T4 B2 Berkowitz Fdr- Entire Contents- Ngo-press Articles And Government Reports- 1st Pgs For Reference- Fair Use 161

Intelligence and the New War on Terrorism1 Bruce Berkowitz After the September 11 terrorist strikes, many people wondered, was this an avoidable intelligence failure? The question is critical because, years from now, Osama bin Laden may be seen less as a mere terrorist and more as a pioneer in the use of a new kind of warfare. For want of a better label, call it "strategic terrorism." It has four key features: A global network consisting of small, semi-autonomous cells capable of operating with little centralized control to achieve the strategic goals of the parent organization; The use of unconventional weapons of mass destruction (e.g., hijacked airliners) to cause huge casualties and enormous physical damage and to attract as much publicity as possible; •

A synergetic alliance between the terrorist network and one or more authoritarian nation-states (e.g., Afghanistan and possibly Iraq) that provide the network with logistics and funding for its non-attributable army; and • Information superiority, both in its "soft" form (an alluring ideological message to recruit and motivate foot soldiers) and its "hard" form (secure global communications for logistics, financial support, and command and control).

To be sure, governments, political organizations, social malcontents, revolutionaries, and oppressed ethnic minorities have employed terrorism in the past. Some terrorist organizations have even carried out attacks over long distances (e.g., the IRA bombed London in the 1980s, Chechens bombed Moscow in the mid-1990s). But bin Laden was the first to use strategic terrorism in a successful large-scale military strike against a superpower—and to devastating effect. No other single-day attack on the American homeland has been so costly. As of this writing, approximately 3,300 people have been reported missing or dead as a result of the September 11 strike. By comparison, during the Civil War, 2,100 Union soldiers were killed at the Battle of Antietam (Confederate deaths totaled 1,550); the United States lost 2,403 lives in the Japanese attack on Pearl Harbor.^ The non-lethal damage done on September 11 was equally vast.

1 First published in Orbis (Spring 2002), pp. 289-300, © Foreign Policy Research Institute, 2002.

-For casualties at Antietam, see the National Park Service website at . For Pearl Harbor, see Gordon W. Prange, At Dawn We Slept: The Untold Story of Pearl Harbor (New York: Viking, 1991). For the Footnote continued on next page

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Wired News: Banking with Big Brother

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Banking with Big Brother Story location: http:/7wwvv.\vired.cora/news/politics/0,1283,16749,00.html 09:25 AM Dec. 10, 1998 PT

US banks must monitor their customers and alert federal officials to "suspicious" behavior under a government plan that has drawn fire as an Orwellian intrusion into Americans' privacy. A set of proposed regulations released Monday requires banks to review every customer's "normal and expected transactions" and tip off the IRS and federal law enforcement agencies if the behavior is unusual. "It turns us into surveillance agents for the government," said John Ehrensperger, compliance director for Atlanta-based Sun Trust Bank. Ehrensperger stressed that he was not speaking on behalf of his employer. Adopting so-called "Know Your Customer" programs will stifle drug-related money laundering, the Federal Reserve Board has claimed for years. "The proposed regulations will reduce the likelihood that banks will become unwitting participants in illicit activities," the proposed rules say. "It's overly alarmist," said Bob Moore, a spokesman for the Federal Reserve Board. "We're not going to invade anyone's privacy." Unless regulators change their minds, banks will be required to comply no later than 1 April 2000. The Federal Reserve, the Office of Thrift Supervision, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Coiporation have published identical requirements. As written, the rules will not apply to credit unions. When a bank detects any "suspicious activity," current regulations require that the company complete a five-page report that includes the customer's name, address, Social Security number, driver's license or passport number, date of birth, and information about the transaction. The banks are required to telephone law enforcement "in situations involving violations requiring immediate attention."

