Podcast Episode: How Private is Your Bank Account? Podcast Episode: How Private is Your Bank Account?

132 02/06/2022

Podcast Episode 108

Your friends, your medical concerns, your political ideology— financial transactions tell the story of your life in intimate details. But U.S. law has failed to protectthis sensitive data from prying eyes.Join EFF’s Cindy Cohn and Danny O’Brien as they talk to Marta Belcher, one of the leading lawyers working on issues of financial censorship and financial privacy, as they help you understand why we need better protections for our financial lives—and the important role courts must play in getting things right.

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When the Supreme Court considered the issue of financial privacy under the Bank Secrecy Act in the 1970s, we were living in a really different time. Online shopping, Apple Pay, and tools like PayPal and Venmo didn’t exist yet. But even as our financial lives have become increasingly complex, digital, and detailed, the Supreme Court hasn’t revisited its approach to our rights. Instead it has allowed this information to be handed over by default to the government, ensnaring hundreds of millions of nonsuspect people instead of just carefully targeting a few suspects . Marta thinks it’s time to revisit this situation.

Marta offers a deep dive into financial surveillance and censorship. In this episode, you’ll learn about:

Belcher serves as general counsel of Protocol Labs, chair of the Filecoin Foundation, and special counsel to the Electronic Frontier Foundation. She was previously an attorney focusing on blockchain and emerging technologies at Ropes & Gray in San Francisco.She has spoken about blockchain law around the world, including presenting during the World Economic Forum, testifying before the New York State Senate,speaking in the European Parliament, and testifying before the United States Congress. You can find Marta on Twitter @MartaBelcher.

If you have any feedback on this episode, please email podcast@eff.org. You can find a copy of this episode on the Internet Archive.

Below, you’ll find legal resources—including links to important cases, books, and briefs discussed in the podcast—as well as a full transcript of the audio.

This podcast is licensed Creative Commons Attribution 4.0 International, and includes the following music licensed Creative Commons Attribution 3.0 Unported by their creators:

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Financial Surveillance:

Payment Processors and Censorship:


Third-Party Doctrine:


Marta: When you're going about your life and you're engaging in financial transactions, all of that data is really exposed. Our financial transactions really paint an intimate portrait of our lives. Our financial transactions really expose our religious beliefs or our family status or a medical history, our location. And these are things that I think are very sensitive, and that should have full fourth amendment protection. These are things that ought to be private.

Cindy: That’s Marta Belcher. One of the lawyers pioneering privacy and user freedom in the emerging world of blockchain technologies. She’s here to explain why financial privacy is vital for everyone and how the digitization of our financial lives has begun to erode that privacy and with it the protections that activists and organizers and all the rest of us need all around the world.

Danny: Marta will also explain the ins and outs of important legal cases that have undermined our financial privacy.

Cindy:I'm Cindy Cohn. And I'm the Executive Director of the Electronic Frontier Foundation.

Danny: And I'm Danny, O'Brien.Welcome to how to fix the internet, a podcast of the Electronic Frontier Foundation.

Cindy: So we are delighted to have Marta with us today to talk about financial surveillance, Marta and EFF. We go back a long way. You were an intern with us, way back when you were in law school, but since then you've blazed a trail that's been just so fun for us to watch. You recently testified before Congress on financial privacy and the practical uses of cryptocurrency.

And before that you testified before the New York legislature.

So we're official about it, Marta is the general counsel to Protocol Labs, and she serves as the chair of the board of the File Coin Foundation.

Danny: Where I should add you recently hired me. I don't know whether that's still in your good books there, Cindy.

Cindy: We're working our way to forgiving Marta about that. But all along the way, you've been one of EFFS official advisors in this space as our special counsel and at each step of the way we've relied on your wisdom, and honestly, the feeling that you were just living a little further into the future than the rest of us. So Marta, thank you for coming on the podcast.

Marta: Oh, my gosh. Thank you so much for having me. I am so excited to be here and to get to talk to some of my favorite people on the planet.

Cindy: Oh, it's just a love fest all around. Let's talk about financial surveillance. What kind of information about how we spend our money in our financial businesses is out there and what's happening to it?

Marta: In the financial system financial transactions that go through certain intermediaries like banks, are often turned over to the government by default. So when there’s been a financial transaction over a certain amount for example, financial institutions will immediately turn that information over to the government, regardless of whether the government has specifically requested that information and without the government having to go and get a warrant to get that specific information. There's also requirements that for example, businesses, even if they receive something like cash, so not even electronic purchases, over a certain amount that they actually have to by default, file a form with the United States government that says I received a transaction in cash over X amount, and here's the identity of the person who handed me that cash.

