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eign Transactions Act), particularly Chapter 2 thereof (Domestic Currency Transactions) and to Title IV of S. 3678 (Securities Transactions Involving Foreign Financial Agencies).

It is the nature of currency to run freely and the degree of acceptance of the dollar as a world currency is increased or decreased depending upon the freedom of flow. Those countries whose economies require that they impose exchange controls on their currencies proportionately reduce the acceptability of their money in the world markets. The economic health of our country to some degree depends upon the continued acceptability of the dollar as a world currency. The imposition of restrictions upon the free flow of the dollar, therefore, could have serious adverse effect upon our currency and it seems to me that the pending bills upon analysis, constitute exchange control under another name.

I hope that the members of your distinguished Committee will give these thoughts full consideration in your deliberation on the bills. Sincerely yours,

ROBERT H. FABIAN,

Senior Vice President and General Counsel. [Editor's Note: Mr. Fabian's letter included an excerpt from the University of Florida Law Review titled "Banks and Banking : Florida Adopts a Duty of Secrecy' 'for inclusion in the record. This same article was submitted for the record during the hearing by the American Bankers Association. It may be found at page 258 of this publication.]

STATEMENT OF WARREN S. RICHARDSON, GENERAL COUNSEL, LIBERTY LOBBY

August 30, 1972. This statement is submitted representing the views of liberty lobby's 20,000 member Board of Policy and on behalf of approximately a quarter million readers of our monthly legislative report Liberty Letter, Liberty Lobby's Board of policy has voted overwhelmingly in favor of the right of privacy for all citizens.

P.L. 91--508 must have been passed by a tired and harassed Congress, because it is difficult to imagine freedom-loving people subjecting their countrymen to the methods used by Hitler. The Bank Secrecy Act is now being made effective by regulations issued by the Secretary of the Treasury, which reveal how dangerous this law can really be. As presently interpreted, it is clear that the individual depositor has no protection against the bank's showing his records to anyone.

Of course complete revocation of P.L. 91–508 is in order, but partial relief can be obtained, in our judgment, by enacting S. 3814 or 3828, either of which would restore some degree of privacy to the individual from indiscreet snooping by the federal government. These bills would prohibit the disclosure of an individual's private bank records unless :

1. The account holder has consented to it;
2. A subpoena has been served requiring the records; and

3. A probable cause hearing has been held, resulting in a court order requiring disclosure of the records.

If a subpoena is to be used, the bill requires that the account holder be served with it, so he would know of the action and have a chance to request a court hearing.

Such corrective legislation needs to be enacted not only to protect the depositor but also the banker from undue pressure by the federal government. A clear example of this took place this spring when a depositor in California found an internal bank memo included with his monthly bank statement by mistake, which said : “This memo is to authorize you to read checks to the FBI before sending statement to the customer.” Very few bank managements have the backbone to refuse any government agency such a request, fearing government reprisals.

While the substantive thrust of P.L. 91-508 is bad enough, the administrative latitude given the Secretary of the Treasury to formulate regulations is, if possible, even worse. It should be apparent that when Congress delegates power to an administrative agency, it must spell out clear limits to the agency's authority. The Secretary of the Treasury has stretched the regulations as far as the letter of the law will allow, and has overstepped the intent of Congress. He has required that microfilm copies of both sides of every check written by a depositor be made and kept on file for five years. This covers everything from a $5 light bill to $10,000 or more transferred to a person outside the U.S. This regulation applies to the honest law-abidding citizen.

Whether by design or accident, a loophole has been provided for the criminal element. One Treasury regulation provides that no report would be required of persons who maintain accounts with balances which the bank determines do not exceed amounts normal for the customary conduct of his business or profession. Thus mafia and labor leaders with great banking influence can get off the hook by action of their friendly local bankers.

It appears that the intent of Congress in P.L. 91-508 has been amplified beyond a reasonable degree by the regulations of the Secretary of the Treasury.

