Though most people do not know it, financial institutions are required by the
federal government to spy on their customers. Congress authorized the Treasury
Department to require them to do so in the Bank Secrecy Act.
The Bank Secrecy Act authorizes the Treasury Department to require financial
institutions to maintain records of personal financial transactions that "have
a high degree of usefulness in criminal, tax and regulatory investigations and
proceedings." It also authorizes the Treasury Department to require any financial
institution to report any "suspicious transaction relevant to a possible violation
of law or regulation." These reports, called "Suspicious Activity Reports" are
filed with the Treasury Department's Financial Crimes Enforcement Network ("FinCEN").
This is done secretly, without the consent or knowledge of bank customers,
any time a financial institution decides that a transaction is "suspicious." The
reports are made available electronically to every U.S. Attorney's Office and to
59 law enforcement agencies, including the FBI, Secret Service, and Customs Service.
A law enforcement agency does not have to be suspicious of an actual crime before
it accesses a report, and no court order, warrant, subpoena, or even written request
is needed. Law enforcement agencies can, and allegedly do, download the entire
harvest of new information from FinCEN whenever they want it.
The SAR Activity
Review — Trends, Tips and Issues, Bank Secrecy Act Advisory Group (October, 2000)
Threats to Financial Privacy, Statement of the Hon. Ron Paul of Texas,
Congressional Record (October 19, 2000)
before the U.S. House Committee on Banking and Financial Services Regarding the Bank
Secrecy Act by Solveig Singleton, Cato Institute (April 20, 1999)
on Financial Privacy, Reporting Requirements Under the Bank Secrecy Act, and the
"Know Your Customer" Regulations before the House Banking Committee Subcommittees
on General Oversight and Investigations, and Financial Institutions and Consumer
Credit by Gregory T. Nojeim, Legislative Counsel, American Civil Liberties Union,
Washington National Office (April 20, 1999)