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Financial Responsibility == Terrorism? 1086

Posted by ScuttleMonkey
from the utterly-speechless dept.
An anonymous reader writes "Capital Hill Blue is reporting that recently a retired Texas schoolteacher and his wife had a little run in with the Department of Homeland Security. The crime? Paying down some debt. From the article: 'The balance on their JCPenney Platinum MasterCard had gotten to an unhealthy level. So they sent in a large payment, a check for $6,522. And an alarm went off. A red flag went up. The Soehnges' behavior was found questionable. [...] They were told, as they moved up the managerial ladder at the call center, that the amount they had sent in was much larger than their normal monthly payment. And if the increase hits a certain percentage higher than that normal payment, Homeland Security has to be notified.'"
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Financial Responsibility == Terrorism?

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  • My experience (Score:5, Informative)

    by MyLongNickName (822545) on Monday March 06, 2006 @09:33PM (#14863417) Journal
    This isn't surprising. I work for a regional bank. Every employee is required to undergo training to know "what to look for". Doesn't matter if you are a teller, or a computer help desk operator. Anything over a certain dollar limit must be reported. As time goes on, the threshold has lowered. Pay off your house early? Gets reported. Large deposit? gets recorded. And anything overseas gets more scrutiny than J-Lo's panty lines.

    The training creeped me out. the uber-patriotic person assigned to train our group was so into it. 3/4 of our group thought it was great... bringing down meth dealers who weren't smart enough to structure their money better. In fact, however, structuring is a crime as well... Go just below the radar one too many times, and you can be charged, eevn if there is no illegal activity behind the generation of money.

    And, I would be wise to post AC (I won't, so this message might get more credibility) as advising someone how to avoid setting off the bells and whistles is a crime too.

    We don't live in 1984, but we might be at 1983...
  • by TCQuad (537187) on Monday March 06, 2006 @09:42PM (#14863481)
    The original article came from the Providence Journal via Scripps Howard [shns.com].
  • Re:My experience (Score:5, Informative)

    by MyLongNickName (822545) on Monday March 06, 2006 @09:55PM (#14863580) Journal
    It is called "structuring [visualanalytics.com]"
  • by d34thm0nk3y (653414) on Monday March 06, 2006 @09:58PM (#14863607)
    Eventually, his and his wife's money was freed up.

    Enough said.
  • Lousy Article (Score:5, Informative)

    by jjohnson (62583) on Monday March 06, 2006 @10:05PM (#14863655) Homepage
    The real story here is that the Department of Homeland Security is also responsible for credit fraud. One of the scams people pull is to steal a number, write a bogus check to the credit card company for that card (which guarantees the credit will be there), and then spend the amount that was written on the check before the check is cashed (and detected as bogus).

    The auto-trip flag for this is that when a large payment comes in that's many multiples of the payee's normal history, the credit card company will hold the payment until the check clears, which is within 10 days at the outside.

    In other words, this has nothing to do with terrorism, the fascist Bush regime, the gestapo at DHS, or any other Orwellian fantasy you can cook up. It's an arguably poor fraud prevention measure, nothing more.
  • by Belial6 (794905) on Monday March 06, 2006 @10:09PM (#14863688)
    Funny you mention Waco. Just last weekend I was talking to one of the neighbors of the Dividian compound. Not members. Neighbors. Their telling of the story is that other than some target practice, which is a common activity in the area, the Dividians were a quite group that didn't bother anyone. Per their telling, some neighbors go annoid with the noise from target practice, and called the cops. The Sherrifs went out, and had the whole thing sorted out well before the Feds showed up. The guns they had were legally purchased and delivered via FedEx.

    Based on this, and what I saw on the news, sometimes when you are not doing anything wrong, you DO have something to worry about.
  • by Krazy Nemesis (795036) on Monday March 06, 2006 @10:38PM (#14863856)
    The requirements for entering the US are so ridiculously more complex than any other country I've visited.
    Obviously you haven't been doing much traveling. Check out Cuba, Nicaragua, Israel, Croatia (until recently), etc. No matter where I've been the U.S. has always welcomed me back with open arms compared to some of the places I've traveled.
  • by Anonymous Coward on Monday March 06, 2006 @10:47PM (#14863896)
    They set it up like it's some sort of idea that all flights into the US require all US citizens to be recognized and accounted for, so that if it goes down? or something like that? that they can know for sure who was on board, and can start contacting people ahead of time?

