The greatest impact of the Patriot Act is that it requires banks to change the way checking, savings and loan accounts are handled. It contains an anti-money laundering provision that impacts every person who opens or holds a bank account.

The reason for the anti-money laundering efforts is that the terrorists responsible for the September 11, 2001 attacks had no problem opening bank accounts in the United States.

They were also able to obtain credit cards by completing applications with made-up social security numbers. The anti-money laundering clause of the Patriot Act attempts to hold banks more accountable for opening accounts or lending money to terrorists.

As a result, honest individuals and business owners are scrutinized more carefully. A dozen years after the Patriot Act was passed, groups like the American Civil Liberties Union fight against it due to privacy concerns.

• What Is the USA Patriot Act?
• Understanding the USA Patriot Act
• Advantages of the USA Patriot Act
• Disadvantages of the USA Patriot Act
• The PATRIOT Act and the Constitution: Five Key Points
• The United States Patriot Act and Banking
• What Does the USA Patriot Act do?

What Is the USA Patriot Act?

The USA Patriot Act is a law passed shortly after September 11, 2001, terrorist attacks in the United States that gave law enforcement agencies broad powers to investigate, indict, and bring terrorists to justice. It also led to increased penalties for committing and supporting terrorist crimes.

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An acronym for “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism,” this anti-terror measure was chiefly designed to lower the probable cause threshold for obtaining intelligence warrants against suspected spies, terrorists, and other enemies of the U.S.

Understanding the USA Patriot Act

The USA Patriot Act deters and punishes terrorist attacks in the United States and abroad through enhanced law enforcement and strengthened money laundering prevention. It also allows the use of investigative tools designed for organized crime and drug trafficking prevention for terrorism investigations.

For example, federal agents can use court orders to obtain business records from hardware stores or chemical plants to determine who may be buying materials to make bombs or bank records to determine who is sending money to terrorists or suspect organizations.

Police officers, FBI agents, federal prosecutors, and intelligence officials are better able to share information and evidence on individuals and plots, thus enhancing their protection of communities.

Patriot Act’s Effect on Finance

While the Patriot Act initially conjures thoughts of expanded surveillance activity, it also impacts the broader U.S. community of financial professionals and financial institutions engaging in cross-border transactions with its Title III provision, entitled “International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001.”

With a goal of thwarting the exploitation of the American financial system by parties suspected of terrorism, terrorist financing, and money laundering, Title III cites International Monetary Fund data estimating that laundered money from drug trafficking and other smuggling activities accounts for 2% to 5% of U.S. gross domestic product.

And by chipping away at these illegal sources of capital, which this law dubs “financial fuel of terrorist operations,” Title III aims to diminish their impact, through a variety of restrictions and controls.

A Closer Look at the Books

The main Title III mandate imposes tighter bookkeeping requirements, forcing financial institutions to record aggregate amounts of transactions involving countries where laundering is a known problem for the United States.

Such institutions must install methodologies of tracking and identifying beneficiaries of such accounts, as well as individuals authorized to route funds through payable-through accounts.

Title III also expands the authority of the Secretary of the U.S. Treasury to develop regulations that stimulate more robust communication between financial institutions, with an aim of stemming laundering activity and making it harder for launderers to conceal their identities. The Treasury is also empowered to halt the merger of two banking institutions if both have historically failed to discourage laundering with their own internal safeguards.

In an effort to control suspicious activity abroad, Title III prevents business with offshore shell banks that are unaffiliated with a bank on U.S. soil. Banks must now also investigate accounts owned by political figures suspected of past corruption.

And there are greater restrictions on the use of internal bank concentration accounts that fail to effectively maintain audit trails—a money laundering red flag according to the law.

Expanded Money Laundering Definition

Nomenclature/definitions are also affected by Title III. For example, the definition of “money laundering” was broadened in scope to include computer crimes, the bribing of elected officials, and the fraudulent handling of public funds.

And “money laundering” now encompasses the exportation or importation of controlled munitions not approved by the U.S. Attorney General. Finally, any offense for which the U.S. is obligated to extradite a citizen under a mutual treaty with another country likewise falls under the broadened “laundering” banner.

The final subtitle under the Title III provision deals with an effort to rein in the illegal physical transport of bulk currency. This movement builds upon the Bank Secrecy Act of 1970 (BSA)—also known as The Currency and Foreign Transactions Reporting Act—which requires banks to record cash purchases of instruments that have daily aggregate values of $10,000 or more—an amount that triggers suspicion of tax evasion and other questionable practices.

Because of the BSA’s success, sharp money launderers now know to bypass traditional banking institutions, and instead, move cash into the country using suitcases and other containers. For this reason, Title III makes concealing more than $10,000 on anyone’s physical person an offense punishable by up to five years in prison.

