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Electronic Warfare


With your indulgence I would like to post this short essay here, which was
stimulated by a recent report posted on this list that was passed on to me.
The essay just ran as an op-ed piece in this week's issue of Communications
Week. I would like to thank and acknowledge the author off the original
report as well as encourage the cypherpunk community to keep me posted on
related issues. (I cannot keep up with the volume on this list and, hence,
am not a subscriber.)

Thank you,

Bill Frezza
Communications Week
Network Computing Magazine
[email protected]



Although the flap over the Clinton administration's attempt to promote
escrowed-key encryption systems like Clipper has temporarily faded, the war
on electronic privacy continues.   As proceedings at the Fourth
International Conference on Money Laundering, Forfeiture, Asset Recovery,
Offshore Investments, the Pacific Rim, and International Financial Crimes
reveal, there has been no let up in our government's efforts to blockade
the cyber-frontier.

No, you won't learn much from the Wall Street Journal or the New York
Times, written by journalist-generalists who have no clue about where this
technology is heading.  The Feds have become so skilled at manipulating the
Old Media that stories about electronic privacy  invariably center on the
latest drug kingpin, pedophile, or domestic terrorist.  Attacking these
universally abhorred enemies of the people not only makes for good
headlines but keeps privacy advocates off balance as they are forced to
defend abstract rights using loathsome examples.  But if you tune in to the
Cypherpunks mailing list ([email protected]) you can get some excellent
first hand reports from the front.

In the relatively short period since the passage of the Bank Secrecy Act,
which, among other things, obliges banks to file Suspicious Activity
Reports on its customers, banks have become virtual deputies in the
treasury department's war on uncontrolled financial transactions.  And this
war is increasingly spilling into cyberspace.

The conference underscored the fact that, paradoxically, we are heading not
toward more specific and well defined transaction monitoring regulations,
but less.  How so?  The problem with making regulations precise is that
what software algorithms can define, other algorithms can evade.  Instead,
regulation by "raised eyebrow" is becoming the norm.  Federal bank
examiners have been given significant latitude to invoke draconian
penalties against uncooperative banks.  Because bank officers have few
due-process protections under this regime, it is no surprise that most of
them have become sniveling toadies.  The objective is to insure that banks
"voluntarily" introduce even more aggressive, unpredictable, and intrusive
monitoring than the government would ever dare mandate.  And to make sure
nothing slips through the cracks, human surveillance will be supplemented
with artificial-intelligence agents that can perform pattern analysis on
the aggregate flow of electronic transactions, flagging anything remotely
suspicious.  George Orwell would be impressed.

Lest you think that all of this is motivated solely by the drug war,  a
visit to the Treasury Department's Financial Crimes Enforcement Network
(FinCEN) homepage
(http://www.ustreas.gov/treasury/bureaus/fincen/facts.html) should open
your eyes.  This battle is not just about drug prohibition, a crime the
Treasury Department would have to invent if it didn't already exist.  The
real struggle is about the future of tax compliance, and it has you in its

A famous Revolutionary War era pamphleteer, writing under the pseudonym
"Brutus", perhaps said it best 200 years ago when he wrote - "The national
government through its taxing power will introduce itself into every corner
of the city and country.  It will take cognizance of the professional man
in his office or his study;  it will watch the merchant in his store;  it
will follow the mechanic to his shop and his work, and will haunt him in
his family and his bed;  it will be the constant companion to the
industrious farmer in his labour;  it will penetrate into the most obscure
cottage;  and finally it will light upon the head of every person in the
United States.  To all these different classes of people and in all these
circumstances on which it will attend them, the language in which it will
address them will be GIVE! GIVE!"

What Brutus didn't know and what the cypherpunks foresee is that one day
strong encryption will make it impossible to spy on our activities in
cyberspace.  Heightened conflict is inevitable.  Expect the rhetoric to get
a lot hotter as the government spinmeisters labor to keep us focused on
public enemies while frantically trying to keep its hand in every citizens
pocket and its eyes on every bankbook.

# # #

Bill Frezza is president at Wireless Computing Associates and co-founder of
the online forum DigitaLiberty.  The opinions expresses are his own. Frezza
can be reached at [email protected]

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