Eliot Spitzer’s financial transactions flagged him. Could yours?

I heard an interesting piece of news about Eliot Spitzer, the governor of New York’s call girl shenanigans. As one reporter explained in an NPR segment, one of the reasons he got caught is because his financial transactions flagged him. We’ve posted before about how you end up with a file when you travel out of the U.S. It’s been that way ever since 2002. Our money transactions through a bank are also run through systems.

Generally, our transactions, the day to day ones, like when we buy groceries at a store by swiping a debit card, are passed on without a blink of an eye. Most transactions are this way unless we happen to be a PEP. A PEP is a “politically exposed person” who is in a position of power where that person could possibly be involved in suspicious activities. If large amounts of cash are put into bank accounts–ding, ding, ding. We’ve got a red flag. The banks let the IRS know and there you have it, a possible scandal. That’s what happened in Eliot Spitzer’s case.

Those of us who don’t fit this category can benefit from the watch dog approach. Two years ago I got a call from my bank asking if I knew where my ATM card was. As it turned out, I had left it in a machine near a blood bank and a liquor store. Not the smartest move. In a couple of hours someone used the card as a debit card to the tune of almost $1,000. Because I rarely used my debit card, the purchases were at places where I hadn’t been before, and there were a few large ticket items, the bank recognized a problem and contacted me. The end result was that the money did come back into our account, but in the meantime, I had to borrow money from another fund to cover the missing money until everything cleared. In retrospect, it’s great not being a PEP. Life is simpler this way. (See NPR article and listen to the story by clicking here.)