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Branch and a lack of judicially or legislatively established principles to rely on in order to proscribe abusive practices under Public Law 91-508. The already inadequate legal structure will prove increasingly incapable of dealing with the situation as computerization comes to dominate financial record keeping and tax administration.

In The Assault on Privacy, I attempted to demonstrate that the existing patchwork of common-law remedies, constitutional doctrines, statutes and administrative regulations is not capable of dealing with the problems raised by the accelerating pace of federal information gathering and the emergence of computerized information systems. Today's legal structure is characterized by uncertain application, lack of predictability, frequent inconsistency, unawareness of the ramifications of the new communications media, and an almost total disregard for the individual's right to participate in information transactions that may have a profound impact on his life. To take but one of many examples of this, the existing common-law tort theories deal almost exclusively with the public dissemination of previously acquired data and ignore the implications of the unrestrained governmental collection of information and its secret use by a limited group. To be effective, a regulatory scheme must reach the latter problem; this simply may be impossible or may evolve too slowly from the right-to-privacy tort as we know it today.

Of course, the legal cupboard is not bare. The Supreme Court has recognized the individual's right to object to certain governmental attempts to extract information from him. Perhaps the most clearly developed of these notions is the citizen's right of associational privacy, which seeks to recognize the "vital relationship between the First Amendment freedom to associate and privacy in one's association." NAACP V. Alabama, 357 U.S. 449, 462 (1958). Thus, when the government attempts to gather data concerning an individual's association with a group dedicated to the advancement of certain beliefs in "political, economic, religious, or cultural matters," id. at 460, it must "convincingly show a substantial relation between the information sought and compelling state interest." Gibson v. Florida Legislative Investigation Committee, 372 U.S. 539, 546 (1963). These cases certainly contain the doctrinal seeds for curbing the excesses of those federal surveillance activities under Public Law 91-508 that are likely to inhibit the exercise of First Amendment freedoms. It must be noted, however, that the successful assertion of a violation of one's associational privacy appears to depend upon a showing that disclosure will result in a restraint

an individual's ability to exercise his freedom of association.

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Closely related to the right of associational privacy is another judicially recognized individual interest--the right to possess ideas and beliefs free from governmental intrusion. As the Supreme Court stated in Schneider v. Smith, 390 U.S. 17 (1968), First Amendment guarantees and the concept of associational privacy "create a preserve where the views of the individual are made inviolate. This is the philosophy of Jefferson that 'the opinions of men are not the object of civil government, nor under its jurisdiction.

Id. at 25. Finally, a broad reading of Wisconsin v. Constantineau, 400 U.S. 433 (1971) suggests the application of Due Process principles in the handling and dissemination of personal information.

These Supreme Court cases might be read as announcing an expansive principle, one that is part of a tradition basic to the nation's philosophical

fabric--the conception of government as an institution of limited powers that is obliged to meet a heavy burden of justification when it undertakes a program or course of action that will inhibit the freedom of its citizens. It seems axiomatic that the in terrorem effect of widescale governmental surveillance or information control can chill the exercise of an individual's constitutional rights.

The shortcomings of relying on the judicial process to protect citizens against governmental intrusion by expanding First Amendment principles is graphically demonstrated by the Supreme Court's five-to-four decision earlier this year in Laird v. Tatum,

U.S. _, 92 S.Ct. 2318, 33 L.Ed.2d (1972), a private suit to declare military surveillance of "lawful civilian political activity" unconstitutional. Despite the findings of Senator Ervin's Subcommittee that the military's activities had gone far beyond that reasonably necessary to discharge its legitimate functions and an acknanledgement by the Solicitor General during oral argument that the Army's conduct was inappropriate, the Supreme Court concluded that the citizen-plaintiffs "have not presented a case for resolution by the courts." According to Chief Justice Burger, judicial intervention

would have the federal courts as virtually con-
tinuing monitors of the wisdom and soundness of
Executive action; such a role is appropriate for
the Congress acting through its committees and the
"power of the purse"; it is not the role of the
judiciary, absent actual present or immediately
threatened injury resulting from unlawful govern-
mental action.

The message of the Laird case is clear. If reasonable limitations on the information gathering and surveillance activities of Executive Branch agencie. are' to be established, the impetus must come from the Congress.

IV.

