Politically Exposed Person

Financial Justice Ideas and Issues Personal Writings

Miami     Fly overnight from Lima to Miami one has the opportunity to wait in the airport for quite a bit to get to New Orleans, which today presented the opportunity to read about the travails of Eliot Spitzer over and over again. The most frightening article was not about the soon-to-be former governor’s mishaps, but some snaps in the trap that ensnared him, another courtesy of the post-9/11 Patriot Act.

Besides the “know your customer” requirements that are causing us such fits in trying to impact on the number of our members coming through the ACORN Centers that are “unbanked,” it turns out that the Act created a special category of scrutiny required for a “politically exposed person.” The definition in the Act focuses on foreign political figures, or as quoted by the Times, “current or former foreign political figures, their immediate family and their close associates.” This term and the entire concept seems less crafted as a reaction to 9/11 than to a last vestige of the Cold War, where the Feds would be looking for a politician who could be compromised and exposed. One hesitates to even speculate how the authorities (and the bankers) determine who might be close associates of a politician from another country. I don’t think I even have a high enough security clearance to imagine who compiles that list, distributes it, and is allowed to give it a look.

Then in a remark that is utterly chilling, the article by Don Van Natta, Jr. and Jo Becker states without adornment that “several banking officials at major institutions said that as a matter of practice, they extend the extra scrutiny to American political figures.” Whoa there, cowboy! Did anyone know that and is it legal, since it would seem to be wildly evasive of any simple privacy protections? So, banks on their own are routinely putting the hairy eyeball on “American political figures” then. Who makes up that list and how low does it go?

And, these same banks that have brought us the economy crashing mortgage and credit crises roiling the United States and much of the world also have the discretion and authority that once they have determined something to be a tad out of plump, then they have to file a “Suspicious Activity Report” with the Treasury Department. As it turns out in the Spitzer case the chances are that people will just sit on that and let it gather dust at least until another one comes in and giggles the cage, but still this is scary, scary “big brother” stuff.

Good ol’ hard cash also seems to have some advantages to wire transfers incidentally, so the ease of zapping money here and there might not be all its cracked up to be. At the least you never would have caught a politician of the “old school” who didn’t carry a big fat wad of cash to handle this and that.

These sanctimonious, yuppie pols of the new school are teaching us all some things that we really did not want to know.