Early the next morning, Friday, November 6, our representatives went to the bank. The subordinate official who had personally dealt with the FBI asserted, contrary to what we had earlier been told, that the FBI had not examined any of the records of the association; that they had not been in the bank prior to the afternoon of November 4; and that all that occurred that afternoon was a discussion of the process by which the records could be efficiently and economically collected for grand jury presentation. The subordinate bank official also said the FBI called earlier that morning and had withdrawn the subpena. In the midst of this conversation, a call was received from the First Circuit Court of Appeals Clerk's Office summoning us to court. The Chief Judge of the First Circuit Court of Appeals had called an emergency hearing to determine whether the FBI was indeed inspecting the records of the association. The hearing was called on the petition of attorneys for Senator Mike Gravel. The precise issue at the hearing was whether or not the FBI had by its actions in subpenaing and examining our records violated a court of appeals stay barring grand jury inquiry into any aspect of the publication of the Pentagon Papers by Senator Mike Gravel and his agents. At this November 5 hearing, the FBI agent assigned to the investigation was called to the witness stand. He said that he went to the bank on Wednesday, November 3, with another agent. He admitted that in the course of his investigation at the bank he had in fact examined the monthly statements of all eight of our accounts. He claimed he saw no microfilm of checks or deposits. But he conceded that after examining our records, he was able to limit the subpena to all checks above $5.000 and to two principal accounts, the UUA general account and the UUA Beacon Press account. He also conceded that he had arranged for the bank to call him when the collection of the records was complete so that he could pick up the records and take them to the FBI Office. These confusing and conflicting accounts of the investigation raise in our view many questions about what actually happened. However, five inescapable conclusions can be drawn: 1. The FBI did inspect bank records of our church without our receiving any prior notification of the investigation and therefore without our knowledge; 2. The data which the FBI admits they saw could have provided them with information that they had no business under the Constitution acquiring; 3. The Internal Security Division of the Justice Department and the FBI were clearly asserting the right to conduct a broad-scale investigation of our bank records without concern for the impact of that investigation upon the liberties guaranteed us under the Constitution; 4. The Internal Security Division and the FBI had, in the 6-day period from October 29 through November 3, the opportunity to collect without our knowledge the names of donors and members of our association; 5. If we had not intervened, the FBI would have collected for their files data from which they could easily assemble lists of our donors and members. As a result of the November court of appeals hearing, the Government stipulated that it would call off its investigation, at least until the appeal by Senator Gravel was decided. There does seem to be one deficiency in the provision in S.3814 permitting disclosure pursuant to a court order. (Section 4 (e)) Unlike S.3828, S. 3814 does not require that notice of the order be given the individual in advance of the date on which the records are to be disclosed. In my judgment, this is a mistake. Admittedly, search warrants often are approved by courts without notice. But in the vast majority of cases the search takes place at a time when the owner of the premises or the property involved is present and has full knowledge 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 requirements, such as inventorying, that provide him with information about what has taken place. Neither of these safeguards are present when a governmental agency examines the records of an individual's transactions at a financial institution. The search does not occur at the customer's home 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 which 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 S.3814 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 Law 91-508. It assures that the information disclosed is used only for the purposes for which it was obtained and that it is expunged with reasonable promptness. However, I believe that its effectiveness could be enhanced if it also prohibited the "transfer to any person" by the agency or person who legitimately secured the initial disclosure. To be effective, any legislation must quard against improper secondary or even more remote uses of financial records. In addition, Section 5(a) should contain appropriate limitations on use, retention, and transfer by any local officials, individuals, and nongovernmental organizations who might gain access to an individual's records. The present text does not seem to cover them. One of the most significant aspects of S.3828 is that it would prohibit the Secretary of the Treasury from requiring a financial institution to maintain records relating to its customers except in three categorie: that seem appropriately related to legitimate governmental concerns. (Section 6) 8.3814 does not contain a comparable provision. This provision would have a number of highly salutary effects. First, it makes the general surveillance of the financial life of the citizenry illegal. Second, it eliminates the risks to individual privacy and record confidentiality attendant upon the federal government's mandating the creation of financial དོ ཀཱཿ a ཝ ད eh a If financial dossiers do not exist, there is no "attractive nuisance" for governmental agencies and private organizations to try to inrade. Pund, it attempts to provide an equal level of privacy in economic matters to Chose who deal extensively with financial institutions and those whe continue to lead a "cash and carry life. Fourth, it assures the public that they need not feel inhibited in their legitimate 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 S.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, § 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. C. Sanctions and Related Procedural Matters 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 proposec 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 relief September 1, 1972 The Honorable John V. Tunney United States Senator Committee on the Judiciary Dear Senator Tunney: Thank you for your letter of August 24. What follows is my reaction to the two questions you ask. 1. I find nothing in S.3814 that would prevent a bank manager from reporting a check-kiting scheme. It seems to me that Section 4 of S.3814 would have to be contorted beyond its natural intent to prohibit a bank official from calling the existence of illegal conduct to the attention of the appropriate authorities. Technically, of course, the actual documents involved and the precise information therein could not be released by the bank to a law enforcement or regulatory agency until one of the procedures prescribed in Section 4 was carried out. of course, that does not pose any difficulty inasmuch as there would be probable cause or enough of a basis for the issuance of a subpoena. It also must be kept in mind that S.3814 does not supersede the extensive network of statutes and regulations that govern the banking industry. I am sure that these would permit, indeed, probably require, both the reporting of illegal conduct and the investigation thereof by one or more regulatory bodies. 2. Increasingly the Social Security number is being used as an identification and access key to files maintained on individual Americans. In our computer-oriented society these files are being put into machine readable form and, as time progresses, data banks will be linked together enabling information stored under an individual's Social Security number to be electronically exchanged. My concern with the use of the Social Security number as an identifying number for each bank customer is that eventually all of the records now required to be maintained under the Department of Treasury Regulations will be stored in electronic form and organized by the Social Security number. Given the complete absence of any legal safequard limiting access to these records, I fear that various agencies of government and the private sector may be able to "dip into the banks' computerized records and extract information about people simply by knowing their Social Security number. Admittedly, this is not an immediate problem; on the other hand, it is not a figment of a Buck Rogers imagination, as anyone who has studied computerized information systems will tell you. Finally, the Treasury Department's requirement that the Social Security number be obtained from bank customers seems inappropriate at a time when the Department of Health, Education and welfare is studying the proper use of that number and has appointed a Public Advisory Committee to make recommendations concerning the limitations and safequards on the use of the number. I hope these responses to your questions are of assistance to you. If I can be of any further help, please do not hesitate to call on me. Sincerely yours, Aith bellllen Arthur R. Miller ARM:eis CC: Senator William Proxmire attn: Mr. Ken McLean (Professor Miller subsequently wrote a letter to Senator Proxmire commenting on correspondence received from the Justice Department. It is printed at page 133 of this publication.) |