ghostjmf wrote:According to NPR story, the software that someone-who-didn't-like-him (there's a long list) used to catch Spitzer was software Spitzer himself OKed for banks to use. It targets "a lot of smaller transactions to a suspicious source" (as in offshore bank in this case) & bundles them so authorities can see if there's really any case there. Of course, "there" is supposed to be looking for terrorist funding, embezzling, etc. Moral I guess is that you should always pay for your illegal activities in cash by hand?
That seems unlikely. The requirement that banks monitor this sort of activity is part of the Bank Secrecy Act (which long predates the USA PATRIOT Act), and is part of a federal requirement that banks (and others) monitor each customer's financial activities for 'suspicious activity,' related to money laundering and other forms of criminal activity. Its real genesis actually has nothing to do with terrorism or even embezzling, but is related to tax dodging (people not reporting cash) and drug trafficking (same issue). Remember that Al Capone was not sent up because of racketeering per se, but because he failed to pay income tax on his illicit income (which of course he never reported). As a state attorney general and governor, Spitzer would not have had much to do with 'approving' the software that a bank uses to satisfy the federal requirement.
As a practical matter, the federal banking regulators (and the state banking regulators, who have some jurisdiction over state-chartered banks) don't really get into the business of 'approving' a bank's choice of software-- they look at results, and if a bank is doing what it is supposed to be doing (catching 'suspicious transactions'), the regulators are OK with it, regardless of the software used, but if the bank is not doing what it is supposed to be doing (it fails to catch 'suspicious transactions,' or does not even monitor transactions), the regulators pounce mercilessly.
What happened in this case sounds like Spitzer was making cash transfers in amounts just below the threshold limits for reporting cash transfers: this smells like 'structuring.' Banks are required to report certain financial transactions where the dollar amounts meet certain specific thresholds (the threshold amount differs depending upon the nature of the transaction), and, knowing this, some people 'structure' their transactions by making multiple transfers, each of which is below the threshold amount that requires the bank to file a report; they do this for the specific purpose of avoiding the reporting requirement. This is inherently 'suspicious' and a bank that detects this must report it to FinCEN (not the IRS, as some of the news reports are reporting) on a Suspicious Activity Report (SAR). FinCEN and various law enforcement agencies (including the IRS) analyze the hundreds of thousands of reports that FinCEN receives each year, to determine whether there really is something 'there' in the transaction, and if there is something 'there,' they launch a formal investigation (as in the wiretaps that snared Spitzer).
A lot of 'suspicious' activities that are reported actually result in nothing at all, the bank is reporting something that is simply out of the ordinary. Banks review the 'suspicious activities' that they detect to see if there is some legitimate purpose behind the transaction, and if there is one, they will not file a SAR; if there is no legitimate purpose, or if it seems unlikely that there is any reasonable purpose, then they will file the SAR.
Several years ago, I happened to receive a rather Large Amount of Income as a lump sum, from which no tax was withheld; I estimated that my state and federal tax liability on that sum would be about 45% and so I put 45% of the Large Amount of Income into a short term CD, which, upon maturity, I rolled over into a money market account, and when it cleared I used the money market account to pay the taxes that were due on the large sum that was involved. This was 'suspicious' under the bank's guidelines (it is unusual to put large sums of money into a money market account for just a week or so before you withdraw it-- that is a typical ploy used by money launderers to move large sums of money), and I am certain that it did trigger a 'suspicious activity' investigation by the bank (well, I know that it did, because I worked for them at the time, and I designed some of their suspicious activity indicators: this kind of a transaction automatically triggers a suspicious activity investigation), but, although the bank is prohibited from disclosing whether or not it has filed a SAR in a particular case, I am certain that none was filed here because, although 'unusual,' it was pretty clear that nothing illegal was going on (i.e., if I were involved in money laundering, I would not be sending the proceeds of my money laundering activities directly to the IRS).