Financial Privacy and the Theory of High-Tech Government Surveillance

How would you like the government to have access to the records of every purchase you have ever made? Part I of this paper describes the trend toward more electronic and more traceable payments over time, and identifies some of the harms that can occur when an individual's transactions records are readily accessible. Part II introduces the metaphor of data entering a 'vault 600 feet down,' and uses that metaphor to understand the range of ways that data can 'reach the surface,' or become accessible. Part III systematically examines the advantages and disadvantages of government access to financial transactional data. Advantages come in administration of the tax system, in avoiding welfare and other benefits fraud, and in money laundering and other rules that seek to detect, deter and prove illegal activity. These advantages, however, can be offset by troublesome ways that government officials and unauthorized third parties might misuse financial data. Part IV expands the analysis to high-tech government surveillance more generally. The arguments developed in Part III apply to key escrow, tracking of cellular phone location, transaction-generated information for telephone calls, and other surveillance systems. One important conclusion is that the government should have a greater burden in order to get 'real time' access to data than to get 'audit trail' access after the fact.