A Comparative Analysis of Senate 3814 and Senate 3828

The introduction of 5.3814 on July 20, 1972 by Senators Tunney and Brock and s.3828 on July 21, 1972 by Senators Mathias and Ervin represents a significant, positive step toward achieving a better balance between the federal government's legitimate information needs and the individual citizen' rights of privacy and information security than was struck under Public Law 91-580 and the Department of the Treasury Regulations promulgated thereunder. Both bills reflect a deep appreciation of the potential abuses that could attend unlimited power in the Executive branch to scrutinize the financial activities of Americans and the dangers of mandating the creation of what in essence are individualized bank dossiers without establishing appropriate safeguards.

Although there are many striking similarities between s.3814 and S.3828, there are significant differences in both the types of protection they afford the individual and the methodology of providing that protection. What follows is a brief appraisal of the two bills with regard to their three basic features--(1) limitations on the disclosure of financial records:

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(2) restrictions on federally required record keeping; and (3) sanctions and related procedural matters,

A.

Limitations on the Disclosure of Financial Records

Both bills seek to assure the confidentiality of financial records by prohibiting their disclosure to anyone except under certain limited circumstances. The first exception allows disclosure pursuant to direct authorization by the account holder. Although Sections 4(a) and 4(b) of S.3814 and Section 4 of 5.3828 differ somewhat in the mechanics of establishing customer consent and what the terms of that consent may be (for example, S.3828 limits the effectiveness of the authorization statement to one week, whereas S.3814 contains no time constraint), the two bills have the same underlying objective. Disclosur? of banking information with the consent of the account holder, whether the information be kept at the direction of the federal government or not, is unobjectionable--if the consent is not the product of direct or indirect coercion. Neither bill, however, expressly guards against this possibility and both could be strengthened by the insertion of a clear statement that consent must be voluntarily given and not be the product of intimidation, such as by threatening that some governmental benefit will be withheld if access is denied or furnished if access is given.

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The two bills differ with regard to other limitations on the disclosure of financial records. S.3828 is the more restrictive proposal in terms of exceptions to the bar against access. Section 5 of that bill limits disclosure in the absence of customer authorization to situations in which

court order has been issued upon a showing of probable cause that would be sufficient to support the issuance of a valid search warrant and the order has been served upon the customer 21 days prior to the date set for disclosure S.3828, therefore, would have the admirable result of eliminating the use of ex parte administrative subpoenas, which are neither subjected to impartial scrutiny before being issued nor challenged by most financial institutions and are issued and executed without any notice to the individual whose records are involved. Since s.3828 invokes a time honored procedure--the issuance of search warrants--under reasonably delineated standards--probable cause--it does not appear to be objectionable on the basis of cost or inconvenience.

By way of contrast, S.3814, in addition to permitting access under customer authorization and court order, would allow disclosure pursuant to a federal or state subpoena or summons that has been served on the account holder personally or by substituted service. Although this bill does not eliminate the use of the ex parte subpoena, it at least tries to insure that the person affected will receive notice and have an opportunity to seek a court order prohibiting the financial institution from complying with the subpoena. Although s.3814 is less restrictive than s.3828, places the burden on the individual to seek judicial relief against a subpoena, and leaves open the possibility that he will not actually receive notice, it does have the advantage of reducing the burden on both the governmental agency seeking disclosure and the courts, which is a reasonable objective to pursue assuming that the possibilities of misuse and overreaching are minimized.

Weze does seem to be ose sesi cieccy in the provision in s.3914 bermittin9 6:$ciosure pursrast to a court orde.. Section 4(e)) Onlike 9.382%, $.3214 coes sot require that notice of the order be given the indivical in advance of the date on which the records are to be disclosed. In ** j ugnent, this is a mistake. Admittedly, search warrants often are Approved by courts without notice. But in the vast majority of cases the $51ch tanes place at a time when the owner of the premises or the property inivel is present ará has full kno-ledge of what is happening and some ability to contest the way the warrant is being executed. Even when he is not present, there are procedural requirezents, such as inventorying, that provide his with intorration about what has taken place. Neither of these safeguards are present when a governnental agency examines the records of an individual's transactions at a financial institution. The search does not occur at the customer's horce or place of business and delves into records that in no sense are under his control. Accordingly, unless he is given notice of the issuance of a court order and a period of grace within whi on to protest its legitimacy, an individual may never learn that his financial records have been examined. It seems to me that Section 4(e) of $.3014 should be amended to provide this procedural safeguard.

