Mon Jan 1, 0001

Social Credit Parallels and FinCEN / Bank Secrecy Act

China’s Social Credit System

Launched formally 2014 (State Council plan). Aggregates government and commercial data to rate individuals and businesses. Consequences for blacklisted individuals:

  • Airline ticket purchases blocked 23 million times (as of 2018, National Public Credit Information Center)
  • High-speed rail blocked 6 million times
  • Throttled internet speeds
  • Exclusion from private schools
  • Public naming on court-maintained defaulter list

Western Analogs

FICO Scores

Created by Fair Isaac Corporation (1989). Used by 90% of top US lenders. Affects mortgage/rental eligibility, auto loan rates, employment screening, insurance premiums.

Insurance Telematics

Progressive Snapshot (2011), State Farm Drive Safe & Save. Real-time driving data (speed, braking, time of day). LexisNexis aggregates into C.L.U.E. Auto report following individuals across insurers.

Tenant Screening Databases

CoreLogic, TransUnion SmartMove, RealPage. Compile eviction filings including dismissed cases. Kleysteuber (2012, Yale Law & Policy Review): eviction records follow tenants 7+ years regardless of outcome.

Employment Background Checks

NCLC “Broken Records” (2013): FBI rap sheets ~50% lack final disposition data. Dismissed charges and acquittals appear as open arrests. EEOC guidance (2012) warned against blanket exclusions based on arrest records.

Uber/Lyft Ratings

Riders below ~4.6 stars may face driver refusals or deactivation. Uber confirmed (2019) consistently low-rated riders could lose platform access.

Academic References

  • Shoshana Zuboff, The Age of Surveillance Capitalism (2019)
  • Virginia Eubanks, Automating Inequality (2018)

FinCEN / Bank Secrecy Act

Bank Secrecy Act (1970)

Requires CTRs (Currency Transaction Reports) for cash transactions over $10,000. FinCEN receives ~15-16 million CTRs annually (FY2019).

Structuring — 31 U.S.C. 5324

Enacted 1986 (Money Laundering Control Act). Federal crime to break up transactions to avoid CTR filing, even if money is entirely legal. Penalty: up to 5 years.

Notable Structuring Cases

  • Dennis Hastert (2015): Indicted for structuring $1.7 million in withdrawals to conceal payments. Pled guilty, sentenced to 15 months.
  • Carole Hinders: Owner of Mrs. Lady’s Mexican Food, Spirit Lake, Iowa. IRS seized $33,000 in 2013 for cash deposits below $10K. No criminal charges. Resolved after Institute for Justice litigation.
  • Terry Dehko: 70-year-old owner of Schott’s Supermarket, Saginaw, Michigan. IRS seized $35,000 in 2013 for alleged structuring. No criminal allegation. Resolved after Institute for Justice litigation.

Civil Asset Forfeiture

Treasury Inspector General (2015): IRS Criminal Investigation seized $17+ million in 600+ structuring cases (2012-2014) where no criminal activity was alleged.

FinCEN Files (September 2020)

BuzzFeed News and ICIJ obtained 2,100+ SARs showing banks flagged $2+ trillion in transactions (1999-2017) as potentially illicit but continued processing. Banks implicated: JPMorgan Chase, HSBC, Deutsche Bank, Bank of New York Mellon.

Sources

  • FinCEN annual reports
  • Treasury Inspector General (2015)
  • BuzzFeed News / ICIJ FinCEN Files (September 2020)
  • Institute for Justice (Hinders, Dehko cases)
  • NCLC “Broken Records” (2013)
  • EEOC guidance (2012)