U.S. Money Police Hide Behind “Privilege”

The news today reported that the Bush administration plans to use again a dubious legal tool, the “state secrets” privilege, to try to stop a lawsuit against a Belgian banking cooperative, the Society for Worldwide Interbank Financial Telecommunication (Swift) that secretly supplied millions of private financial records to the United States government, court documents show. The suit alleges that Swift, in secret cooperation with the U.S. government, violated the privacy of an untold number of persons by allow the U.S. access to Swift cash transfer records. 

Swift is a privately run cooperative founded in 1973 and headquartered in Brussels, Belgium that electronically transmits trillions of cash transfers every day to more than 200 countries. The network handles some nine million transfer instructions and confirmations a day with a value of about US$6 trillion. Swift is considered the nerve center of the global banking industry, routing trillions of dollars each day among banks, brokerage houses and other financial institutions. Its secret partnership with Washington, reported in The New York Times in June 2006, gave U.S. Central Intelligence Agency and the U.S. Treasury Department access to millions of records on international banking transactions by private individuals and others.

This massive access was part of an effort to trace money that government police claimed might be linked to financing of terrorism. The Justice Department claims that the suit against the Swift consortium threatens to disrupt the operations of a vital national security program and to disclose “highly classified information” if it continues. No doubt the Bush officials don’t want the world to know just how great a violation of the privacy of millions of people may have been.

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In 2006 a news story got a lot of coverage in Switzerland, but was generally ignored elsewhere. But to those who advocate offshore financial activity, including recommending Switzerland as one of the world's best asset havens, this was an important story. Datelined from Zurich, it stated that "the United States has confirmed it has been monitoring international financial transactions, including those in and out of Switzerland, for almost five years. The Swiss government remained quiet on the issue, but data protection experts and lawyers were and are concerned by revelations that the U.S. government had been tapping into records of Swift, supposedly looking for evidence of potential activity by terror groups.

In my opinion you better believe that the U.S. money snoops who say they are looking for terrorist cash are also looking for tax evasion, money laundering of all kinds and any other indictable offenses. And they are doing this in violation of the Fourth Amendment guarantees against illegal searches without a warrant. Naturally enough, the question arose as to whether the U.S. government having wholesale Swift access to hundreds of millions of wire transfers since Sept. 11, 2001 has compromised the Swiss banking secrecy mandated by law since 1934.

In Switzerland 99 banks and 254 institutions are connected to Swift, with a daily transaction value of some CHF200 billion (US$160 billion). Although the Swiss Bankers Association says that Swiss banking secrecy had not been endangered or violated, the Swiss Federal Data Protection Commissioner said he was alarmed. And well he might be. Switzerland cooperates in foreign criminal investigations.

But however much the U.S. money police may have seen in the records of Swift wire transfers, Switzerland still is home to fully one-third of all private wealth in the world. It has a centuries old tradition of confidentiality that will only be breached if someone is suspected of committing an action that the Swiss consider a crime. Tax evasion is not considered a crime in Switzerland, though tax fraud (falsifying documentation, for example) is.

The question now is whether the U.S. government money police will be allowed to hide behind the “state secrets” doctrine and conceal just how far they have gone in violating everyone’s privacy.