Americans Deserve Financial Privacy

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At the Cato Institute, Nicholas Anthony discusses the abuse of Americans’ financial privacy by the government and what can be done to restore it. He writes:

The Right to Financial Privacy Act of 1978 was enacted to protect Americans from warrantless surveillance. In theory, it was supposed to counter the financial surveillance born out of the Bank Secrecy Act of 1970 and the Supreme Court case United States v. Miller in 1976. In practice, however, the Right to Financial Privacy Act failed to live up to its name because it was enacted with a list of 20 different exceptions to its protections. From law enforcement inquiries to federal statutes, the exceptions covered nearly all forms of financial surveillance. Worse yet, these issues have only been compounded in the digital age. The prevalence of credit cards, mobile banking, and other app-based financial tools has created an unprecedented supply of financial data. Government efforts like Operation Choke Point, the Treasury’s $600 reporting threshold proposal, and the constant increase of the scope of Bank Secrecy Act reporting have already made it evident how these financial data are being used. Such unrivaled access to the lives of all Americans makes it evident that now, more than ever, it is time to rethink how financial privacy is treated in the United States. Turning back the clock may not be possible, but removing the exceptions to the Right to Financial Privacy Act would establish the financial privacy protections that Americans should have had from the beginning.

Introduction
Financial privacy in the United States has been in disrepair for more than 50 years, and it’s getting worse. Not only are decades-old beliefs (e.g., the third-party doctrine) highly questionable, but they are also particularly dangerous in the digital age. Efforts, both new and old, to surveil and collect data on Americans’ financial activity show that now is the time for Congress to craft a better framework for financial privacy. But Congress may not need to look far for ideas on how to protect Americans’ financial privacy.

The Right to Financial Privacy Act, originally enacted in 1978 in response to how the Bank Secrecy Act and the third-party doctrine weakened the protections of the Fourth Amendment to the U.S. Constitution, has already set a foundation for some of the protections needed today. However, it is largely due to a long list of exceptions in the Right to Financial Privacy Act that much of the financial surveillance over the past 50 years has been permitted to expand—hidden away from the public eye.

Part of the challenge is that the “right to financial privacy goes to the heart of the tension between an individual’s right to conduct [his or her] business without governmental intrusion and the government’s legitimate need for information in law enforcement.”1 But striking this balance is not an insurmountable task. While critics point to curbing criminal activity to justify invading the public’s financial privacy,2 there should be stronger protections so long as the U.S. justice system maintains that the public is innocent until proven guilty. Neither fishing expeditions nor thread pulling that may lead to investigations should be considered a sound justification when financial information can reveal a person’s relationships, profession, religion, political leanings, locations, and more.3 A revised legal and regulatory regime for the financial sector must protect citizens against warrantless searches and seizures—a protection guaranteed by the Fourth Amendment.

To restore Americans’ financial privacy, Congress should amend the Right to Financial Privacy Act to remove the exceptions to its protections. Removing the exceptions will not bar law enforcement and other government agencies from obtaining access to financial information. Instead, it will merely require that government agencies acquire a warrant or subpoena through the judicial process and notify Americans when they seek their records.4 During the past few years, Americans have seen time and time again how financial privacy can be violated by unchecked government authorities.5 Now is the time for Congress to establish the protections that should have remained in place since the beginning—especially amid the digital age.

Read more here.