Cindy: So when you talk about financial transactions, can you make that real for us? What are the kinds of things that the US government is getting access to?

Marta: The thing that we're talking about here is people's financial transactions, which includes for example, transactions that they're doing via their bank. It includes transactions that are done, for example, via cryptocurrency and that's things like, making purchases, sending money back and forth buying things, particularly if you're, if you're buying them electronically, but also if you're buying them with cash. So there's sort of a wide range of financial transactions that are subject to government surveillance.

Cindy: How did the United States get into this place where we treat financial transactions like they're, you know, not vitally private to people.

Marta: This is really one of the things that I find so frustrating about working on policy around financial surveillance is that for whatever reason, we seem to have gotten to a place where everyone accepts that financial surveillance in the banking system is totally normal.

Podcast Episode: How Private is Your Bank Account? Podcast Episode: How Private is Your Bank Account?

Cindy: What should people know about the bank secrecy act and how it plays into this whole story?

Marta: I think that the important thing for folks to know about the Bank Secrecy Act is that it effectively imposes reporting requirements on banks, so that for certain financial transactions those are turned over to the government without a warrant, en masse by default. So the issue here is that instead of law enforcement having to go get a warrant in order to get particular financial information, not only do they have the ability to just go to financial institutions and get that information, but actually it gets turned over to them by default.

Cindy: So a warrant means you have to go in one by one and get information about a particular crime or a particular person. A subpoena lets you go a little more broadly without having probable cause or a judge sign off. And what I'm hearing is the Bank Secrecy Act actually flips that on its head and it starts out that the government gets the information rather than them having to go through any hoops at all. Is that a fair summary?

Marta: Exactly. Exactly. And that is exactly why I think it’s pretty shocking. I think this is something that is in my view, clearly violates the fourth amendment and is something and I really find it shocking that this is something that we see in our society today as being totally normal and acceptable. That somehow financial surveillance is different than other surveillance.

Cindy: Part of the problem here is the Supreme court precedent. There is a decision from decades ago about this. Can you talk a little about that?

Marta: So there was a challenge to the Bank Secrecy Act in the 1970s. And unfortunately the Supreme court at the time held that because of a thing called the third party doctrine, as it existed at the time, the Bank Secrecy Act requirements that for example, banks turn over information about their customers by default, without a warrant, didn't violate the fourth amendment. And that is as a result of that 1976 Supreme court case, US v Miller

Cindy: If you look at the Miller case, and some similar cases, I mean, they really existed at a simpler time. That people's banking and their financial transactions, first of all, many of them were not available to their bank at all because things happened in cash. But otherwise things were just a simpler time. And I think we, I feel the same way about this with the financial side, as you do with people's email or other communications, you know, suddenly when things get digitized, there's much more information available. And so the default rule, which might've been okay in a simpler time, makes less and less sense in a more complicated time. Can you talk a little bit about the real world consequences of all this surveillance?

Marta: You know, you can imagine why a court in 1976 would say, okay, if you're turning over, details about people's financial transactions from, you know, from a bank to the government, the amount that you can learn about a person is pretty limited in 1976. Right. And of course, if you fast forward to today, you know, people's financial transactions really paint a detailed picture of their lives, right? It paints a picture of who they are interacting with, who they're associating with, what their religion is, what their location is.

Danny: How to Fix the Internet is supported by the Alfred P Sloan foundations program in the public understanding of science enriching people's lives through a keener appreciation of our increasingly technological world and portraying the complex humanity of scientists, engineers, and mathematicians.

Cindy: It seems like part of this problem originates in the courts and in their interpretation of the Bank Secrecy Act. So let's, let's drill down a little bit, you know, a lawyer to lawyer with lots of non lawyers listening. The core thing here is something we call the third party doctrine, which provides that your fourth amendment rights end when a third party has your data. This is something EFF has worked to end for a very long time. And for those of you that have listened for a while, it was the topic of episode 3 of How to Fix the Internet with our friend Jumana Musa. So tell me about how the third party doctrine applies in the context of financial records.

Marta: Yeah, absolutely. So, I mean, going back even further, the fourth amendment really requires that law enforcement obtain a warrant supported by probable cause before they are conducting a search or seizure. And so why is it that in the financial system, law enforcement can engage in mass surveillance of bank customers without a warrant? So the answer is: the third-party doctrine, which is the idea that people don't have a reasonable expectation of privacy in the data that they share with a third party, like a bank. And so that was why that was what the Supreme court was relying on in 1976 in US v Miller when it held that the Bank Secrecy Act didn't violate the fourth amendment, it was because of the third party doctrine.

