Right On The Money

[Tigermike 3,034]

Right On The Money

The Bush administration's tracking of international financial transactions was legal, congressionally endorsed, and largely transparent.

by Adam J. White

06/28/2006 12:00:00 AM

SHORTLY AFTER SEPTEMBER 11, 2001, the Treasury Department began to monitor international financial transactions of persons suspected of having terrorist connections. According to Treasury, the program successfully identified terrorists. Like other disclosed counterterrorism programs, the program's legality was immediately challenged. But critics have their work cut out for them: The program appears to be both constitutionally sound and congressionally authorized. Furthermore, the Bush administration has repeatedly indicated that such surveillance was underway.

The overview of the Terrorist Finance Tracking Program (TFTP), as reported last Friday and largely confirmed by Treasury officials, is fairly straightforward. The United States secured information on international financial transactions from the Society for Worldwide Interbank Financial Telecommunication (Swift), a Belgian consortium founded in 1973 by the world's banks. Pursuant to administrative subpoenas, Swift provided to Treasury electronic financial data that would be searched for terrorist-related information.

The details and circumstances surrounding TFTP have only begun to come to light and to say that the program appears to be on firm legal ground generally is not to say that it has been applied legally in every respect on every occasion. But on the evidence currently available, the objections raised to the program seem unfounded:

The program did not violate the Constitution. The ACLU categorically denounced the TFTP as a violation of the Constitution, saying that "The invasion of our personal financial information, without notification or judicial review, is contrary to the fundamental American value of privacy and must be stopped now."

But the program's constitutionality is incontrovertible. In U.S. v. Miller (1976), the Supreme Court held in no uncertain terms that the Fourth Amendment's protection against unreasonable searches and seizures did not protect bank customers' financial records. Customers have "no legitimate 'expectation of privacy' in their [records]," because all such financial information is "voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business." In short, "[t]he depositor takes the risk, in revealing his affairs to another, that the information will be conveyed by that person to the Government." No reasonable expectation of privacy means no Fourth Amendment violation.

The ACLU also cannot support its statement that an administrative subpoena is somehow unconstitutional because it is issued from the executive, rather than the judicial, branch. Judicial oversight is not absent, because a court would review the subpoena if the Treasury Department sought to enforce it in court. And the Supreme Court made clear in See v. City of Seattle (1967), among other cases, that administrative subpoenas for the production of records or documents satisfy the Fourth Amendment so long as they are "sufficiently limited in scope, relevant in purpose, and specific in directive." As of yet there have been no suggestions that Treasury's subpoenas failed to meet that standard.

Congress authorized the program. Whereas the defense of other recently disclosed surveillance programs may depend in part on the president's authority to act in the face of congressional silence or disapproval, defense of the TFTP is simplified by Congress's express statutory authorization of the president to conduct this program. The International Emergency Economic Powers Act of 1977 (IEEPA) expressly affords the president power to investigate international financial transactions, including those of non-foreign persons, pursuant to a declared state of emergency. Section 1702(a)(2) empowers the president to compel production of such financial transactions, via administrative subpoenas.

The president certainly has satisfied the requirement that such investigations be undertaken pursuant to a declared national emergency. On September 23, 2001, the President Bush notified Congress and the general public that he would utilize the powers authorized under IEEPA in combating terrorism. He has announced the continuance of that emergency repeatedly--in 2002, 2003, 2004, and 2005. (A comparable state of emergency with respect to terrorists threatening Middle East peace has been re-announced annually since 1995.) These announcements cited, first and foremost, the IEEPA among the powers that the president intended to utilize; the use of his IEEPA powers was by no stretch of imagination "secret."

The IEEPA does place upon the president certain reporting requirements: Under Section 1703, he must report to Congress following any exercise of his IEEPA authority--but it does not require that he consult with Congress before exercising IEEPA authority. (It requires that he do so "in every possible instance," thereby excusing the lack of consultation where circumstances so prohibit.) Treasury undersecretary Stuart Levey stated that Congress's intelligence committees have been briefed repeatedly on the TFTP; whether these reports satisfied the statutory requirement remains to be seen.

In the weeks following 9/11, Congress acknowledged that bank records could be searched pursuant to the Global War on Terror. In enacting Section 357 of the PATRIOT Act, Congress amended the Financial Right to Privacy Act (RFPA) to waive otherwise applicable procedural requirements regarding searches of bank records pursuant to counterterrorism investigations and analyses. While RFPA is not immediately applicable to the TFTP--by the RFPA's definition, Swift does not appear to be a "financial institution"--Congress's approval of such inspection of bank records for counterterrorism purposes underscores the federal government's unified position that financial records are "fair game" for review in these circumstances.

YET CRITICISM PERSISTS, primarily along two lines. First, critics argue that the president should have sought specific congressional approval for this program. Second, it is argued that the TFTP is, statutory authorization aside, an "abuse of power."

For an example of the first criticism take the Washington Monthly's Kevin Drum:

The big problem with this is the Bush administration's insistence that it can conduct this kind of program without congressional approval. Why do we need legislation if the program is (probably) legal without it? Because we have only the Bush administration's word that they'll use this database solely for narrowly-targeted terrorism-related investigations--and human nature being what it is, that promise is likely to be broken at some point. Legislation that mandates appropriate judicial oversight is the way to handle things like this. Remember: Laws, not men.

Such criticism (echoed by the New York Times) is puzzling: Congress explicitly granted the president authority to undertake such broad searches of financial information pursuant to national emergencies. The president announced annually his intent to exercise that authority. Weeks after the president first announced such intent, Congress granted him comparable authority with respect to individual banks (when it amended the RFPA). It does not seem that either Congress was illegally circumvented or that Congress's will has been frustrated.

The laws are on the books, and by all appearances they authorize the TFTP. To suddenly declare those statutory authorizations null and demand that the president satisfy requirements utterly contrary to the statutes would be an affront to the rule of law.

Criticism that the TFTP is an "abuse of power" fails for similar purposes. The Bill of Rights does not prohibit this program; Congress has authorized such searches by enacting the IEEPA; and the president has satisfied the procedural requirements of the IEEPA. The TFTP program is not an "abuse" of power--it is the faithful execution of power.

Adam J. White is an attorney in Washington, D.C. The opinions expressed here are his own; he does not write on behalf of his employer. Treasury undersecretary Stuart Levey was a partner at the law firm that employs him before he began to work there.

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