Section 5(a) of s.3814 is a salient provision regarding disclosure that has no counterpart in S.3828. It proscribes the use or retention of any information disclosed by a financial institution unless it is used in a civil or criminal complaint or indictment within six months of being obtained This is an extremely important procedural safeguard against the misuse of the records required to be maintained by the Regulations under Public Lan

assures that the information disclosed is used only for the piece for which it was obtained and that it is expunged with reasonable

However, I believe that its effectiveness could be enhanced if also prohibited the "transfer to any person" by the agency or person who 1 collimalely secured the initial disclosure. To be effective, any legislalinn must guard against improper secondary or even more remote uses of financial records, In addition, Section 5(a) should contain appropriate imitations on use, retention, and transfer by any local officials, indiviquale, ant nongovernmental organizations who might gain access to an indivisualisierung. The present text does not seem to cover them.

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Restrictions on Federally Required Record keeping

One of the most significant aspects of S.3828 is that it would Piniliit the perletary of the Treasury from requiring a financial instituHinn le maintain tende relating to its customers except in three categories

om aliniately related to legitimate governmental concerns. (Sec

A, indien not contain a comparable provision. This provision www have a number of highly salutary effects. First, it makes the general kmVillance { the financial life of the citizenry illegal. Second, it eliminare le risks to individual privacy and record confidentiality mit want mon the federal government's mandating the creation of financial

financial dossiers do not exist, there is no "attractive Mia Ar" rong opponmental agencies and private organizations to try to in

۱۱۱۱۱۱۱۱, 1( attomits to provide an equal level of privacy in economic mattress in a wo steal extensively with financial institutions and those whenint le À Man and carry" life. Fourth, it assures the public that will heiminuit feal innoited in their lecitinate monetary transactions

by the fear that "Big Brother" is watching their every economic move. And fifth, it reduces the risk of misbehavior and abuse of financial information by government officials and members of the financial community; it also might well curtail the operations of the information buddy system.

Of course, Section 6 of 5.3828 may be challenged on the ground that it destroys the utility of Public Law 91-508 by eliminating the availability of records that might be useful in "criminal, tax, and regulatory investigations and proceedings." (P.L. 91-508, S 101) However, the proposal

is an understandable reaction to a feeling that the Regulations promulgated | by the Department of the Treasury require an excessive amount of record

keeping.'

If this Subcommittee decides that there is merit in giving the Department of the Treasury powers beyond those available prior to Public Law 91-508, it should give serious consideration to finding an equilibrium point somewhere between S.3828 and the existing Regulations. This is an appropriate context in which to legislate record keeping standards and procedures. Title III of the Omnibus Crime Control Act suggests itself as a model. One possibility is to authorize the Secretary of the Treasury to seek a court order directing that a financial institution maintain certain records on specified individuals for a statutorily prescribed period of time on a showing of probable cause or reasonable grounds to believe that the individuals have engaged in or are likely to engage in specified criminal conduct. The records maintained under such a court order would then be subjected to appropriate procedural safeguards regarding their use, retention, and disclosure.

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Both bills contain provisions for the enforcement of their requirements. Those in S.3814 seem significantly more complete and effective than those in S.3828. For example, Section 7 of S.3814 creates a civil remedy for nonwillful violations of the statute. There is no counterpart in S. 3828. It seems desirable to provide a right of action that does not saddle the plaintiff with the often insurmountable burden of proving the defendant's intent. In addition, S.3814 provides larger minimum levels of punitive damages against wrongdoers than does S.3828, thereby making the threat of such damages more credible. Moreover, the limitations period in S.3814, Section 7(c), allows an action to be brought "within three years from the date on which the liability arises, or the date of discovery of such liability, whichever is longer." S.3828 does not contain the underscored language. Its inclusion is desirable since an individual may not become aware of a violation of the statute until many years after it has occurred. Thus, as in cases of fraud, the "date of discovery" language seems essential to make the right of action effective.

S.3814 also contains provisions for the removal and disqualification from office of any employee of the government who is convicted of a violation of the statute, Section 9, and for injunctive relief in favor of anyone who is aggrieved by a violation or threatened violation of the proposed statute, Section 10. Both of these remedies are sound. The first provides an additional sanction against a federal employee who violates the statute and therefore should serve as a deterrent. The second provides an alternative to a damage action for someone who wants to assure the future confidentiality of his financial records and is only secondarily interested in monetary reliei

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