Data Mining and Data Warehousing Might Just Protect Your Identity, Someday

In dealing with financial activities, our law enforcement/intelligence community is someplace between Get Smart and Mission:Impossible, depending on which story you read in the newspaper.

Eighty-one people in 17 states used a California woman's Social Security number, according to the AP on June 18, 2006. You'd think the IRS or Social Security Administration would notice that 81 jobs falls outside the normal range of jobs. Maybe even past 3 standard deviations above the mean number of jobs that people hold in a given time period.

"They knew what was happening but wouldn't do anything," said Schmierer, 33, a housewife in this San Francisco suburb. "One name, one number; why can't they just match it up?"

Then on June 23, the New York Times breaks a story about how the Treasury is overseeing a CIA program that monitors data going through the Society for Worldwide Interbank Financial Telecommunications. What do these reporters think FinCen does? They look for the same kind of activity that the NY Times-revealed program does, except they've been doing it a lot longer than the CIA.

A former compliance officer for a major brokerage once told me that you might get away with insider trading once. After that the investigators would know the people with whom you attended kindergarten and might be in a position to give you insider information. That's link analysis.

The last time I bought AMEX traveler's cheques it took half an hour because of the paperwork required by the bank to satisfy post-9/11 financial tracking regulations, so it doesn't surprise me that the intelligence community is monitoring international transactions. (The paperwork is so tedious that I'm going to carry cash more often than not.)

Our government can access tons and tons of data about every transaction that travels across our borders, but without efficient algorithms for flagging suspicious activity, it will all be useless. Placing every tax return and W-2 statement into a single data warehouse would be academic. Yahoo and Google probably generate more data in a week than all our tax returns and W-2s annually. You would think the Social Security Administration would be able to see the fraud in their systems. The ACLU wouldn't even be able to argue that our government isn't allowed to look at its own data.

Once you loaded the data, a few queries could spit out suspicious Social Security Number users in a day or two. Again, the budget for this would be under a million or two.