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12/8/2003

Federal Register/Vol. 64, No. 59/Monday, March 29, 1999/Proposed Rules explanation that his failure to register was neither knowing nor willful. [FR Doc. 99-7416 Filed 3-26-99; 8:45 am] BILLING CODE 6325-01-P

FEDERAL DEPOSIT INSURANCE CORPORATION 12CFRPart326 RIN 3064-AC19 Minimum Security Devices and Procedures and Bank Secrecy Act Compliance AGENCY: Federal Deposit Insurance Corporation. ACTION: Withdrawal of notice of Proposed Rulemaking. SUMMARY: The Federal Deposit Insurance Corporation (FDIC) published a Notice of Proposed Rulemaking in the Federal Register on December 7, 1998. The proposed regulation would have required state nonmember banks to develop and maintain "Know Your Customer" programs. The FDIC received 254,394 comments from the public during the comment period. The overwhelming majority of the commenters were strongly opposed to the adoption of the proposed regulation. After considering the issues raised by the comments, and in view of the strong opposition to the proposed regulation, the FDIC is withdrawing the Notice of Proposed Rulemaking. DATES: Proposed subpart C to part 326 is withdrawn on March 29, 1999. FOR FURTHER INFORMATION CONTACT: Carol A. Mesheske, Chief, Special Activities Section, Division of Supervision (202) 898-6750, or Karen L. Main, Counsel, Legal Division (202) 898-8838. SUPPLEMENTARY INFORMATION:

illegal activities that might be occurring through financial institutions. The proposed amendment required each state nonmember bank to develop a program to determine the identity of its customers; determine its customers' sources of funds; determine the normal and expected transactions of its customers; monitor account activity for transactions that are inconsistent with those normal and expected transactions; and report any transactions of its customers that are determined to be suspicious, in accordance with the FDIC's existing suspicious activity reporting regulations. The FDIC's proposal was substantially the same as the regulations proposed by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision in December 1998. The FDIC issued the proposed amendment pursuant to its authority under section 8(s)(l) of the Federal Deposit Insurance Act (FDI Act) (12 USC 1818(s)(l)), as amended by section 2596(a)(2) of the Crime Control Act of 1990 (Pub. L. 101-647), which requires the FDIC to issue regulations directing banks under its supervision to establish and maintain internal procedures reasonably designed to ensure and monitor compliance with the Bank Secrecy Act. The FDIC also relied on its general rulemaking authority under section 9(a) of the FDI Act (12 USC 1819(a)).

II. Comments Received During the comment period, the FDIC received 254,394 comments from the public. Comments were received from community banks, multinational or large regional banks, members of Congress, trade and industry research groups, and regulatory bodies, as well as the general public. Only 105 commenters were in favor of the proposed regulation. The overwhelming majority of I. Background commenters were individual, private On December 7, 1998, the FDIC citizens who voiced very strong published a proposed amendment to opposition to the proposal as an Part 326 of the FDIC's Rules and invasion of personal privacy. Other Regulations, "Minimum Security issues raised by these commenters Devices and Procedures and Bank included that the FDIC lacked the Secrecy Act Compliance" (63 FR 67529, authority to issue the proposal; the cost Dec. 7, 1998). The proposed amendment of any Know Your Customer program was intended to provide guidance to would be passed on to customers; and state nonmember banks to facilitate and the regulation would be ineffective in ensure their compliance with existing preventing money laundering and other federal reporting and recordkeeping illicit financial activities. requirements, such as those found in the Banks, bank holding companies and Bank Secrecy Act. It was intended to other banking trade groups that help protect the integrity and reputation commented on the proposal uniformly of the financial services industry and opposed the proposed amendment. assist the government in its efforts to Their concerns included the following; combat money laundering and other (1) the regulation would be very costly

