Dec 09 2024

Public/private partnerships for financial surveillance

[Email from the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury to some of its banking industry partners forwarding list prepared by Mitsubishi United Financial Group (MUFG) of vendors at DMV (DC, Maryland, and Virginia) airports, train stations, and bus stops, to target reporting of purchases at these locations as “suspicious” .]

The House Committee on the Judiciary and its Select Subcommittee on the Weaponization of the Federal Government have released a ground-breaking report on their investigation of what they describe — accurately, we think — as “the coordination between Big Banks and Big Government” in financial surveillance.

The Judiciary Committee and Subcommittee’s latest report on financial surveillance as well as their earlier interim report on the same issue are part of their broader inquiry into the investigative tactics used in the aftermath of the storming of the US Capitol  on January 6, 2021.

Partisan criticism of the Weaponization Subcommittee may lead to some skepticism or dismissal of its report and recommendations. But that would be a mistake, regardless of what anyone thinks about the Weaponization Subcommittee in general. The report is thoroughly researched and its sources are well documented. It’s based on interviews with witnesses from goverment agencies and the banking industry and tens of thousands of documents provided in response to Congressional subpoenas.

The report on financial surveillance uses the post-January 6th investigation only as a case study. The practices it reports on could have been, and still could be, used against any of us, regardless of party or affiliation (if any). They shouldn’t be used against anyone, even the most stigmatized individuals and groups. What we allow to be done to our enemies, or anyone’s enemies, could be done to any of  us. The report deserves bipartisan public attention and calls for bipartisan action by Congress.

As we’ve noted in surveying what’s likely to lie ahead in demands for ID and ID-based surveillance and control of our real-world and virtual movements and activities, it’s all too easy and all too common for otherwise-principled civil libertarians to allow their distaste for particularly reviled individuals to blind them to the bad precedents being set by the investigative and prosecutorial tactics used against those stigmatized defendants.

We can’t afford to be sanguine about violations of anyone’s rights. The government’s response to the events of January 6, 2021, was a textbook example of the way that unsympathetic defendants are exploited to expand the norms of permissible and publicly-tolerated investigative and prosecutorial practices that can later used more widely.

After January 6th there were misguided calls to add everyone involved in the storming of the Capitol (and perhaps also anyone suspected of possibly having been involved) to the million-and-a-half names already on the US government’s no-fly list — by summary, secret, extrajudical administrative action. It’s unclear whether, or to what extent, that was done. That remains an open question, as does the larger question of how no-fly decisions are made. We hope that the  Weaponization Subcommittee and the Subcommittee on the Administrative State will look into these questions during the next session of Congress.

Suspects were targeted for prosecution after January 6th based on what may have been the most extensive use to date in any single investigation of geofence warrants for cellphone location data. Those general warrants were used not to obtain evidence pertaining to individuals who there was already probable cause to suppect of crimes, but to trawl through records of hundreds of millions of innocent cellphone users to find individuals to place under suspicion based on where their cellphones were logged by Google as having been on that day. Challenges to the Constitutionality of these general warrants for dragnet searchess were all — so far as we can tell — dismissed by the judges hearing these cases.

But that’s not all. The latest Judiciary Committee report shows how logs of routine, entirely legal, financial transactions were subjected to warrantless scrutiny and data mining by banks and financial services providers collaborating with government investigators, and used as the basis for placing individuals under suspicion.

The FBI encouraged banking companies to “voluntarily” submit Suspicious Activity Reports (SARSs) to  the Financial Crimes Enforcement Network (FinCEN), the police division of the Department of the Treasury. These SARs were used to finger to FinCEN as “suspicious” anyone who had engaged in such mundane activities as taking money out of an ATM, buying a meal at an airport, or paying for a hotel or AirBNB anywhere in the DMV (DC, Maryland, and Virginia) area on January 6th or the days before or after:

To be clear: these transactions were, in and of themselves, entirely legal, and weren’t in and of themselves in any way suspicious. They didn’t create probable cause to believe that each such individual was likely to have committed any crime, and they wouldn’t have provided sufficient basis for the issuance of a search warrant. These SARs were used not to investigate people who were already suspected of crimes, but to identify new individuals to be extrajudically placed under suspicion and investigated without probable cause.

