LAWMAKER WANTS FINANCIAL PRIVACY

WASHINGTON - Citing complaints that new rules could turn every
bank teller into a cop, a Texas lawmaker is proposing legislation
aimed at protecting the financial privacy of Americans.

The far-reaching legislative package unveiled Wednesday by Republican
Rep. Ron Paul would, among other things, block proposed anti-money
laundering rules that would track the habits of bank customers.

At least two federal banking agencies are reconsidering the proposed
"Know Your Customer" rules in response to the public outcry that
started in December. The Federal Deposit Insurance Corp., for example,
had received more than 14,000 e-mail messages and letters opposing
the proposal as of Friday.

Privacy advocates, conservative groups and ordinary people have
complained that the rules would transform every bank teller into a
cop.

"We proclaim that American citizens have the right to be free of the
snooping, spying, prying eyes of government bureaucrats," Paul told
reporters. He said his legislation would "give Americans the peace of
mind that comes from knowing that their every financial step is not
being filed away and viewed as potentially criminal."

Paul said about a dozen lawmakers, including House Republican Whip Tom
DeLay of Texas, had agreed to join him as co-sponsors of the bill to
stop the "Know Your Customer" rules.

But the other two measures in his package to repeal the Bank Secrecy
Act and to let people see the files on them created by the federal
Financial Crimes Enforcement Network hadn't attracted any
co-sponsors yet and legislative prospects were clouded.

The Bank Secrecy Act of 1974 obligates banks to report customers' cash
transactions of $10,000 or more to law enforcement authorities. Paul
said the law has failed to help catch drug dealers, who "are smarter
than most bankers."

Paul, a physician who is on the House Banking Committee, once ran for
president as the Libertarian Party's nominee. His strict
constitutionalist beliefs routinely put him at odds with his fellow
Republicans.

Paul maintains that the "Know Your Customer" rules violate the Fourth
Amendment prohibition against unreasonable search and seizure.

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.

The proposal is designed to combat money laundering techniques used by
drug traffickers and other criminals to hide illegal profits. Money
laundering is a major concern of law enforcement officials; it
reached an estimated $30 billion in this country last year.

Laundering includes the use of wire transfers and bank drafts as well
as "smurfing," the practice of breaking down transactions into smaller
amounts that do not have to be reported under the Bank Secrecy Act.

Although Paul's bill regarding files kept by the Financial Crimes
Enforcement Network would not abolish the Treasury Department agency,
he said he does not see any need for it. Most law enforcement activity
should be done by states rather than federal "bureaucrats carrying
guns," he said.

Spokesmen for the agency said they hadn't seen Paul's legislation yet
and had no immediate comment on it.

Officials of the Federal Deposit Insurance Corp. and the office of the
U.S. comptroller of the currency, which regulates nationally chartered
banks, told The Associated Press on Friday that they were
reconsidering the "Know Your Customer" rules they had earlier proposed.

The nation's bankers last week urged the federal banking regulators to
withdraw the proposal, warning it could make Americans lose confidence
in the banking system and government.