Cindy: The Miller case is interesting because it was about the cops trying to figure out whether somebody was illegally distilling whiskey. And then if you look at the case, they actually probably could've gotten a warrant. They knew a lot about this guy. The thing that we're arguing for is the difference between the cops having free range access to people's financial information and the cops having to do a probable cause warrant. And in most of these situations, if you drill down, if the police could have easily made their case to a judge, and just didn't want to. Again, I think a lot of this stuff around financial privacy really comes down to things that make cops jobs as easy as possible. But the entire thing about civil liberties is to make the cops’ job harder so that we have a zone of privacy that we can live in.

Are we safer because they have to automatically report any transaction of $10,000 or more when we know that the vast majority of those are going to be perfectly innocent? Or would we be safer if we made the cops actually do the work that they need to do to do probable cause and identify the suspects through all the other ways in which you can investigate. And it, of course, it's an important issue about all the other innocent people who are sideswiped along the way.

Marta: Yeah, I think that's really well put. And I think the thing that I would expand on is fundamentally if the thing we are optimizing for is solving every single crime, we could live in a society where people have cameras following them around at all times in their homes and everything is recorded, right? So there's a spectrum. And the way that the constitution balances civil liberties with the interests of enforcing the laws is the fourth amendment, which is to say that if there is probable cause law enforcement can go and show there's probable cause and get a warrant in order to obtain information. And so it's really the difference between does law enforcement need to go get that warrant to show probable cause in order to obtain information, which is what the fourth amendment requires, or do they have access to that information by default, even when there is no probable cause? Do they have the ability to look at people's transactions, even when there's no reason to believe that those transactions are in any way associated with crime? And that's really fundamentally the issue from a civil liberties perspective.

Cindy: I guess that leads to the obvious question. Do you think this is all constitutional?

Marta:I absolutely do not think that the Bank Secrecy Act, as it's applied today,is, is constitutional. And, you know, unfortunately the Supreme court disagreed with me on that, but that was back in 1976. I really do think that the court would come to a different decision if it was faced with that challenge again for a variety of reasons. The extent to which the surveillance under the Bank Secrecy Act has expanded, but I think more importantly, and as a Testament to EFFs work in the decades since that Miller decision, the Supreme court has really issued strong pro-privacy opinions in multiple cases. So they've been chipping away at the third party doctrine in the context of the digital world. So for example, the Supreme court held in Carpenter v US that law enforcement must have a warrant in order to obtain location information from a cell phone company. And really, I think that goes to show that the information that could be gleaned from bank data in the 1970s is just a complete world away from the picture of a person's life that can be painted with access to digital financial transactions today.

Danny: There seems to be a sort of global spread in this assumption that financial data is fair game for any country. Are there any sort of examples that really bring home just what it means to have the local state be able to peer directly into your day-to-day transactions?

Marta: Last year when we had the Hong Kong protests there were these really powerful pictures that showed long lines at the subway stations. As these pro-democracy protestors were waiting to purchase their tickets with cash because they didn't want their electronic purchases to place them at the scene of the protest. And so for me, that really underscores the importance of the ability for people to engage in anonymous transactions for civil liberties, and really underscores that a cashless society or a society where all transactions are tracked is really a surveillance society.

Danny: Do you think that that cryptocurrency really addresses some of the sort of privacy issues?

Marta: I think the most important thing about cryptocurrency is that it takes the civil liberties enhancing benefits of cash and imports them into the online world. I think that for me is the most important thing about the technology and because of that ability to transact anonymously, cryptocurrency has become a target of regulators, lawmakers to try to expand this surveillance to the cryptocurrency space. But for me, the fact that cryptocurrencies can enable anonymous transactions is a feature, not a bug.

Cindy: Now we know cryptocurrency transactions can enable anonymity and transactions, but so far anyway, that's not really what we're seeing. Can you talk a little bit about you know, how the laws interacted with it so far, the, you know, specifically I'm thinking about the Gratkowski case.

