In speaking with, advising, and defending countless security clearance holders each year, I’ve heard most of the rumors and myths that circulate about the security clearance process.
One of the most persistent rumors is that the government monitors clearance holder banking records and/or maintains some sort of secret database from which it culls things like clearance holder tax and consumer debts.
In fact, there is a minimal degree of truth in the rumor as it pertains to banking records. The Financial Crimes Enforcement Network, or “FINCEN” does track banking transactions in excess of $10,000, and clearance holders may be asked about the nature and source of such transactions during regular background investigations.
You may be surprised to learn, however, that the government obtains information about your debts, any civil court judgments or tax liens against you, and your broader financial record in a decidedly less high-tech way – from your credit report.
What Changes in Credit Monitoring Mean for Your Clearance Reporting
That’s partially about to change in light of a recent decision by the three major credit reporting bureaus – Experian, TransUnion, and Equifax – to stop reporting most tax liens and civil court judgments due to concerns about information reliability. The move stems from a settlement by the credit bureaus with a coalition of 31 state attorneys general after repeated complaints were filed against the bureaus for failing to remove outdated or inaccurate entries on consumer credit profiles. (Liens and judgments which include a unique debtor identifier, like a Social Security number, will remain).
“The change will benefit borrowers with negative public records, but it will also help thousands of people who have battled, often in vain, to have incorrect information removed from their files,” reported the New York Times,
Left out of that equation is the federal government and its compelling need to verify the information security clearance applicants list (or don’t list) on their SF-86 form. Prior to reading about these changes in the New York Times, I was admittedly unaware of them; and, conversations with multiple federal security officials made clear that they were caught equally flat-footed by the changes made effective July 1.
The result is that the government is now far more reliant on applicant self-reporting of financial problems on the SF-86 – amplifying already existing criticisms of the effectiveness of the background investigation process – and manual records checks by investigators.
Problems with the latter are many. For example: tax liens are often filed with county assessors or clerks, whose records are not typically searched; applicants may have moved multiple times since a judgment was filed, resulting in the prior jurisdiction being outside of “scope” for the current investigation; and, the IRS does not provide tax records to federal background investigators without a specific release called a “4056-T” – something that further extends an already horribly backlogged investigation process and would be a logistical nightmare if implemented for all 5 million security clearance holders in the United States.
For some applicants, the ability to escape scrutiny for civil judgments and tax liens is now very real. But failing to report such information on the SF-86 remains a federal crime, and the government must ultimately craft a means of recapturing this information to avoid further damaging the credibility and utility of its personnel security program. Big data brokers like Lexis Nexis and others will no doubt rush to fill that gap, perhaps further driving the investigative process into the cyber realm. Ultimately, however, the government’s response – not to mention the accuracy of such third-party data sources – remains to be seen.
This article is intended as general information only and should not be construed as legal advice. Consult an attorney regarding your specific situation.