Once submitted to FinCEN, these SARs are available for individual search and retrieval by tens of thousands of government agents, without the need to apply for a warrant. SAR data is also exported in bulk by FinCen for import into other agencies’ data mining systems.

Read More

Dec 06 2024

Court stays deadline for IDs and mug shots of corporate principals

A Federal District Court in Texas has issued a nationwide injunction against enforcement of the Corporate Transparency Act (CTA) of 2021.

This injunction is only temorary, pending a decision by the court on the merits of a lawsuit challenging the Consittutionality of the law, which could take months or years. But until that ruling, the preliminary nationwide injunction stays the January 1, 2025, deadline for officers and owners of all types of corporations to obtain ID documents from government agencies and submit copies of those documents, including photos, to the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury.

Another US District Court in Alabama has already ruled that the Corporate Transparency Act is unconstitutional. But that ruling only applied to the plaintiffs in that case.

The Texas District Court’s detailed ruling on the motion for a preliminary nationwide injuction focuses primarily on issues of federalism. It doesn’t mention the issue of corporate officers or owners who don’t have any of the required ID documents, or the implications of requiring  mug shots as well as document numbers and other written information.

The government argued that the plaintiffs in the case against the CTA had not suffered sufficient damage to give them a cause of action, because the reporting burden would be “de minimus” (minmal). The Court rejected that argument, noting that, according to the regulations implmenting the CTA reporting requirement, ” FinCEN estimates that the total cost of filing BOI [Beneficial Owner Information] reports is approximately $22.7 billion in the first year and $5.6 billion in the years after.”

The Court noted with a footnote that, “FinCEN also estimates that it will take approximately twenty minutes to read a beneficial ownership report form and understand it, thirty minutes to collect information about a company’s beneficial owners, and twenty minutes to fill out and file the report, resulting in a seventy-minute endeavor. But the Court notes that as a practical matter, it takes far longer than seventy minutes simply to read the CTA and Reporting Rule alone.”

What we find espcially significant and encouraging in this ruling is that it recognizes explicly that requiring ID is a law enforcement and investigatory device — as FinCEN’s very name, the Financial “Crimes Enforcement” Network, makes clear:

In other words, the CTA is a law enforcement tool—not an instrument calibrated to protect commerce; an exercise of police power, rather than a regulation of an activity…. The CTA regulates reporting companies, simply because they are registered entities, and compels the disclosure of information for a law enforcement purpose.

The Court rightly rejected the government’s argument that mandatory reporting of identifying information (and photos, although that wasn’t mentioned) about all corporate principals is “useful” for law enforcement. Unconstitutional general warrants, dragnet surveillance, or suspiconless, warrantless, house-to-house searches would undoubtedly enable the government to find evidence of crimes, some of which would otherwise have gone undetected, in many homes. But the effectiveness of these police tactics, from the point of view of the police, does not make them Constitutional.

FinCEN hasn’t updated its website yet to mention the nationawide injunction. The Texas case and other legal challenges to the CTA remain pending, and the injunction is likely to be appealed. For now, however, you can ignore the CTA reporting requirements and the January 1, 2025, compliance deadline.

Dec 04 2024

CBP facial recognition is a service for the airline industry

After five years of foot-dragging in responding to our Freedom Of Information Act (FOIA) request, US Customs and Border Protection (CBP) has finally released the pitch it made to the Future Travel Experience airline industry conference in 2019 on why airlines and airport operators should “partner” with CBP on automated facial recognition of airline passengers.

CBP claims in its presentation that “THIS IS *NOT* A SURVEILLANCE PROGRAM”. Its vision, however, is for CBP’s Traveler Verification Service (TVS) facial recognition system to provide automated identification of travelers at every stage of their journeys.