Practical Implications

For banks, investors, financial advisors, intermediaries, broker/dealers, commodity merchants, and other financial professionals, the practical result of the Patriot Act’s Title III provision effectively translates to unprecedented levels of due diligence on any corresponding accounts that exist in money-laundering jurisdictions throughout the world.

However, many believe the actual methods of achieving this analysis tilt towards the nebulous. And the specific questions that must be asked seem to fluctuate since there are no concrete levels of information required to satisfy potential inquiries, should a bank or an investor be suspected of violating Title III terms. For this reason, many are taking a “better-safe-than-sorry” approach to gathering as much information as possible.

On the banking side, applications for foreign accounts—either directly or indirectly owned by U.S. citizens, have become inordinately complex and onerous. Compliance officers are routinely augmenting applications, with an almost paranoid worry about satisfying broader Patriot Act mandates, and the enforcement agencies that oversee them.

Advantages of the USA Patriot Act

The Act has been a highly polarizing national security initiative since President George W. Bush signed the bill into law a month after the terrorist attacks of September 11. Advocates feel the Act has made anti-terrorism efforts more streamlined, efficient, and effective.

Federal agents use roving wiretaps while tracking international terrorists trained to avoid surveillance by rapidly changing locations and communication devices.

A reasonable delay in notifying terrorist suspects of a search warrant gives law enforcement time to identify the criminal’s associates, eliminate immediate community threats, and coordinate the arrests of individuals without first tipping them off.

Because law enforcement has more unity through multiple communication channels, investigating officers can act quickly before a suspected attack is completed. Surveillance is easier because companies have a clear definition of who investigates terrorist activities.

Faster inquiries are made about suspicious activities, strengthening terrorism prevention. Increased wiretapping lets investigators listen to conversations potentially threatening to national security.

1. Strengthens National Security

Since the devastating 911 terrorist attacks and the 2001 anthrax attacks, America and the whole world has never been the same again. With the enactment of the USA Patriot Act, many suspected terrorists were intercepted, more convictions were recorded and stringent policies have been created to ensure these attacks will not ever happen again.

Apart from stricter regulations, surveillance processes were streamlined, making it difficult if not impossible for acts of terrorism to succeed. This policy has widened the authority of the government in ensuring national security and people have started to sleep better at night, so to speak. This act brought back the feeling of security to citizens one way or the other.

2. Easy Terrorist Identification

Since the Patriot Act, government agencies such as the FBI was given the green light to act and tap phones that are suspected to be used by terrorists and lone wolves without having to go under strict policies such as having to ask for individual requests.

With the USA Patriot Act, the government came up with a streamlined surveillance system which made it easier for the authorities to intercept and send terrorists to justice. Moreover, there was a great improvement in the communications within agencies, making them capable of addressing problems and acting on issues related to terrorism.

3. Victim Support

One of the provisions of the Patriot Act is the opportunity for grandparents to apply for special immigrant status in order to take care of the children orphaned as a result of terrorism. These were the children whose parents were victims of the September 2001 attack of the World Trade Center which claimed innocent lives and affected the lives of survivors and their families.

Without the Act, support and aid to the victims and their families might not be given that much attention or be organized. Moreover, business owners who had establishments in the vicinity of the WTC were given financial support to rebuild structures.

4. Updates Law on Technology and Threats

Part of the Patriot Act includes allowing victims of computer hackers to request for law enforcement assistance to track down hackers. This has given an equal footing between victims of physical trespassers and digital trespassers.

Also, law enforcers can now request for surveillance from any district unlike before when this was not possible and it was harder for the authorities to act on potential threats without violating protocol.

Disadvantages of the USA Patriot Act

Opponents of the Act argue it effectively lets the U.S. government investigate anyone it sees fit, colliding directly with one of the most cherished American values: a citizen’s right to privacy.

Questions of misusing government funds arise when limited resources are used in tracking American citizens, especially those moving overseas. It is unclear what federal authorities plan to do with information discovered through tracking public records, raising concerns about the government’s autonomy and power.

Suspected terrorists have been imprisoned at Guantanamo Bay, Cuba, and other sites without always explaining why or allowing legal representation, violating their right to due process; some prisoners have been proven, subsequently, to not even have any ties to terrorism.

The business, finance, and investment communities are more likely to be affected by heightened documentation requirements and due diligence responsibilities.

Though the impact falls more on institutions than individual investors, anyone who conducts international business is likely to experience added costs and greater hassles with something as mundane as opening a simple foreign checking account.

