Inflation Invades Our Privacy: "... It is not just our wallets that are paying the price. For more than 50 years, inflation has helped the U.S. government increase surveillance under the Bank Secrecy Act by silently increasing the activities banks must report in their effort to counter financial crime.".

• Author: Anthony, Nicholas

THE HIDDEN TAX of inflation has been a little less hidden lately. From grocery stores to gas stations, people are seeing prices rise before their eyes. Yet, it is not just our wallets that are paying the price. For more than 50 years, inflation has helped the U.S. government increase surveillance under the Bank Secrecy Act by silently increasing the activities banks must report in their effort to counter financial crime.

One of the key requirements of the 1970 Act was that banks must report to the government any time a customer's financial activity crosses any number of thresholds. For instance, banks are required to file currency transaction reports (CTRs) whenever a customer makes a cash transaction of $10,000 or more, or multiple cash transactions in a single day that add up to that amount. The result of the law is that thousands of reports are filed every day against Americans merely for using their own money.

What does inflation have to do with the reports? The $10000 threshold was set 52 years ago. If it were adjusted for inflation all this time, the threshold would be nearly $75,000 today. So, while it may have been politically feasible to set a "high" threshold of $10,000 in the 1970s when you could buy two brand new Corvettes for that price, the threshold should have been designed with an adjustment for inflation so it would change to reflect shifts in the economy.

Without that adjustment, as financial writer J.P. Koning has described, "This means ever more invasions of privacy and higher costs of compliance." Each year with inflation is another year that the government is granted further access to people's financial activity.

More people are taking notice, though. The issue came up multiple times during a recent congressional hearing. Reps. Barry Loudermilk (R.-Ga.), Joyce Beatty (D.-Ohio), French Hill (R.-Ark.), Bryan Steil (R.-Wis.), and Roger Williams (R.-Texas) all were right to express concern over what is at best an administrative oversight and at worst a planned expansion of financial surveillance without public notice.

However, it is not just an issue of unjust surveillance and rising compliance costs. The artificially low threshold also forces the Financial Crimes Enforcement Network (FinCEN) to face an ever-expanding workload--something the cash-strapped agency cannot afford to engage in. "Finding a needle in the haystack is dependent on a number of things," said Rep. Steil at the hearing, "One of mem being how big the...