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FATCA: a Tool of the Electronic Surveillance State

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Having established that (a) information received under FATCA may be passed on to these other agencies, (b) there is no legal expectation of privacy or confidentiality, or any limitation on use of any information gathered, and (c) institutions would be required to log onto   a portal created and operated  by the U.S. government, it is fair to ask, given growing concerns about covert information-gathering by the   NSA , whether the motives behind FATCA  are limited to tax enforcement and what further use will be made of information supplied to the IRS. 

So, Why Would "Intel' Agencies Want Personal Information from Banks?

If information itself, not tax enforcement, is the real underlying "value" of FATCA for U.S. government agencies, this might also help explain exemption of corporations. Perhaps the law's authors figured that corporations, unlike individuals (all presumed to be slimy "tax cheats"), might have the means to fight back and risk upsetting the whole applecart.  Or perhaps personal information is more useful for intelligence purposes.  Either way, targeting individuals' private data appears to be the most plausible way to impose a mandate that FFIs -- including many thousands worldwide that don't do business in the United States and may not be as readily accessible to U.S. agencies as domestic firms -- log onto a government-controlled site. 

How might FATCA compliance by FFIs facilitate intelligence collection?  In at least two ways:

First,  the FATCA data itself, matched with other information available to the relevant agencies, would greatly enhance creation of a global   financial social accounting matrix , using U.S. Persons' account information as a kind of marker or human " taggant " for mapping contacts, relationships, and activities of a wide range of persons and institutions well beyond the U.S. Persons themselves.  While email, phone records, blog postings, social media ramblings, and other personal data are valuable for the surveillance state, one could argue that capture of personal   financial   information is a far more valuable payload for intelligence monitoring and management.  FATCA data would be an invaluable supplement to "intel' agencies existing efforts to monitor international finances. (See: " 'Follow the Money': NSA Spies on International Payments ,"   Der Spiegel , September 15, 2013.)   

Second,  and more ominously, it needs to be asked what additional types of information-gathering on FFI targets   other  than "U.S. Persons" may be facilitated by metadata and other transfers incidental to automatic electronic data transmission.   There is no reason to suppose the technical capabilities of U.S. agencies would be thwarted by metadata-scrubbing, encryption, or other safeguards FFIs might place on data transfer, whether incidental or anticipated.  (With respect to the possible hazards for institutions' data security, see: " XKeyscore: NSA tool collects "nearly everything a user does on the internet' ," the   Guardian , July 31, 2013 and " Reports: NSA has cracked much online encryption ,"   CNN , September 6, 2013).   Certainly, from a purely technical point of view, it seems NSA and other intel agencies already are doing fine on their own.  But consider how much easier it would be to   steal keys , crack encryption, or install a   worm , a   Trojan horse  program, or other   malware  via a   drive-by download  to provide   backdoor  access to   all the data in a target network   when it's unnecessary to   phish  the target in.  Instead, they can just   require  the target institution (under threat of FATCA sanctions) to log in at the   Black Gate  of   Mordor  and take it from there.  As an extra bonus, instead of having to pay for costs incurred by the target firms, as   NSA did for U.S. firms involved in the "Prism" program , the FFIs themselves would have to bear the costs of providing possible access for U.S. agencies to acquire data even beyond that demanded under FATCA.    

Some might consider the suggestion that U.S. agencies would abuse FATCA compliance for intelligence collection purposes speculative, or even offensive.   But then one wonders what would be the impediment to such abuse.  Technical? Political?  Moral?    Legal ? Given almost daily revelations of what the same agencies already have been doing it's hard to take such objections seriously.  (And if anyone thinks Treasury and the IRS are not already integral elements of the broader spying program, see:   Jennifer Stisa Granick and Christopher Jon Sprigman,  " NSA, DEA, IRS Lie About Fact That Americans Are Routinely Spied On By Our Government: Time For A Special Prosecutor ,"   Forbes , 8/14/2013.)

At the very least, it should be expected that the IRS would have the decency to provide a warning on the log-in portal, which opened on August 19, 2013:


This site is operated by the United States Internal Revenue Service (IRS).   Foreign financial institutions are on notice that any information made available to the IRS as a result of logging onto this site may be passed on to other agencies of the government of the United States and that use of such information may not be exclusively for tax purposes.

It's Time to Think of   Financial   Information as   Personal  Information

Thus far, media coverage of FATCA has been almost entirely relegated to the finance and tax pages, mainly outside the United States, much of it dominated by compliance-mongers drumming up business.  Even FATCA's deleterious economic impacts and the Treasury Department's grossly exceeding its legal authority have drawn little notice, especially in U.S. domestic reporting. 

Still less attention has been given to what may be the real story of FATCA as a critical, but thus far almost completely ignored, piece of the growing machinery of global surveillance.  After all, FATCA is only about "offshore tax evasion" and has nothing to do with personal privacy, right?  It's not as though the IRS or NSA were hacking into something important, like your Instagram pix . . . right?

Wrong.  First, an individual's financial information   is  personal information.  In terms of intrusive agencies' monitoring -- and perhaps soon, controlling -- of the lives of people who used to consider themselves free and independent citizens of their respective countries, financial information is far more significant in content than most of the fluff and narcissism on  Internet forumsweblogssocial blogsmicrobloggingwikissocial networkspodcasts ,   facial recognition , and other electronic content we've gotten used to thinking of as defining "personal":

"Financial privacy isn't typically considered as sexy as other forms of privacy, like our right to private beliefs, health care, property, and communications. Infringement of financial privacy doesn't evoke the kind of outrage as other violations, because most overlook the vital role it plays in preserving human rights and protecting individuals from governmental abuse. Without financial privacy, for instance, law-abiding citizens around the world would be in danger of having all of their financial information shared with corrupt governments or criminal organizations, potentially exposing them to extortion, blackmail, or even kidnapping.

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Managing Director, Global Strategic Communications Group; government and media relations specialist. Former US diplomat, US Senate staffer. JD Georgetown 1978, BA Penn State 1974.

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Barter and local currencies are a great alternativ... by Paul Repstock on Saturday, Sep 28, 2013 at 6:43:34 PM
As someone who is subject to FATCA requirements, I... by Doc McCoy on Monday, Sep 30, 2013 at 3:52:31 AM