From: "Mark A. Smith" 
Subject: SNET: Over 225,000 objection filed against KYC proposal
Date: 9 Mar 1999 07:09:04 -0500
To: Mark 


->  SNETNEWS  Mailing List

Let's see how long it takes before they come back and try this again.


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SCAN THIS NEWS
3/8/99

Over 225,000 objection filed against KYC proposal

The nation's major news outlets are reporting on the overwhelming defeat
of
the banking industry proposal to monitor customers transactions; the
plan
referred to as the "Know Your Customer" program. The latest news is
that, as
of Monday, March 8, 1999, over 250,000 e-mails and letters have been
sent in
with all but a handful (fewer than 25) being opposed to the banking
industry
proposal. However, the major news sources continue to miss what is
without a
doubt the most significant part of the KYC story -- i.e. the battle was
fought almost exclusively over the Internet.

The banking regulation itself was actually not all that much more
egregious
than many other already-in-place federal programs. Furthermore, all four
of
the banking regulatory agencies proposing KYC regulations openly stated
that
most of the KYC policies are already in place throughout most of the
banking
community; the KYC proposal was merely to "formalize" these policies. So
the
defeat of one amongst many is not going to immediately turn the tide of
rights-violating regulations.

The most relevant aspect of this unprecedented defeat, however, is that
it
all took place through Internet activities. For the first time since the
enactment of the Administrative Procedures Act -- the act which requires
federal agencies to publish newly proposed rules and to allow the public
a
period to submit comments -- the public now has a method to learn about
agency proposals BEFORE they are finalized. The Internet also provides a
tool for use in expressing objections directly to the source. SCAN
subscribers knew about the KYC proposal weeks before it was published in
the
Federal Register. And, comments were being filed the very same day the
proposal was published by the regulatory agencies. Prior to the
Internet,
most regulations were already adopted and being enforced before the
general
public could find out about their existence.

The battle against the KYC bank snooping plan was fought and won on the
Internet. That's the real story. This is the second MAJOR defeat of a
federal regulation accomplished in this fashion; the first being the
Department of Transportation's National ID/standardized driver license
proposal, also placed on hold as a result of public objections. Both
defeats
took place within less than one year of each other. Very rarely are
agency
regulations totally withdrawn as was done with both the KYC and the
DOT/National ID proposals. The number of objections to the KYC proposal
is
hundreds of times greater than anything in the prior history of
rulemaking.
Could this be the start of a trend wherein the people may actually have
some
say in what happens with their government? We hope so.

Scott

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

FDIC Chief Yields on New Rules
By Marcy Gordon
AP Business Writer
Monday, March 8, 1999; 4:54 p.m. EST

WASHINGTON (AP) -- The head of the FDIC said Monday her agency is ready
to
withdraw proposed anti-money laundering rules to track bank customers'
transactions, which had provoked a public outcry over privacy.

"The public has spoken very loudly and clearly," Donna Tanoue,
chairwoman of
the Federal Deposit Insurance Corp., said in a telephone interview.

She said she will urge her colleagues on the agency's four-member board
to
agree to drop the proposed regulations, called "Know Your Customer"
rules.
The board's next meeting is on March 23.

Ms. Tanoue spoke as the 90-day public comment period for the proposal
closed. On Friday, the Senate joined the torrent of criticism and sent a
message to federal bank regulators to withdraw the rules.

By an 88-0 vote, the Senate expressed support for a measure directing
the
regulators to drop the proposed rules. Senate Democrats blocked a vote
on
actual adoption of the measure, sponsored by Sens. Phil Gramm, R-Texas,
and
Wayne Allard, R-Colo., so it lacks the force of law.

In the House, the Banking Committee on Thursday adopted an amendment to
a
big financial services bill that would kill the proposed banking rules.

Ms. Tanoue previously had said she was reconsidering the proposed rules,
which were denounced in a flood of angry e-mail starting in December.
The
FDIC had received more than 170,000 e-mail messages and letters as of
Friday; by Monday, the final day of the comment period, that had jumped
to
some 225,000.

The proposed regulations would require banks to verify their customers'
identities, know where their money comes from and determine their normal
pattern of transactions. The current requirements for banks to report
any
"suspicious" transactions to law enforcement authorities would be
expanded.

Privacy advocates, conservative groups, ordinary people and the nation's
bankers have complained that the rules would transform every bank teller
into a spy for Big Brother. They maintain the rules are unconstitutional
and
would violate the Fourth Amendment prohibition against unreasonable
search
and seizure.

---[snip]---

The Federal Reserve, which also is involved in proposing the bank rules,
has
not taken a public position on them.

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2) it is consistent with what you already know to be true.
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