Airlines and airport operators won’t need to operate their own facial recognition software or databases. CBP will do that for them, allowing them to use TVS (which “integrates into airport infrastructure”, CBP boasts) for any of their business process automation, traveler profiling, personalized pricing, etc. purposes. Airlines and airport operators won’t need to store mug shots, since CBP will re-identify travelers for them as often as they want.

And that’s not all. The TVS facial recognition service will also be made available to cruise lines, bus companies, etc., to automatically identify travelers using all modes of transportation:

CBP will use a traveler’s face as the primary way of identifying the traveler…. This will create the opportunity for CBP to transform air travel by enabling all parties in the travel system to match travelers to their data via biometrics, thus unlocking benefits that… enhances the entire traveler experience.

The CBP “Biometric Pathway” will utilize biometrics to streamline passenger processes throughout the air travel continuum, and will provide airport and airline entities with the opportunity to validate identities against DHS information systems using the data available. CBP will partner with airlines, airports, and TSA to build a device independent, vendor neutral back­end system called the Traveler Verification Service (TVS) that allows for private sector investment in front end infrastructure, such as self­service baggage drop off kiosks, facial recognition self­boarding gates, and other equipment; this service will ultimately enable a biometric­ based entry/exit system to provide significant benefits to air travel partners…. The TVS will also be able to support future biometric deployments in the land and sea environments and throughout the traveler continuum. Figure 4 shows the different environments and touchpoints that will interact with the TVS.

Let’s make a deal”, CBP says to airlines and airport operators. “You provide the camera infrastructure embedded in passenger terminals at airports, and we’ll provide the facial recognition service.” It’s a Faustian bargain in which travelers are the losers, but already by 2019 many airlines and airports had taken CBP up on its offer. In the five years since, many more airlines and airports have joined CBP as collaborators in traveler identification, surveillance, and tracking.

Read More

Dec 02 2024

DEA pays airline staff to target innocent travelers

In response to a scathing report by its Office of the Inspector General (OIG), the US Department of Justice has directed the Drug Enforcement Agency (DEA) to suspend most of its suspicionless “consensual” questioning and searches of travelers at airports and in other transportation facilities, pending an internal review of these practices.

For years, DEA agents, sometimes in partnership with local law enforcement task forces, have been searching travelers in ways that make travelers think that they are being detained and are legally required to submit to searches and answer questions.

The OIG report stops short of calling for an end to these “consensual” searches and interrogations, but is pausing them indefinitely. According to the report, “the Deputy Attorney General (DAG) issued a memorandum directing the DEA to suspend the program until an assessment is completed, identified concerns addressed, and the DAG approves resumption of tbe program.”

Much of the OIG report concerns procedural and training issues. The DEA has failed to keep its previous promises (1) to train its agents on travelers’ rights before sending them into airports to stop, question, and interrogate travelers, without probable cause to suspect them of crimes, and (2) to keep records of these “consensual” encounters with travelers.

The lack of records makes it harder to tell whether DEA agents have been engaged in profiling on the basis of race or national origin.

The OIG also found that DEA agents didn’t wear body cameras. If you want a record of what happens, film the police yourself if you are stopped, questioned, or searched.

Even in the absence of demographic data about which travelers were stopped, searched, and questioned, or bodycam recording of these interactions, the OIG found evidence of continuing disregard for travelers’ rights:

[P]roceeding with such interdiction activities… creates substantial risks that DEA SAs [Special Agents] and TFOs [Task Force Officers] will conduct these activities improperly [and] impose unwarranted burdens on, and violate the legal rights of, innocent travelers.

The goal of these “consensual searches” is to find and seize cash, not drugs, from travelers. Rather than being based on suspicion of crimes, they are based on suspicion of carrying cash. Airline staff are given a cut of the seized cash to finger passengers to be stopped by DEA agents in the hope that they will “consent” to searches so that any cash that is found on their person or in their luggage can be seized: Read More