enough to overlook or ignore very important protections which, thanks to the Bill of Rights, stand between us and Government tendencies to whittle away our liberties.

(John H. F. Shattuck, staff counsel of the American Civil Liberties Union wrote to Senator Proxmire regarding comments of the Justice Department on the testimony of Miss Eastman. The letter is printed at page 131.)

Senator PROXMIRE. There are a whole series of questions I would like to ask you, but the hour is late, so I am going to confine myself to one very briefly.

There has been much concern that Public Law 91-908 and regulations thereunder authorize the Federal Government to have unlimited access to bank account information without a search warrant or similar procedure. Those who make this argument refer to section 103.45 of the regulations which states that the Secretary in his sole discretion. may by written order or authorization impose additional recordkeeping or reporting requirements authorized by statute.

The American Civil Liberties Union brief in California argues that the power reserved to the Secretary in this regulation transmutes any recordkeeping requirement into a reporting requirement on a written report, and permits the Secretary to have access to all records required to be maintained simply by signing a written order. It was alleged by ACLU that this is the functional equivalent of a blank search warrant, issuable without probable cause, unchallengable and backed by threat of immediate action.

I believe I can say that was not the intent of the Congress, and I am amazed that the Civil Liberties Union could come to that conclusion. They do not give the Secretary the power to impose further reporting requirements. He can only modify those authorized by statute. Those deal with currency withdrawals and deposits, transfers in or out of the country, and so forth.

In addition, title 1 of the legislation imposes certain recordkeeping requirements on banks.

There is nothing in the statute which authorizes the Secretary to require that all of the information required to be kept by banks under title 1 be reported to the Secretary. Moreover, the Senate committee report clearly states that the records required to be kept under title 1 are only to be available pursuant to existing legal processes.

Therefore, the law and regulations are not the functional equivalent of a blank search warrant as the Civil Liberties Union alleges.

I believe much of the concern which has been voiced about these regulations is due to a simple misreading and misunderstanding of the statute. Would you care to comment?

Miss EASTMAN. Yes, I would. I think there has been perhaps some confusion about the exact thrust of the regulation and the section on reporting. I think it is clear that the reporting requirements are limited to currency transactions and on their face they do not, alone, allow for all of the things that are required to be recorded, to be automatically turned over to the Government.

But that is not to say that our concern is unwarranted, and I think that this is so for the following reasons.

First under the terms of the regulation, it says that the Secretary in his sole discretion may by written order impose additional recordkeeping or reporting requirements authorized by statute.

Now, that is the first thing. In the present situation, they have the reporting requirement limited to $10,000 and above currency transactions. There is nothing in the statute and certainly nothing in the regulations which would prohibit the Secretary from lowering that requirement to $1 and require that any currency transaction over $1 be reported automatically. There is nothing in the statute which prohibits

that.

Secondly, looking at the language of the statute itself, it requires in section 221

Senator PROXMIRE. Even before this law, they had to report currency withdrawals in excess of $2,500.

Miss EASTMAN. They had to report unusual currency transactions. But you are talking about the language of the statute. That was not an across-the-board requirement. I understand from testimony during the House hearings, I believe, that that requirement was not always fully implemented and the Treasury Department did not enforce it across the board. I am not certain about that. But be that as it may, this statute allows the Secretary to lower that requirement to $1. You are asking me about whether our fears are unwarranted, by the language of the statute, and I don't think so.

The second reason I don't think so is that section 221 sets out what reports are to be required. It says that the reports are to be required in such detail as the Secretary may require.

Now, think for a moment. Suppose the Secretary were to lower the requirements to $1, or $10, or $15. Then that statute gives him the authority to require that that information be made available to the Government, reported to the Government, in such detail as the Secretary may require. If you look at the forms which the Treasury Department has promulgated to be used for the present currency reporting requirement, on page 24 of the booklet put out by the Treasury Department, it asks for certain information to be reported to the Government if the currency transaction at either end involved a check. The information required is the drawer of the check and the payee of the check. That is requiring information which is much more than the fact that currency has been transmitted from one person to another through a bank.

Now, if you have a situation where very small amounts of currency have to be reported, and this kind of information or more, as the Secretary is authorized to require as much detail as he wishes, I don't think that our fears are unwarranted. Certainly they haven't been implemented that way now but that is not enough when a court goes to evaluate whether or not the legislation is overly broad.

You referred to congressional intent. I don't think the congressional intent at all meant this information to be reported to the Government, but I am not sure that the intent was expressed as well as it could be. And the problem is complicated as the Bank Secrecy Act's enactment has highlighted defects in the existing rules. In fact, the act has guaranteed that vast new amounts of information will be available to Government investigators. Congress said that none of the records to be maintained are to be obtained except with legal process. I think that these hearings have shown a misleading understanding on the part of Congress as to what the legal situation is. It in fact gives very few rights to the individual.