Perhaps the most compelling reason we can advance to show that P.L. 91–508 needs to be expunged from the records is that both Liberty Lobby and the ACLU enthusiastically support its repeal.

Thank you for the opportunity to submit this statement for the record.

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1789

June 19, 1972 The Department of the Treasury has issued regulations to implement Titles I and II of Public Law 91–508, the Financial Recordkeeping and Currency and Foreign Transactions Reporting Act of 1970. These regulations will become effective on July 1, 1972.

The issuance of these regulations is a further step in major efforts directed toward frustrating organized and white collar criminal elements who use secret foreign accounts to conceal substantive violations of drug smuggling, securities and gambling laws, as well as the untaxed income generated from these and other illegal activities. The regulations are designed to benefit both foreign-related and domestic law enforcement efforts without burdening legitimate commerce. It should be emphasized that the regulations impose no restriction on the free flow of funds into or out of the United States.

The regulations will:
• Require all persons maintaining foreign bank or securities accounts to disclose

that fact on their Federal income tax returns, and to maintain adequate records

of such accounts; • Require all persons transporting, mailing, or shipping from the United States

to a foreign country, or receiving from without the United States, currency or bearer instruments in amounts in excess of $5,000, to report such transac

tions to Customs;
• Require financial institutions, including banks, building and loan associations,

brokers and dealers in securities, foreign exchange dealers, and credit unions,
to secure a social security or taxpayer identification number with respect to
each account opened after June 30, 1972;
Require all financial institutions to make reports to the Treasury of unusual

currency transactions involving amounts of more than $10,000;
• Require financial institutions to keep for five years records of all transfers

into or out of the United States involving more than $10,000; • Require financial institutions to keep for five years certain other records which will be useful for law enforcement purposes;

and • Require banks to retain for a period of two years records which would be

needed to reconstruct a demand deposit account and to trace a check

deposited in such account.

The Treasury Department will continue to study both the types of records to be kept and the most desirable retention period in order to maximize enforcement benefits and minimize unnecessary and burdensome paperwork. Assistant Secretary Eugene T. Rossides will head a small group within the Treasury to work with the financial community in this effort.

Every financial institution affected by these regulations should designate a compliance officer to insure that the applicable recordkeeping and reporting requirements of the regulations are fully observed, and to maintain liaison with the compliance agency involved.

Every effort has been made to insure that the final regulations will serve their law enforcement purposes, while at the same time not interfere with legitimate international monetary transactions, unduly burden financial institutions or others, or impose unreasonable requirements that would serve no useful purpose. In doing this, consideration has been given to existing recordkeeping procedures, including the length of time records are ordinarily retained.

Governmental access to the records of financial institutions is not changed by either the statute or the regulations, but will continue to be subject to the require. ments of existing subpoena and other legal processes.

Luse f. Seuló

Table of Contents

Page

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I. AN OVERVIEW OF THE CURRENCY AND FOREIGN TRANSACTIONS
REPORTING REGULATIONS

A. Those Affected By Act And Regulations
B. Reports of Currency Transactions By Financial Institutions
C.

Reports of Transportation of Currency or Monetary Instruments

By Persons
D. Reports of Interest in Foreign Financial Accounts By Persons
E. Recordkeeping By Financial Institutions
F. Additional Recordkeeping By Banks
G. Additional Recordkeeping By Securities Brokers and Dealers
H. Variations From Regulations
1. Civil and Criminal Penalties

J. Issuance of Search Warrants
II. CURRENCY AND FOREIGN TRANSACTIONS REPORTING ACT STATUTE

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(Titles I, II and IV of Public Law 91–508) III. TREASURY DEPARTMENT REGULATIONS ISSUED TO IMPLEMENT TITLES I

and Il of Public Law 91-508
IV. CURRENCY AND FOREIGN TRANSACTIONS REPORTING FORMS

(1) Form 4683
(2) Form 4789
(3) Form 4790

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