Marta:So I think first of all, it's important to say that not all cryptocurrency transactions are anonymous, many of them are actually pseudonymous. So Bitcoin for example, the Bitcoin ledger, the Bitcoin blockchain is a publicly viewable ledger of all transactions. So you can actually go see that user 123 sent one Bitcoin to user 456. Right? And if you are able to figure out that Marta is user123, and Cindy is user 456, you can actually see anyone in the world can see that I have sent one Bitcoin to Cindy. And so what happens is you have these choke points such as cryptocurrency exchanges, which is where those cryptocurrency exchanges will do identity checks. In the Gratkowski case basically the law enforcement had gone to an exchange and basically done that. They had gone in and said we want to know who user 123 is. Right. And based on that, we're able to arrest this person. Now they could, as we've been discussing, they could have gone and gotten a warrant, but instead they just asked the exchange and the exchange just handed over that information. So the defendant, Gratkowski, challenged that based on the fourth amendment and that, went up to the Fifth Circuit court of appeals. Unfortunately the fifth circuit held that because of the third-party doctrine and because of US v Miller, the law enforcement did not need a warrant to go and get that information from the exchange. And I think that was the wrong decision and I think that that court really missed an opportunity to follow the Supreme court's lead in recognizingthat there are stronger privacy protections for digital data that's held by third parties.

Cindy: So let's go to my favorite part, which is how do we fix all of this? I think you've pointed to some ways. But let's, let's talk about them, what does the world look like if we get this right?

Marta: I think there are a couple of things. I think the big one is, you know, there's really no reason that we need to take the financial surveillance of the traditional banking system and extend it out to cryptocurrency, just in the, in the cryptocurrency context specifically. And so we could really utilize this technology that enables people to make anonymous transactions, and really utilize that for enhancing civil liberties. The thing that I hope will happen is that there will be a fourth amendment challenge to the Bank Secrecy Act, as it is currently applied. And that the Supreme court would come out differently today and would basically decide ifthe government wants to get this detailed financial information about bank customers, they do have to go get a warrant in order to do it.

Cindy: So, you know, in our future world, your transactions are your own, you get to buy what you want, whether that's a ticket to attend a protest or opening a bank account to start your opposition work against a dictator, or whether you just simply want to, you know, buy something without the government looking over your shoulder, you get to do all of that. You're free to do all of that. And if the government thinks you're doing something wrong, they have to go to a judge and get a warrant to get access to your information.

Marta: Right now, one of the other issues in this space beyond just financial surveillance is the amount of censorship by financial intermediaries. So we've seen repeatedly Visa and MasterCard and PayPal and other financial intermediaries cut off access to financial services for all sorts of different legal websites, legal speech, and merely because of their own sort of moral whim. So some examples are adult booksellers, social networks, whistleblower websites, have all sort of suffered from financial censorship.

Cindy: I think that the other piece of this, it's not only that the companies are engaging in kind of some moralistic decisions about who gets to do transactions and who doesn't. We have this thing that we call jawboning, right,which is kind of a newly emerging term for politicians leaning on platforms to cut some people off or limit what people can do, because the politician wants to make political points. And, this, I would say, tends to come up, around election time a lot. So I think the other thing that we get in this world is not only that the corporations don't feel a push to be moralistic about who gets to do financial transactions, but they also aren't vulnerable to pressure from governments, US and otherwise to do that for them to outsourcing the censorship that a politician can't do directly to a private company.

Marta: I think it's a huge vulnerability that the way that electronic payments work really make these payment systems a choke point for controlling online content. And we have seen, as you said, instances of government officials actually pushing for financial services to cut off particular websites, particular speech. Luckily, you know, thanks in part to EFF, submitting an Amicus brief in at least one of those cases, in the Backpage V Dart seventh circuit case, there have been findings that, um, doing so would violate the first amendment.

Danny: So I started this thinking of this sort of solution, this future as being kind of the same as what we have now, but in the world of cash, right. Cash is reasonably protected, but it seems like part of the solution would actually be broader than that. It would give us more choice and more alternatives in a digital world that you would not only just deal with the limitations of cash, but you would also be able to escape the limitations of credit card companies and you will be able to pick and choose, who to transact with based on what you want to do rather than what the credit card companies want you to do. Is that right?

Marta: I think that there's a really interesting question for advocacy organizations in the financial space as to are we going to draw the line at, well, whatever restrictions there are on cash that's okay. We can extend those to other types of technologies as well. Or are we going to take a stronger stance and say, you know, actually we think all of these types of reporting requirements, including those that apply to cash are violations of the fourth amendment and that that should not be extended into new technologies.

Cindy: So Marta, what values are we trying to preserve and support in this new world where we get it all right?

Marta: Fundamentally, this is about civil liberties and this is about people's ability to go about their lives without government surveillance. We may not think about money when we think about, for example, exercising our first amendment rights and engaging in politics. But in reality, all of these things do involve financial transactions, whether that be political expenses or things that reveal your religion or your sexual associations or who you associate with all of these things can be revealed by your financial transactions. And it's very important to be able to live in a world where you can engage in those transactions privately without those being surveilled by the government by default.