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to implement, especially for small banks; (2) the Know Your Customer program would invade customer privacy; (3) commercial banks would be unfairly disadvantaged and lose customers if all segments of the financial services industry are not covered; (4) compliance with the regulation would divert resources from Y2K preparation; (5) the FDIC lacks authority to adopt the regulation; (6) public confidence in the banking industry would be harmed by the regulation; and (7) the regulation is both unnecessary and redundant, as banks are already familiar with their customers and have adequate procedures in place. III. Paperwork Reduction Act The FDIC submitted a collection of information associated with the Know Your Customer proposed rulemaking to the Office of Management and Budget for review. That request for review is withdrawn. IV. Board Decision The FDIC has carefully reviewed every comment received during the 90day comment period. Based upon that review, and in light of the overwhelming objections raised by the public, the FDIC's Board of Directors has decided to withdraw the proposed regulation. By Order of the Board of Directors. Dated at Washington, D.C. this 23rd day of March, 1999. Federal Deposit Insurance Corporation Robert E. Feldman, Executive Secretary. [FR Doc. 99-7583 Filed 3-26-99; 8:45 am] BILLING CODE 6714-01-P

DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12CFRPart563 [No. 99-12] RIN 1550-AB15 Know Your Customer

AGENCY: Office of Thrift Supervision (OTS), Treasury. ACTION: Proposed rule; withdrawal. SUMMARY: The Office of Thrift Supervision ("OTS") published a Notice of Proposed Rulemaking in the Federal Register on December 7, 1998 that would have required savings associations to develop and maintain "Know Your Customer" programs. The Board of Governors of the Federal

Order Code RS20185 Updated February 28, 2003

CRS Report for Congress Received through the CRS Web

Privacy Protection for Customer Financial Information M. Maureen Murphy Legislative Attorney American Law Division Summary Title V of the Gramm-Leach-Bliley Act of 1999 (P.L. 106-102, H.Rept. 106-434) requires financial institutions to provide their customers with notice of their privacy policies. It prohibits financial institutions from sharing nonpublic personally identifiable customer information with non-affiliated third parties without giving consumers an opportunity to opt out and prohibits financial institutions from providing account numbers to non-affiliated third parties for marketing purposes. It requires financial institutions to safeguard the security and confidentiality of customer information. Finally, it delegates rulemaking and enforcement authority to the federal banking and security regulators, the Federal Trade Commission, and state insurance regulators. The legislation includes prohibitions on "pretext calling," obtaining financial institution customer information by false pretenses. Legislation is expected to be offered in the 108th Congress, as was the case in the 107th Congress, to amend these provisions. This report will be updated on the basis of floor action involving privacy protection for financial institution customer information. For further information see CRS Reports RS21427, Financial Privacy Laws Affecting Sharing of Customer Information Among Affiliated Institutions, and RL31758, Financial Privacy: An Economic Perspective.

Background. With modem technology's ability to gather and retain data, financial services businesses have increasingly found ways to take advantage of their large reservoirs of customer information. Not only can they serve their customers better by tailoring services and communications to their preferences, but they can profit from sharing that information with others willing to pay for customer lists or targeted marketing compilations.1 While some consumers are pleased with the wider access to information about available services that information sharing among financial services providers offers, others have raised privacy concerns. Individuals are particularly interested in

1 This report addresses financial privacy issues. For more general information on privacy issues see: CRS Report RL30671, Personal Privacy Protection: The Legislative Response, by Harold C. Relyea. Also see CRS Issue Brief IB98002, Medical Records Confidentiality.

Congressional Research Service <» The Library of Congress

Order Code RL31730

Report for Congress Received through the CRS Web

Privacy: Total Information Awareness Programs and Related Information Access, Collection, and Protection Laws

Updated March 21, 2003

Gina Marie Stevens Legislative Attorney American Law Division

Congressional Research Service »t» The Library of Congress

Report to Congress regarding the Terrorism Information Awareness Program In response to Consolidated Appropriations Resolution, 2003, Pub. L. No. 108-7, Division M, § lll(b)

Executive Summary

May 20, 2003

Task Force on National Security in the Information Age

ZOE BAIRD, JAMES BARKSDALE CHAIRMEN MICHAEL A. VATIS EXECUTIVE DIRECTOR

10 Rockefeller Piaai, I6tH Floor, New York, NY 10020-1903 Phone 212.713.760ft' Fax 212.7ft5.%90 www.hiartie.orii