    AVIATION DISASTER FAMILY ASSISTANCE ACT OF 1996 [loc.gov]
  • Re:Lousy Article (Score:4, Informative)

    by Gloizen (914313) on Monday March 06, 2006 @10:49PM (#14863903)
    I can't speak to DHS involvement, but I can personally attest to having my credit card frozen after making an unusually large payment. I wanted to buy my fiancee an engagement ring, but knew my line of credit was more than the cost of the ring. So, I called my credit card (issued by "Bank One First USA JP Morgan Chase" at last check) and asked if I can make a purchase over my credit limit by pre-paying the amount of the purchase. They said "Yes." So, I sent an electronic payment for $15k. The next day when trying to buy gas with the credit card, I found the card account frozen! This was the last thing I expected. I called the CC company and asked what was going on. They explained that due to the unusually large payment, they froze the account. (Why not just not give me access to the added funds until they can verify them?) It took me hours on the phone with the CC supervisor and a conference call to the bank from which I'd transferred in the money before they even unfroze my account. In the end, they _still_ wouldn't let me purchase the ring, regardless of the ample credit balance, because "the transaction amount is over your credit limit". (Apparently, the first CC customer service rep. that I had spoken with was wrong.)

    Anyway, I don't have a problem with this because it was the CC's decision, not the goverment's decision, to freeze my account. I let the market forces go to work... and stopped doing business with that credit card company (as soon as I got my money back).

  • Re:My experience (Score:1, Informative)

    by Anonymous Coward on Monday March 06, 2006 @10:50PM (#14863908)
    And if you want to know more, it's called a Suspicious Activity Report [treas.gov]. Also see the US Code it falls under... [treas.gov]. Don't forget the user manual [fincen.gov]!!
  • by Krach42 (227798) on Monday March 06, 2006 @10:56PM (#14863939) Homepage Journal
    Obviously you haven't been doing much traveling. Check out Cuba, Nicaragua, Israel, Croatia (until recently), etc. No matter where I've been the U.S. has always welcomed me back with open arms compared to some of the places I've traveled.

    I can understand such things as these places, and I'm certain that there are states with more crazy control laws than the US. Truth be told I've only been to EU states, where customs consists of two doors, one green, the other red. If you walk through the green one, and you don't look suspicious, and you're not randomly selected, there's absolutely no questions. Just grab your stuff, and walk through.

    The US meanwhile dictates that you declare everything that you're bringing into the country and puts you in long lines where the customs people ask generally more prying questions about where you're going, and what you were up to than in Europe. This last time, my whole interaction with the entrance process in Germany was:

    Passkontrol: What is your final destination?
    Me: Düsseldorf
    Passkontrol: *looks odd for a sec, shrugs unnoticably and stamps passport*

    No customs interaction.
  • It happened to me. (Score:5, Informative)

    by sakusha (441986) on Monday March 06, 2006 @11:14PM (#14864024)
    This same thing happened to me. I inherited some money when my mom died, so a couple of months ago, I paid off my $7500 credit card balance, I mailed them a check for the full amount. About a week later, the payment still wasn't credited, so I called them and they said it takes 7 to 10 days for such a large check to clear. Yeah right. They told me to call back if it wasn't credited after 10 days. It wasn't, I called back again, they said if it wasn't credited after 14 days, call back again. It wasn't, I called back again. THIS time, I insisted they get a 3 way call with my bank to confirm the check had cleared. They credited my account during the phone call.
    But after reading the article about the guy who got turned in to Homeland Security for paying $6500 on his JCPenneys account, now it all makes sense. I saw another version of this news article, it said the "bank security act" requires credit card companies to report large payments. I can't find any such law, there's a Bank Security Act of 1974 but that far predates the existence of Homeland Security. The closest regulation I can find is the requirement to report cash transactions larger than $10k to the IRS.
    This is all so much bullshit I can't believe it. It's some sort of secret law, or more likely Homeland Security has duped banks into playing along with an imaginary law, just to get more data on totally innocent people. I am infuriated. I can't wait to see what happens when I try to board an airplane, now that DHS thinks I'm a terrorist, I bet I'm on the No Fly List.
  • Re:My experience (Score:5, Informative)

    by StikyPad (445176) on Monday March 06, 2006 @11:27PM (#14864084) Homepage
    The Filing Compliance [visualanalytics.com] and Terrorism Financing [visualanalytics.com] articles were interesting as well.
  • Re:Lousy Article (Score:3, Informative)

    by dr_dank (472072) on Monday March 06, 2006 @11:38PM (#14864129) Homepage Journal
    The real story here is that the Department of Homeland Security is also responsible for credit fraud. One of the scams people pull is to steal a number, write a bogus check to the credit card company for that card (which guarantees the credit will be there), and then spend the amount that was written on the check before the check is cashed (and detected as bogus).

    This scheme (called Kiting) should be on the decline now that the Check21 [federalreserve.gov]initiative has been in effect since late last year.