Cindy:Thank you so much Marta for taking this time and taking us through this tour of financial privacy. It's a tremendously important issue and sometimes it gets buried underneath a lot of the hype around cryptocurrency.

Where can people find you? I understand that you have your own podcast and that our own Rainey Reitman was recently a guest.

Marta: That’s right, we do have a podcast, the FileCoin Foundation as a podcast, it’s called the Future Rules, and not only has Rainey been a guest but also Danny has been a guest. You can definitely listen to that podcast.

Cindy: Wonderful, thanks again for taking the time to talk to us.

Cindy: Wow. That was so fun and so interesting. Marta really opened my eyes even a bit more about how critical financial privacy is to real privacy. And I was especially struck by the image of the protesters in Hong Kong, buying their tickets with cash, because as we all know, you can be tracked to where you are based on what you buy, and, you know, at that particular time, especially being at a protest in Hong Kong, it was tremendously dangerous.

Danny: And of course we have this background in preventing communication surveillance and all the arguments apply, right? Like actually tracking money lets you see everything about someone and everyone uses money in the same way as everyone has to communicate. It's not just criminals who use money and like every transaction over $10,000, you know, if the police talk about that, you go, oh yeah, $10,000, that's probably drugs. But actually of course, you know, houses, cars like, like monthly transactions. I'm not a rich person, $10,000 is still something that, you know, I run into occasionally. And everything else, and every credit credit card transaction, everything going to the government, getting stored in databases forever and ever. It's really sort of turned around my thoughts on this actually.

Cindy: You know, the thing that she really drove home is that, you know, this kind of financial surveillance, especially under the Bank Secrecy Act, it's mass surveillance, right? It is surveilling everybody first and then figuring out what you need second. There's millions, literally hundreds of millions of people who are innocent, who are caught up in this dragnet for the few people that they want to catch. And, and I honestly don't know that the case has been made that they couldn't catch these people any other way, most specifically by getting a probable cause warrant, which I think she told us over and over again was, you know, the thing that would switch this around from a situation in which there's a problem for a lot of people to something that's, you know, a reasonable law enforcement strategy.

Danny: It’s this classic problem of mass surveillance. Right. You're trying to tackle and find a thousand to 10,000 people who are doing a bad thing. And you're looking through millions of people's records in order to do that. The other thing I think is that in the same way, as we say, in communication surveillance, that surveillance leads to censorship, or at least you can't sensor without surveillance. If you can't see what websites people are visiting, then you can't censor them. And same thing here, right? Like if you have a basis that people have to share all their financial information with third parties, pretty soon, those third parties are going to have pressure put on them or just decide themselves that they don't want some kinds of business. Like you said, is it Jawboning, is that the phrase?

Cindy: Yeah, that's the phrase I just heard about it.

Danny: It's so Jawboning where, where Congress people like put pressure on, credit card providers, like Visa and MasterCard to throw sex workers or other people that other people don't like off the financial system. And you can only do that with this level of surveillance.

Cindy: Thinking about this, you know, the cryptocurrency and the blockchain technologies are really technologies, but what's become so clear about this is that we've got some legal case law, frankly, that was written in the 1970s or, or adopted in the 1970s, it's really getting in the way here in a context where it's really not appropriately applied. So this is one where we think about, you know, again, we do this a lot, but Larry Lesig’s four areas we've got code, we've got law, we've got social norms and we've got markets. We've got code doing, giving us potentially some really good things and we need to get the law out of the way.

Danny: Right. And the norms, I think, beginning to rethink again, just how intrusive all of this surveillance is, and I think that that might be a little uphill work, right? Because people, people just think of it this way, but, but if we're going to build a better future, we have to start thinking and putting our own civil liberties first.

Danny: And thanks to Nat Keefe and Reed Mathis of Beat Mower for making the music for this podcast. Additional music is used under a Creative Commons license from CCMixter. You can see the credits and links to the music in our episode notes. Please visit eff.org/podcasts where you’ll find more episode, learn about these issues, you can donate to become a member of EFF, as well as lots more. Members are the only reason we can do this work plus you can get cool stuff like an EFF hat, an EFF hoodie or an EFF camera cover for your laptop.

How to Fix the Internet is supported by the Alfred P Sloan foundation’s program and public understanding of science and technology. I'm Danny O’Brien.I'm Danny O'Brien.

Cindy: and I'm Cindy Cohn.

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