1. Privacy Invasion

If there is one major issue about the enactment of the Act is the concern of the citizens that they have never felt their privacy invaded until the Patriot Act. This has led to data mining, where personal information was collected without the knowledge of unsuspecting individuals.

Although this Act was mainly signed to combat terrorism, the fact still remains that this has jeopardized personal freedom and has left citizens uncomfortable. According to critics, some federal agents can abuse this authority and simply collect information or accuse anyone of terrorism based on guesses.

2. Anti-immigrants

Another flaw of the Act is the provision on immigration where immigrants who are suspected of terrorism can be held and detained indefinitely. Worse, they are not entitled to trials to prove their innocence.

In effect, if an immigrant is suspected of terrorism and the country he or she comes from refuses to take this person in, the United States government can detain this individual for as long as it wants. Also, this has given power to the Attorney General to decide on the fate of immigrants.

3. First Amendment Violation

The USA Patriot Act, according to critics, has kept the citizens to enjoy the freedom of speech and expression, whether in public or on paper.

This has also earned the ire of some librarians because the Act includes a provision that permits the FBI to order for the production of publications it believes can be used in the investigations. The access to too much personal information of federal agents and the way they conduct their surveillance are unconstitutional.

4. Racial Profiling

Another disadvantage of the Act is the possibility of racial profiling because almost anybody suspected to be a terrorist can be selected from the rest and most of these are immigrants and tourists coming from countries that are suspected to have terrorists.

This can be traumatic for some visitors and immigrants who just want to experience what it is to be in the land of opportunity. Also, this controversial act has put some unsuspecting tourists to shame when they are asked to step aside as they go through immigration. The Act somehow puts this practice in the spotlight.

It cannot be denied that the Patriot Act has strengthened national security but it also has invaded the privacy of Americans. This has also allowed the government to obtain extensive personal information which can sometimes be illogical and too much.

It is said to protect constitutional rights yet the government can obtain information of people whenever they want. Whether the advantages of the Act outweigh the disadvantages, what is more important is for some reforms to be made to ensure Americans are protected.

The PATRIOT Act and the Constitution: Five Key Points

Here are five key points about the PATRIOT Act:

1. It protects civil liberties and provides for the common defense. The Constitution requires the President and Congress to respect and defend individual civil liberties but also provide for the common defense. The Constitution weighs heavily on both sides of the debate over national security and civil liberties—it is important to recognize both factors.
2. Expectation of privacy is not unlimited. The Supreme Court has ruled that Americans enjoy a “reasonable” expectation of privacy; however, this is not an unlimited expectation of privacy. This means that anything one exposes voluntarily to the public—or even to a third party—is not considered protected. Congress of course can expand these rights (and it has repeatedly); however, these protections yield to criminal and national security investigations.
3. The law provides significant safeguards. The PATRIOT Act does not provide investigators with unfettered power to spy on innocent Americans. What it does do is ensure that national security investigators have the same tools at their disposal to investigate terrorists that law enforcement agents have to investigate and prosecute drug dealers and rapists. These tools come with significant procedural safeguards, oversight, and reporting requirements and are subject to routine and aggressive oversight by the FISA court and Congress.  
4. It has passed constitutional muster. No single provision of the PATRIOT Act has ever been found unconstitutional. This is a testament to the act’s limited applicability, procedural safeguards, and extensive oversight mechanisms—as well as the fact that it often provides more protections than are afforded in criminal proceedings.
5. Disagreements over the role of government are different from actual abuse. Mere expansion of executive authority in the context of national security investigations alone does not in itself create actual abuse. Certainly, there are fundamental disagreements over the role of the executive branch during wartime. However, careful monitoring and vigilant oversight are oftentimes the answer to potential abuses of power—not all-out prohibition.

Next Steps

Opponents of the PATRIOT Act have repeatedly sought to repeal the act’s provisions or hamstring the act with yet another set of bureaucratic hoops. However, Congress has extensively modified and tailored the act over the years, adding new safeguards with substantial court oversight.

Adding more hoops for investigators to jump through—in time-sensitive investigations—would kill the law’s ability to fulfill its very purpose: to help stop terrorism. Congress should:

• Reauthorize the PATRIOT Act sunset provisions. This should also include reauthorization of Section 6001 of the Intelligence Reform and Terrorism Prevention Act (also known as the “lone wolf provision”).
• Seek permanent reauthorization. Congress should permanently incorporate these tools into the broader counterterrorism framework.
• Resist initiatives to erode key provisions. Despite repeated attempts to demonstrate abuse, little evidence has been proffered to demonstrate that the provisions in the act have been misused. Tying the hands of investigators through more procedural safeguards would not make the country any safer.

Little Danger of Abuse

The key to the PATRIOT Act is empowering the government to do the right things while exercising oversight to prevent any abuse of authority.