    For most, it means that the little images of checks that come back on your bank statements are just as good as the cancelled checks that used to be returned to you, but now clears the way for electronic presentation of funds. What used to take several days for clearing is now as fast as an EFT (electronic funds transfer), so they'll know right away if the funds are available in the account.
  • Re:My experience (Score:5, Informative)

    by drgonzo59 (747139) on Monday March 06, 2006 @11:53PM (#14864207)
    Exactly, today the Government can detain you without evidence of a crime, they just have to think that you might commit a crime in the future. Watch the "Power Of Nightmares" movie [archive.org] -- free download, if you have some time. I just saw it yesterday , it is quite enlightening and educational. Warning: it is a 3 hour thing!
  • by Anonymous Coward on Monday March 06, 2006 @11:55PM (#14864221)
    The story sounds real enough to me. But the spin is very misleading.

    Ever since the Secret Service [wikipedia.org] was created in 1865, its primary duty has always been to investigate counterfeiting and financial fraud.

    One of the main indicators of fraud is unusual financial activity. For example, if you make a single deposit of a very large amount of cash at a bank (more than $10,000, IIRC), then the bank will notify the Secret Service, and they will probably investigate your action. There are other things you can do which attract their attention.

    From the story, you'd think that this is some new form of overreaching by the federal government enacted since 9/11. But this particular .. activity .. has actually been going on for a long time now. The only new thing is that the Secret Service is part of the Department of Homeland Security rather than the Department of the Treasury. Otherwise, the story is one that could have happened anytime since credit cards became popular.
  • by Saanvik (155780) on Tuesday March 07, 2006 @12:00AM (#14864246) Homepage Journal
    You're just flat wrong. You're not alone, though, a lot of other people believe this, too. It's part of an attempt to make the HUAC [wikipedia.org], and similar activities that try to hunt out "the bad guys" without regard to civil rights, seem like a positives, not amoral attacks on the foundations of this country. I'm not saying you believe that, but this is one of the beliefs of people that support the Patriot Act and other attacks on our freedoms.

    Read about the Smith Act [wikipedia.org] passed in 1940. Admit you're a member of the Communist party, a party which was equated with meaning "overthrowing and destroying the government of the United States by force and violence", and you could go to jail. Nearly 200 members of the Communist Party stood trial, and many were convicted, just because they were members of the organization, not because of any other action.

    Also, the famous "Hollywood Ten" never said they were or were not part of the Communist party, yet they were convicted for contempt of Congress and were blacklisted.

    Go back a little further and look at the Red Scare of the '20s, where things were even worse.

  • Re:My experience (Score:3, Informative)

    by jasen666 (88727) on Tuesday March 07, 2006 @12:02AM (#14864250)
    Yes, but now that I'm aware of this, if I take my 15k in at 3 difference deposits, I'm already guilty of stucturing, aren't I?
  • by Shelled (81123) on Tuesday March 07, 2006 @12:15AM (#14864313)
    Not exactlky correct. When Clinton tried to enact bank reporting of 'unusual' activity as part of the War on Drugs I recall it raised a shitstorm on Slashdot. Whether Clinton or Bush, this is a recent requirement:


    http://www.zmag.org/ZMag/articles/mar01bender.htm [zmag.org]

  • Re:My experience (Score:5, Informative)

    by skotte (262100) <`moc.liamg' `ta' `ezeehcehtmai'> on Tuesday March 07, 2006 @12:48AM (#14864441) Homepage
    Actually ..

    http://www.law.cornell.edu/uscode/html/uscode31/us c_sec_31_00005324----000-.html [cornell.edu]

    Yes, it is a crime. Punishable by fFine and up to 5 years in jail.
  • by ktakki (64573) on Tuesday March 07, 2006 @12:57AM (#14864471) Homepage Journal
    Except CHB didn't write the content. They reprinted it from a Rhode Island Scripps Howard newspaper (the retired couple lives in RI). Perhaps you'd like to accuse Scripps Howard of liberal bias?

    k.
  • I call Bullshit (Score:5, Informative)

    by wass (72082) on Tuesday March 07, 2006 @01:33AM (#14864597)
    Obviously you haven't been doing much traveling. Check out Cuba...No matter where I've been the U.S. has always welcomed me back with open arms

    I'm assuming from the way you worded your post you're a US citizen. If you're not a citizen, well, the following only really applies to citizens and you can read about how the US so warmly treats its citizens that travel there.

    The US does NOT welcome you back from a trip to Cuba with welcome arms unless you either have a license to travel there from OFAC, or if you went there quietly and never mentioned it to immigration.

