NO TO BANK SNOOPS

KNOW Your Customer is an innocuous-sounding regulation that found its
way onto the Federal Register two months ago. Thanks to attentive
Internet privacy groups, the snoopy practices proposed by financial
regulators may not survive much longer. The proposed new rule would
require federally chartered banks to identify every customer for the
federal government and would mandate tracking of ordinary customer
banking transactions. Credit unions and state-chartered banks that
aren't members of the Federal Deposit Insurance Corp. also would be
roped into the Know Your Customer scheme.

In addition to monitoring customers, banks would be forced to provide
customer profiles and maintain databases accessible to federal regulators.

If it sounds like something made up by paranoid crusaders against Big
Brother, here's the exact language: Banks would be required 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."

Federal regulators say the scheme is needed to protect the banking
system against drug-related money-laundering. But existing rules
already require private financial institutions to report most cash
transactions of $10,000 or more. Banks also must file reports of
suspicious transactions with the Treasury Department if they believe a
customer is engaging in criminal activities.

There is no need for an additional federal mandate directing banks to
snitch on customers making ordinary financial transactions.

Public reaction to the plan has been overwhelmingly negative. Public
comments will be accepted until March 8. To add your voice to those
saying "no" to Know Your Customer, send e-mail to comments@fdic.gov or
fax comments to (202) 898-3838.