That is a rather long answer to your question. I am sorry. Senator PROXMIRE. The only point I was trying to make is that the recordkeeping process is not the subject of an automatic course.

Miss EASTMAN. I think that is true in the language of the statute, but when you put it together with the detailed recordkeeping the Government could require to be reported, an awful lot of detail which is required to be kept in the recordkeeping section would then become available.

Senator PROXMIRE. Was the ACLU invited to join the New York banks in opposition to the legislation being considered in 1970, and if so, why did you not come forward to testify?

Miss EASTMAN. I have pondered that question before the hearings. We were not invited by the New York banks. We were very interested in your section on fair credit reporting, and we did testify extensively, as you may recall, on those sections. We really focused only on them. I never really took a good look at the rest of the bill which people kept describing as "something to do with the Swiss banks." It is my job to keep the ACLU informed about these things and that is what happened. If we had taken a better look at it, we would have been in here making these objections at this time.

Senator PROXMIRE. I see.

Senator Sparkman?

Senator SPARK MAN. I think you have presented a tremendous legal brief supporting your position.

Miss EASTMAN. Thank you.

Senator TUNNEY. Mr. Chairman, I do have some questions but we have other witnesses and perhaps these questions could be submitted in writing to the witness and made a part of the record.

Senator PROXMIRE. Fine. If you would reply to those corrections when you correct your remarks, I have some I would like to submit, too.

Miss EASTMAN. Yes. I would like to submit a couple of additional things for the record, the letter and the summary of the responses that the ACLU obtained from the banks and an article which has been written in the American Banker on a proposed draft agreement which the ACLU is preparing to use with banks.

Senator PROXMIRE. We will be happy to have that placed in the record.

Miss EASTMAN. Thank you.

(The full statement of Miss Eastman and the additional information referred to follow :)

STATEMENT OF HOPE EASTMAN, ASSOCIATE DIRECTOR, WASHINGTON NATIONAL OFFICE, AMERICAN CIVIL LIBERTIES UNION

My name is Hope Eastman. I am a lawyer and the Associate Director of the Washington National Office of the American Civil Liberties Union. The ACLU, which is a non-profit organization wholly devoted to the protection of our rights and liberties under the Constitution, strongly supports the objectives of the legislation which you are considering today.

Privacy Key to Political Freedom

The privacy and confidentiality of bank records are sorely in need of congressional protection. An individual's banking transactions are a mirror to his life, especially his political life. Information about the groups he joins, the publica

tions to which he subscribes, the books he buys, and the causes he supports are the indicators of his political sympathies and affiliations. The revelations over the last few years-the Army dossiers on civilian activists, police and FBI files on demonstrators, and congressional files on controversial groups recording the worus and deeds of individuals of all political persuasions, civil rights leaders, Congressmen, Senators and presidential candidates-suggest that fears that bank records will become a tool of political surveillance are quite real.

A person writing a check or making a deposit in his bank assumes that these transactions are no one's business but his own, that he can use his checking account without it being a dossier on his life and his political associations. Traditionally, the guarantee of confidentiality and privacy has been thought to be at the heart of the relationship between the bank and its customer. The courts have traditionally recognized that this is so.

"Inviolate secrecy is one of the inherent and fundamental precepts of the relationship of the bank and its customers or depositors." Peterson v. Idaho First National Bank, 83 1da 578, 367 F.2d 284, 290 (1961); See also Zimmerman v. Wilson, 81 F.2d 847 (3rd Cir. 1936); U.S. v. First National Bank of Mobile, 67 F. Supp. 616 (S.D. Ala. 1946); Brex v. Smith, 146 Atl. 34, 36–37 (Ch. N.J. 1929).

However, as outlined more fully below, we have learned that bank customers in fact do not enjoy the privacy they thought they had. As we heard in testimony last Friday, the government maintains it has an essentially unlimited right to examine bank accounts limited only by the bank's willingness to cooperate. The legislation under consideration is, therefore, urgently needed.

It is the position of the ACLU that the individual who chooses to conduct his financial and political life with the aid of a bank should in no way lose the constitutional protections he would otherwise have if he alone kept a record of his financial dealings. Those constitutional protections include: the right of privacy, freedom of association, freedom from unreasonable searches and seizures and the privilege against self-incrimination. Enactment of some version of the pending bills would accomplish this objective of assuring to bank customers both protection for their constitutional rights and procedural safeguards to insure that those rights can be protected.