As long as lawmakers keep a vigilant eye on police authority, the federal courts remain open, and the debate about governmental conduct is a vibrant part of the American dialogue, the risk of excessive encroachment on our fundamental liberties is minimal.

The United States Patriot Act and Banking

The USA PATRIOT Act was enacted in response to the 9/11 terrorist acts. The intent is for banks, credit unions and other financial institutions to verify the identity of all people who do business with them.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What information do you obtain and why?

To comply with the USA PATRIOT Act, Copper State CU is required to verify the identity of members applying for membership and opening new accounts or services. Information we are required to obtain includes name, mailing and residence address, tax identification number, date of birth and a copy of a government-issued photo ID. Additional information may also be gathered depending on the type of account applied for or opened.

Identification and information on existing members will be gathered as they open or use additional services offered by the credit union. The Act requires us to maintain records of the identification verification and to periodically update this information. Confidentiality of the information gathered and used by the credit union will be maintained as required under the Privacy Act.

How does this affect me?

When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents. We will ask to verify your identification occasionally. This is a good safety precaution for you and an effective way for each of us to comply with the provisions of the Act.

I’ve been a member for years, why are you checking my identification?

We know it may seem odd to verify the identification of someone we’ve known for years. However, to guarantee compliance with the Act, we ask that you show your identification when asked. The law was written so that all member identities are verified. This will not have to be done each time you visit a branch, but it will be done periodically.

What does the credit union do with our identification?

We are required to keep proof that we have verified your identification. We will keep a record that we are complying with the Act. Our member base is periodically checked against a list of known or suspected terrorists. This Act should have little or no effect on law-abiding citizens.

What Does the USA Patriot Act do?

The Patriot Act covered a lot of ground. Some of its provisions have since been struck down by the courts (the Supreme Court has ruled that it’s illegal to indefinitely detain immigrants who aren’t charged with crimes, for example); others have become part of the mission of the Department of Homeland Security, which didn’t exist when the law was passed.

Others have stuck around and aren’t the subject of a lot of controversy: the law created a slew of new federal crimes related to terrorism, created federal funds to assist victims of terrorism, and gave the federal government a range of new powers to track and seize money being used by organizations connected to terrorism.

But what “Patriot Act” tends to mean to most Americans — and the reason the parts of the bill that need to be renewed by Congress have faced increasing opposition over the past several years — is several provisions that made it much easier for the government to collect millions of Americans’ communications records.

Why are some parts of the Patriot Act expiring?

Back when the Patriot Act was first being debated, Sen. Ron Wyden (D-OR) was worried about some of the powers the Patriot Act was giving the federal government. He voted for the bill, but not before adding a five-year countdown clock to three of the sketchiest-looking provisions.

After five years, if Congress hadn’t passed a new law renewing the programs, they would “sunset.” Wyden hoped “these provisions would be more thoughtfully debated at a later, less panicked time.”

In 2006, there was a little more “thoughtful debate” — including a filibuster, led by Feingold, that caused senators to tweak the surveillance provisions slightly.

By 2011, though, Ron Wyden was on the Senate floor warning that there was a “secret Patriot Act”: that the federal government secretly believed the law allowed it to conduct way more surveillance of Americans than people assumed. Despite Wyden’s warnings, Congress passed a four-year extension — which reset the countdown clock for May 31, 2015.

What did the expired parts of the Patriot Act actually do?

The parts of the law that expired at the end of May cover three of the most controversial programs for domestic and international surveillance.

The one you’re most likely to have heard of is Section 215, which is officially called the “business records” provision — it gives the government broad power to ask businesses for their records relating to someone who might be involved in terrorism. For example, if the FBI had been tracking Timothy McVeigh before the Oklahoma City bombing, it might have learned from business records that he’d rented a truck and bought a truckload of fertilizer.

When the Patriot Act was first passed, 215 came under some mild criticism because of fears that the government could force public libraries to turn over someone’s borrowing records. (Remember libraries?)

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But in 2013, documents leaked by former government contractor Edward Snowden revealed that the government had been collecting the phone records of every single customer of phone companies including Verizon. And it was using Section 215 as the justification that made it legal.

The Snowden leaks put Section 215 at the center of a renewed controversy about government surveillance of Americans — which ultimately led to the current legislative fight. But two other, less discussed provisions have also expired.

The “roving wiretap” provision (Section 206) allows the government to tap every device a person uses — landline, cell phone, laptop, etc. — with just one approval from the (famously permissive) Foreign Intelligence Surveillance Court.

And the “lone wolf” provision (Section 207) allows the government to surveil someone who might be engaged in international terrorism, even if he or she is not actually connected to any existing terrorist group.