Spitzer and the BSA
No, I’m not about to introduce another titillating scandal about Elliot Spitzer. That “BSA” doesn’t stand for the “Boy Scouts of America”, but the “Bank Secrecy Act”, the general term for the array of laws requiring banks to report on suspicious financial transactions.
I’m not one to focus too much on personal failings of our politicians, seeing most of their failings as simply reflections of our common, and failed, human natures. But it is instructive that an expert in criminal investigations was tripped up by laws that have been on the books for some 30 years. Laws that he himself used to identify crime.
Andrew Cochran at Counter Terrorism Blog has a good explanation of the laws and their origin:
These federal laws and regulations were added in layers as new transactions arose which exposed loopholes in existing law. In 1970, Congress passed the first such law, the Currency and Foreign Transactions Reporting Act, also known as the “Bank Secrecy Act” (BSA), with requirements for recordkeeping and reporting by banks and other financial institutions to identify the source, volume, and movement of funds for investigatory purposes. The BSA implemented the filing of Currency Transaction Reports, or CTRs, for currency transactions in excess of $10,000. The Money Laundering Control Act of 1986 imposed criminal liability for any person knowingly assisting in money laundering or structuring transactions to avoid reporting under the BSA. It also directed banks to establish and maintain BSA compliance procedures. In January 1987, all federal banking agencies issued regulations requiring banks to develop procedures for complying with the BSA and other AML requirements. By 1996, the federal financial regulators mandated that all banking organizations report any instances of known or suspected criminal or suspicious activity to the Treasury Department by filing a Suspicious Activity Report, or SAR … Unlike the CTR, there is no threshold dollar amount for filing a SAR. It was this form, filed by Spitzer’s bank, which triggered the investigation.
Spitzer kept the financial transactions under the $10,000 threshold, but exhibited suspicious activity when he requested the bank remove his name from the records. It was that suspicion … legally binding the bank to file the SAR form … that led to his downfall.
Beyond the general feeling of schadenfreude expressed in the media, one gets the feeling that this is more than just a tawdry affair.
It could be that Spitzer used government resources to pay for his call girl, but Spitzer is rich and can easily afford the price he paid for sex. It could be that there are other corruption charges pending, but we don’t know that. I’m not sure that, in the end, we’ll end up with more than just a man, a call girl, and the real victims, his wife and children.
On the moral level, there is a lesson here. It may be lost in the irony of an inquisitor being subject to the inquisition, but it remains a warning for all men: moral standards apply to us all, and no matter how much power we amass, no matter how much wealth we attain, it is the way we treat our wives and children that matters. And visiting a hooker betrays them all.