Urgent Need for Legislation

There are a number of factors which make the need for this legislation especially apparent. First, there is strong constitutional precedent to safeguard the confidentiality of membership and contributor lists of political organizations from governmental scrutiny so as to preserve freedom of association. The Supreme Court has invalidated a congressional subpoena for the subscribers to a conservative organization's literature, United States v. Rumely, 345 U.S. 41 (1953); disallowed local government attempts to secure the names of NAACP members and contributors, NAACP v. Alabama, 357 U.S. 449 (1958); Bates v. Little Rock, 361 U.S. 516 (1960); upheld the right to circulate anonymous political literature, Talley v. California, 362 U.S. 60 (1960); and invalidated a subpoena for the checking account records of the Arkansas Republican Party. Pollard v. Roberts, 283 F. Supp. 248 (E.D. Ark. 1968), aff'd per curiam 393 U.S. 14 (1968).

Yet, in recent years the ACLU litigation docket has included a long list of cases in which political information of this kind has been sought by governmental subpoena of bank records. Our experience with these cases has revealed, and the government's testimony has confirmed, that the government does seek bank record information without subpoenas and that even where subpoenas have been obtained, the government has proceeded without any notice to the customer. Only where the bank has voluntarily chosen to inform its customers has any access to legal remedies been available.

In 1970 and 1971, the Senate Subcommittee on Internal Security and the House Internal Security Committee attempted to obtain the bank records of certain controversial organizations, including the United States Servicemen's Fund, the Progressive Labor Party, National Peace Action Coalition and the People's Coalition for Peace and Justice, as well as at least one individual who had contributed to various peace organizations. The subpoenas sought records of all checks deposited to their accounts.

In the case of the United States Servicemen's Fund, the customer did have an opportunity to challenge the subpoena, but only because its bank chose to

notify it. A federal Court of Appeals has issued a stay of the subpoena pending judicial consideration of the groups constitutional arguments.

Similarly, in the case of the Progressive Labor Party, their bank, the Amalgamated Bank in New York City, notified the organization of the subpoena's existence prior to complying with it, allowing it time to challenge the validity of the demand in the courts. On April 29, 1971, the District Court granted the Progressive Labor Party a preliminary injunction barring bank compliance with the subpoena.

In the case of the National Peace Action Coalition and the People's Coalition for Peace and Justice, however, their bank, the Public National Bank in Washington, D.C., did not notify the two organizations of the subpena, but instead turned over portions of their checking account records to a staff member of the House Internal Security Committee. Further compliance was stayed only by the order of a federal District Court which also ordered the bank to give notice to the plaintiffs in the event any further subpenas were received.

The ACLU is also involved in two suits where bank records were obtained by the FBI, apparently without any legal process at all. The Fifth Avenue Peace Parade Committee brought suit against the FBI for return or destruction of bank records which the FBI had obtained, contending that the FBI examined the Committee's checking account without any legal process, with bank cooperation and without notice to the Committee to determine who had purchased tickets to attend the "Vietnam Moratorium" peace demonstration in November, 1969. The other pending case involves Muhammed Kenyatta, president of the National Black Economic Development Conference. Kenyatta has sued the FBI, claiming that documents stolen from the FBI Media Pennsylvania office show that the FBI obtained informally copies of his organization's bank statements and checks drawn on its account.

Lastly, we are by now all familiar with the incident reported in the Marin County (California) Independent Journal. That newspaper reported on April 10, 1972, that Richard Stark, a 29-year-old artist and supporter of radical causes had discovered that his checking account at a branch of the Wells Fargo Bank had been reviewed by FBI agents before being returned to him. An interdepartmental bank memo was returned to him by mistake wrapped around his checks. It read, "This memo is to authorize you to read checks to the FBI before sending the statement to the customer."

The government maintains it can and must have access to bank accounts in secret, that the customer has no rights, and that, so long as the banks do not object, there is no need to proceed by legal process. Thus, the government asserts a right to essentially unreviewable discretion to determine what accounts will be examined and for what purposes. Such a system would be directly contrary to the line of Supreme Court cases referred to above because there would be no way for the bank customer to know his account is being searched and no opportunity to raise his constitutional rights. The bills we support would put an end to this uncontrollable access to information protected by the First Amendment.

Second, we have learned that there is no uniform bank practice of notifying customers when governmental authorities seek access to their accounts. Because of our experience in the litigation discussed above, the ACLU in April, 1972, wrote to the presidents of the nation's 100 largest banks seeking information on their policies and urging them to formulate procedures to protect the confidentiality of customers' records from surveillance by government investigatory agencies and to insure that customers will be alerted when these agencies seek such account information. Similar letters were sent by ACLU affiliates in the 50 states to banks in their areas.

We received replies from approximately one-quarter of these banks. Examination of the responses reveals no uniform practice among banks on these questions and the absence of any clear law compelling banks to keep their customers' records confidential.

Some institutions reported that they will resist informal inquiries by governmental groups for customer account information and maintained that the only way they will release such data is if they are served with a subpoena or court order. Yet exceptions to this rule were pointed out frequently. Others indicated that they fulfill their responsibility to protect customer privacy by agreeing to release information only after a subpoena is served on them, but that they are not obligated to notify customers that the government has demanded such in