Show us your money: the USA PATRIOT Act lets the feds spy on your finances. But does it help catch terrorists?

Reason, Nov, 2003 by John Berlau

"I consider all these measures to be highly counterproductive," says John Yoder, director of the justice Department's Asset Forfeiture Office in the Reagan administration. "It costs more to enforce and regulate them than the benefits that are received. You're getting so much data on people who are absolutely legitimate and who are doing nothing wrong. There's just so much paperwork out there that it's really not a targeted effort. You have investigators running around chasing innocent people, trying to find something that they're doing wrong, rather than targeting real criminals."

The paperwork is indeed massive. Even before the PATRIOT Act, banks sent more than 12 million transaction reports to the government in 2000 alone. In a 2000 report for the Competitive Enterprise institute, economist Lawrence Lindsey, who later became head of the Bush administration's National Economic Council, calculated that banks file more than 100,000 reports on innocent customers for every money laundering conviction. Oliver "Buck" Revell, a highly decorated 30-year veteran of the FBI who supervised the bureau's counterterrorism division in the 1980s and '90s, agrees that the sheer volume of data generated by these measures can overwhelm law enforcement efforts. "You can be buried in an avalanche of information," Revell says. "The total volume of activity makes it very difficult to track and trace any type of specific information.... It's virtually impossible to look at millions and millions of CTRs [currency transaction reports] and make any sense out of them if you don't have some prior intelligence as to what might be occurring."

Yoder argues that the information overload from bank surveillance contributed to the intelligence failure before the September 11 attacks. "We already had so much information that we weren't really focusing on the right stuff," he says. "What good does it do to gather more paperwork when you're already so awash in paperwork that you're not paying attention to your own currently existing intelligence gathering system?"

While it did not cite the BSA directly, the recently published joint Congressional inquiry report on intelligence lapses before 9/11 did find that law enforcement and intelligence agencies faced a "huge volume of intelligence reporting," within which were "various threads and pieces of information that, at least in retrospect, are relevant and significant." The report concluded that "although relevant information ... was available to the intelligence Community prior to September 11, 2001, the Community too often failed to focus on that information and consider and appreciate its collective significance in terms of a probable terrorist attack." This was partly because analysts were trying to find a needle in a very large haystack of data created by laws like the BSA.

Banker or Spy?

Fears that the BSA would swamp law enforcement with data were expressed from the beginning. The federal court decision striking down the law's reporting requirement (issued, coincidentally, on September it, 1972) called the BSA a "far-fetched" way to catch criminals and warned that it could be counterproductive. The court quoted an IRS commissioner as saying that "the creation of a mass of paper beyond our capacity to utilize could have the effect of submerging and making unobtainable information of special interest to us."