    If you go to Cuba without a license (eg to visit your dying grandfather), and are honest enough to tell immigration about it when you come back into the USA, you get a big Illegal CUBA stamp on your passport, and then get a friendly threatening letter from OFAC a few months down the line. Sometimes they'll 'nicely' let the problem disappear for a $10,000 fine. That's a nice pair of welcoming open arms there, pal.

    And the open arms aren't necessarily guaranteed even if your travel to cuba is licensed. I've travelled to Cuba twice, both time perfectly legally as licensed with OFAC. One of those times we first flew to Canada, then to Cuba. Believe it or not that was the easier way to go. The more difficult way involved flying to Miami first, and then dealing with the absolute worst set of red tape I've ever dealt with in any travel. If going out wasn't bad enough, coming back through Miami was absolutely horrible, when my girlfriend and I didn't join in the immigration official's anti-communist tirade, he sent us and our luggage to be hand-inspected for evidence of illegal farm visits. Again, nice open arms there.

    And to anyone reading this, if you are issued a license to go to Cuba, think seriously about going through Canada (or Mexico) first, instead of flying through Miami, it will really make your life much easier.

  • Re:My experience (Score:2, Informative)

    by Antony T Curtis (89990) on Tuesday March 07, 2006 @01:46AM (#14864641) Homepage Journal
    Obviously, you are either too young to have ever use dial-up electronic Bulletin Board Systems (BBS) with a simple terminal emulator ... or you are a computer newbie who hasn't realised that the unwashed masses was using a distributed network of computers before the internet became cheaply available.

    In those days (ok - we are only talking about 15 years or so), modems would report "NO CARRIER" when the connection was lost. Actually they still do but the user never sees what goes on between the computer and modem anymore.

    Ahh, nostalgia... I remember wasting time playing multiplayer "Global Thermonuclear War" ... since the round-trip-time for FidoNET email could be measured in days, a game would take weeks!

    Good times....

  • USA Money Laundering law - background for Brokers [sia.com]

    The original $10,000 threshold for reporting cash transactions is from 1970. A few tweaks have been made over the yers, but no big changes until 2001 and the anti-patriot act.

  • Re:My experience (Score:3, Informative)

    by Jesus_666 (702802) on Tuesday March 07, 2006 @03:13AM (#14864887)
    While I don't neccesarily agree with the notion that the American legal system has to be dismantled the parent is right in one regard: If the government becomes capable of making it impossible to organize an armed revolt the Constitution has pretty much failed. The Second Amendment was put in there for a reason and that reason is not "so people can use .50 cal. anti-materiel rifles to defend themselves against suspected burglars".
  • It is called a SAR (Score:3, Informative)

    by hughk (248126) on Tuesday March 07, 2006 @04:32AM (#14865065) Journal
    When anyone in the financial industry spots unusual activity, they are trained to raise a Suspicious Activity Report [federalreserve.gov] or SAR. There are some definite things that always have to be reported like currency movements of $10K, (using the Currency Transaction Reports [fincen.gov]. The thing about the SAR is that as opposed to the CTR, it isn't so specific, so it is very much up to the financial institution.

    These would initially go to the fed who would pass them on to DHS, IRS or whoever. The whole thing makes the financial institution err on the side of over-reporting. Not raising an SAR on something that turns out to be an issue (i.e., that Egyptian's down payment for flying lessons) will dump the FI in deep trouble with the regulators.

    In most cases the problem can be sorted with a quick call for a reason and a source of funds. In this case it should have been clear that the people had other funds and they were looking to pay of their debt. With a reasonable explanation, all should have been quickly settled.

    Oh, I do AML/KYC systems for a largeish bank so this is why I can comment.

  • by Anonymous Coward on Tuesday March 07, 2006 @11:07AM (#14866304)
    Transactions of at least $5,000 that the institution knows, suspects, or has reason to suspect have no business or apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage and for which the institution knows of no reasonable explanation after due investigation.
    http://www.epic.org/privacy/rfpa/ [epic.org]
    http://www.fincen.gov/sars/sars_by_numb_issue5.pdf [fincen.gov]
  • by shrubya (570356) on Tuesday March 07, 2006 @01:27PM (#14867532) Homepage Journal
    It's a crime to shoot someone while hunting if you're drunk [google.com]. Good thing the police didn't get to question him until 14 hours later, guess we'll never know.
  • Re:My experience (Score:3, Informative)

    by Stephen Samuel (106962) <samuel AT bcgreen DOT com> on Tuesday March 07, 2006 @06:37PM (#14870461) Homepage Journal
    That's 1 week at 15%/year. do the math... Units is real nice, if you've got Linux/BSD:
    $ units 6000-15%/year /week

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