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California Bankers Association :

Page

Letter to Senator Proxmire from Frederick M. Pownall...

268

Statement of Andrew J. Shepard, chairman of the board, Exchange

Bank of Santa Rosa, Calif.-

263

California Savings & Loan League, statement of Thomas M. Clusserath,
assistant vice president----

272
Cannon, Howard W., U.S. Senator from the State of Nevada, statement
received for the record..

330

Decision of three-judge court in California--

277

Ervin, Sam J., Jr., U.S. Senator from the State of North Carolina, ex-

change of letters with the Department of the Treasury-

31

Federal Rules of Civil Procedure, excerpts---

66

Federal Rules of Criminal Procedure, excerpts.

65

First National Bank Lincoln, letter received from Walter E. Nolte, vice

president

331

Hruska, Roman L., U.S. Senator from the State of Nebraska, letter re-

ceived for the record.--

331

Independent Bankers Association of America, statement of H. L. Gerhart,
Jr., president---

285

Justice Department:

Correspondence with:

Securities and Exchange Commission..

122

Senator Bennett-

128

Senator Tunney-

126, 127

Statement of William S. Lynch, Chief, Organized Crime and Racket-

eering Section, Criminal Division --

106

Liberty Lobby, statement of Warren S. Richardson, general counsel..

289

Marin Independent Journal, reprint of article_

28

Mathias, Charles McC., Jr., U.S. Senator from the State of Maryland :

Letter to the Treasury Department--

59

Prepared statement-

39

Miller, Arthur R., professor of law, Harvard University :

Letter to Senator Proxmire.

133

Letter to Senator Tunney-

162

Statement

144

National League of Insured Savings Associations, letter and statement re-

ceived for the record..

319

Nebraska, letter from attorney general Clarence A. H. Meyer--

Paton's Digest, reprint of paper titled "Disclosure of Credit and Other

Information Concerning Customers”.

238

Rules of Court of the Court of Claims, excerpts_

67
Rules of Practice before the Tax Court, excerpt_

68
Securities and Exchange Commission, correspondence with:
Department of Justice..

122
Senator Proxmire_--

124

Treasury Department:

An overview of the currency and foreign transactions reporting

regulations

297

A. Those affected by act and regulations.

294

B. Report of currency transactions by financial institutions_.

294

C. Reports of transportation of currency or monetary instruments

by persons.

294

D. Reports of interest in foreign financial accounts by persons. 294

E. Recordkeeping by financial institutions..

294

F. Additional recordkeeping by banks---

295

G. Additional recordkeeping by securities brokers and dealers.. 295

H. Variations from regulations---

295

I. Civil and criminal penalties.

295

J. Issuance of search warrants..

295

Currency and foreign transactions reporting act statute (Titles I,

II and IV of Public Law 91–508).

296

Treasury Department regulations issued to implement Titles I and

II of Public Law 91-508__

307

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99

Treasury Department—Continued

Page Currency and foreign transactions reporting forms..

313 (1) Form 4683_

313 (2) Form 4789_

315 (3) Form 4790_

317 Bureau of Customs cases involving bank records_

104 Eugene T. Rossides, Assistant Secretary : Exchange of letters with Senator Tunney

26, 55 Letter to Senator Proxmire----

48, 105 Prepared statement..

70 Legislative history of Public Law 91-508_ Proposed amendments to currency and foreign transactions regulations

105 Recent Internal Revenue Service cases involving bank records.

93 Samuel R. Pierce, Jr., General Counsel, letters to : Senator Ervin...

32 Senator Tunney

29 Summary of the results of the task force study on recordkeeping and reporting by financial institutions..

60 William L. Dickey, Deputy Secretary for Enforcement, Tariff and

Trade Affairs and Operations, letters from U.S. Savings and Loan
League

285
Tunney, John V., U.S. Senator from the State of California :
Correspondence with:
Arthur R. Miller, professor of law, Harvard University.

162 Justice Department..

126, 127 Treasury Department

26, 55 Prepared statement

21 Unitarian Universalist Association: Affidavit

164 Letter to Senator Proxmire.-

175 Statement of Rev. Christopher G. Raible

164 United States Code, reprint from Title 5_.

68 U.S. District Court, northern District of California, memorandum of decision

277 United States Savings and Loan League :

Letter to Treasury Department from William C. Prather, general
counsel

285 Statement of Stephen Slipher, legislative director

284 Wisconsin, letter from attorney general Robert W. Warren..

333

AMEND THE BANK SECRECY ACT

FRIDAY, AUGUST 11, 1972

U.S. SENATE, COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS, SUBCOMMITTEE ON FINANCIAL INSTITUTIONS,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to call, in room 5302, New Senate Office Building, Senator William Proxmire, presiding.

Present: Senators Proxmire and Bennett.
Also present : Senators Mathias and Tunney.

Senator PROXMIRE. The subcommittee will come to order. I apologize for being late. I had a speech to give on the floor. The Subcommittee on Financial Institutions will begin 2 days of hearings on regulations issued by the Department of the Treasury to implement the Currency and Foreign Transactions Reporting Act of 1970, otherwise known as the Bank Secrecy Act.

The hearings will also cover bills introduced to amend the Bank Secrecy Act including S. 3814 by Senator Tunney and S. 3828 by Senator Mathias.

The principal purpose of the Bank Secrecy Act is to enable law enforcement authorities to obtain the evidence needed to prosecute white collar criminals. While the act was concerned with the illegal use of secret foreign bank accounts, it was also concerned with domestic criminal activities including tax evasion, securities manipulation, and other white collar crimes.

The act was designed to achieve these objectives by requiring financial institutions to maintain certain records which the Secretary of the Treasury determined to have a high degree of usefulness in tax, criminal, or regulatory proceedings.

In prescribing these record keeping requirements, Congress clearly did not intend for law enforcement officials to have access to bank records without obtaining a subpena.

For example, the report of the Senate Banking Committee on the legislation states and I quote:

Access by law enforcement officials to bank records required to be kept under this title would, of course, be only pursuant to a subpena or other lawful process as is presently the case. The legislation in no way I am still quoting the words of the committee, authorizes unlimited fishing expeditions into a bank's records on the part of law enforcement officials.

Unfortunately, this legislative intent may not have been realized in the regulations issued. The regulations do not outline the procedures whereby Federal law enforcement officials can obtain access to the records which banks and other financial institutions are required to keep. Nor do the regulations prohibit a bank from releasing these records unless pursuant to a subpena or other legal process.

I believe we need to take necessary action to safeguard the regulation. A strong argument has been made that unlimited access to these records can invade a person's right of privacy and have a chilling effect on freedom of speech and association.

On the other hand, we should not let these concerns obscure the basic purpose of the legislation nor should we repeal or substantially weaken the substantive provisions of the legislation. I am hopeful that these hearings can point the way toward accommodating the individual's right of privacy with the legitimate needs of law enforcement officials to prosecute white collar criminals.

(The two bills being considered are reprinted as follows:)

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