight.

Law professor Daniel Solove analyzed the various statutes that empower the FBI to issue national security letters, including the Fair Credit Reporting Act (FCRA).

Solove believed that the letters issued by the Pentagon and the CIA might not be "true" national security letters, but that financial firms would be intimidated enough to comply regardless.

"[I]t would be quite problematic if the letters were issued under the guise of an NSL and failed to indicate that cooperation was voluntary," Solove said on his blog. "On the facts given, we have no idea what these particular letters said or looked like."

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