By Jon Matonis
Monday, June 17, 2013
Regarding surveillance, the world may never have a Fincen whistleblower in the same way that we have an NSA or CIA
whistleblower. This is because the Fincen bureau conducts all of its
surveillance activity out in the open and in plain sight, probably for
its effect as a deterrent. Fincen even recruits banks and other agent
financial institutions to participate in the direct surveillance that
make serious and consequential judgment calls along the way.
and stated upfront, the unimpeded surveillance of Americans’ financial
activity is Fincen's core mission. So, nothing much to blow the whistle
Since the establishment of Fincen
in 1990 to act as the designated administrator of the 1970 Bank Secrecy
Act, two generations of educated Americans, including some smart
attorneys, have been conditioned to think of money laundering as a real
and legitimate category of crime. Eradication of privacy is the goal and
manipulation of the semantic crime debate is the tool.
In typical crime-speak fashion, it is therefore possible to have telephone crime and email
crime, because persons committing illegal acts can use telephone and
email channels to execute their deeds. Perhaps this is why the U.S.
administration and the NSA don't see much wrong with PRISM. In their
minds, violating the privacy rights of the 99.99% is justified if it
ultimately results in the identification of the evil 0.01%.
In true Machiavellian
spirit that glorifies instrumentality in statebuilding, "the ends
justify the means," especially when it comes to using our money as an
identity tracking device. In order to rule successfully, deceit and
violence may be necessary for the stabilization of power, to eliminate
political rivals, to coerce resistant populations, and to purge the
community of other individuals with strong character.
The larger debate around privacy is not just a matter of perception. Nor is it about striking the proper balance,
as many have implied. The debate is about zero privacy or zero
surveillance as the default and who defines the variations from the
Since the available cryptography
and technical tools of today permit near absolutes on each side of the
privacy-surveillance spectrum, each advancement from one side elicits an
equally strong reaction from the other side. More pervasive and
aggressive surveillance techniques at the governmental level encourage
greater general use of advanced cryptography tools among average
citizens. Last week’s headlines only served to spread public awareness
of these privacy tools.
shouldn't have to be this way. We shouldn't always have to deploy the
strongest available encryption techniques against the surveilling class.
The surveilling class should simply stop watching us.
As shameful as the existence of PRISM
is, and it is monumentally shameful for a free society, it doesn't even
compare to the unprecedented level of financial surveillance the world
is on the verge of witnessing. With FATCA nearing its debut, the IRS goes global, and with FATF,
the OECD develops policies to assist in standardizing worldwide
enforcement of financial surveillance, ensuring there is nowhere left to
hide. These are the agents of our "financial" PRISM.
As banks and credit card companies become more complicit in the surveillance, digital currencies with proper mixing services
such as bitcoin become a viable option for preserving some
transactional privacy, even if identification is required for its
initial acquisition from licensed money transmitters.
At a conference
last week, the U.S. Institute of Peace and the International Centre for
Missing & Exploited Children trotted out Bitcoin and the anonymized
web browser Tor as whipping boys in a gross and misguided attempt to
paint certain technologies as indirectly enabling immoral behavior. The
theme of the conference was brainstorming possible ways to reconcile the
opportunities of innovative financial technologies with the needs and
concerns of law enforcement.
Some type of back door, or exception,
for law enforcement must certainly be possible – to protect the
children, you know. Although virtual currency exchange endpoints can be
regulated, two representatives of the Bitcoin Foundation clearly stated
the obvious limitations in altering the Bitcoin transaction protocol
itself. Also, for the life of me, I cannot imagine how the Tor Project
could compromise itself in an acceptable way. It would be like asking a
toaster not to toast.
In her opening remarks
at the conference, Fincen Director Jennifer Shasky Calvery cited the
two wildly different lenses through which observers see the virtual
currency issue. Generally, it's thwarting financial innovation versus
establishing a clear and safe regulatory environment. She happens to be
correct about this framework.
However, upon leaving the director's
U.S.-centric bias, two other lenses emerge – U.S. interests versus
rest-of-the-world interests. And, this is where we find our elusive
The Fincen whistleblower is other sovereign nations and they are starting to speak.
April, the Dutch Minister of Finance and president of the Board of
Governors of the European Stability Mechanism, Jeroen Dijsselbloem, answered questions from his country’s parliament regarding bitcoin. (His remarks were later translated by a Dutch member of the Bitcoin community.)
asked if "the activities as performed by Bitcoin fall under the
Financial Supervision Act or is this a private activity," Minister
Dijsselbloem responded, "Anyone is free to develop and/or use
alternative (digital) products, as long as it does not conflict with the
Dutch law, such as the law on gambling."
He continued: "The
current understanding is that Bitcoin is not electronic money as meant
in the Financial Supervision Act, partly because Bitcoins are not issued
in exchange for received money and they do not represent a claim on the
issuer. Because of this, Bitcoin does not meet at least two of the four
requirements set out in the law. Also, Bitcoin is not in any other way a
financial product as meant by the law. (Mediation in) the purchase or
sale of Bitcoins is not a financial service either, so the Financial
Supervision Act does not apply."
Many educated and developed
countries don't immediately see every product as something to track and
don't necessarily view financial privacy as a negative. Indeed, prior to
immense and unparalleled pressure from the U.S., bank secrecy and
client confidentiality had been a proud heritage in countries such as
Switzerland, Austria, and Liechtenstein.
But will the world listen
to the up and coming Fincen whistleblowers? They should. Either
willingly or begrudgingly, the world has embarked on a path of greater
and greater transparency in a bargained exchange for the warm embrace of
security. But, the ends do not justify the means in that grand
tradeoff. A world where privacy isn't sacrificed and all human
transactions aren't tracked is not only possible, but imperative. The
alternative will be far worse than you can imagine.