P O L I C Y

A N A LY S I S
M ay 2, 2023 N u m b e r 945

The Right to Financial Privacy

Crafting a Better Framework for Financial Privacy
in the Digital Age
By Nicholas Anthony

EXECUTIVE SUMMARY

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

NICHOLAS ANTHONY is a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives.
INTRODUCTION warrantless searches and seizures—a protection guaranteed
Financial privacy in the United States has been in disrepair by the Fourth Amendment.
for more than 50 years, and it’s getting worse. Not only are To restore Americans’ financial privacy, Congress should
decades-old beliefs (e.g., the third-party doctrine) highly amend the Right to Financial Privacy Act to remove the
questionable, but they are also particularly dangerous in the exceptions to its protections. Removing the exceptions will
digital age. Efforts, both new and old, to surveil and collect not bar law enforcement and other government agencies
data on Americans’ financial activity show that now is the from obtaining access to financial information. Instead,
time for Congress to craft a better framework for financial it will merely require that government agencies acquire a
privacy. But Congress may not need to look far for ideas on warrant or subpoena through the judicial process and notify
how to protect Americans’ financial privacy. Americans when they seek their records.4 During the past
The Right to Financial Privacy Act, originally enacted few years, Americans have seen time and time again how
in 1978 in response to how the Bank Secrecy Act and the financial privacy can be violated by unchecked government
third-party doctrine weakened the protections of the Fourth authorities.5 Now is the time for Congress to establish the
Amendment to the U.S. Constitution, has already set a foun- protections that should have remained in place since the
dation for some of the protections needed today. However, beginning—especially amid the digital age.
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 T R O U B L E I N T H E WA K E O F
away from the public eye. THE BANK SECRECY ACT
The Bank Secrecy Act was signed into law by President
“Efforts, both new and old, to Richard Nixon on October 26, 1970.6 At the time, the Bank
Secrecy Act—a response to concerns over the use of secret
surveil and collect data on foreign bank accounts7—made two major changes to the
Americans’ financial activity show U.S. financial system: (1) requiring that U.S. financial insti-
that now is the time for Congress tutions maintain records “where such records have a high
to craft a better framework for degree of usefulness in criminal, tax, or regulatory investiga-
tions or proceedings” and (2) requiring that U.S. financial
financial privacy.” institutions report certain financial transactions to the U.S.
Department of the Treasury (Treasury).8 In other words, the
Part of the challenge is that the “right to financial privacy Bank Secrecy Act deputized American financial institutions
goes to the heart of the tension between an individual’s as de facto law enforcement investigators. And although this
right to conduct [his or her] business without governmental initial form of the Bank Secrecy Act was only a fraction of
intrusion and the government’s legitimate need for infor- what can be seen today, it did not take long for people to rec-
1
mation in law enforcement.” But striking this balance is ognize how the law conflicted with the Fourth Amendment
not an insurmountable task. While critics point to curbing to the U.S. Constitution, considering it forced financial insti-
criminal activity to justify invading the public’s financial tutions to report information that the government would
2
privacy, there should be stronger protections so long as the otherwise need a warrant to obtain.
U.S. justice system maintains that the public is innocent By 1972, a group including the American Civil Liberties
until proven guilty. Neither fishing expeditions nor thread Union (ACLU), California Bankers Association, and Security
pulling that may lead to investigations should be considered National Bank applied for a temporary restraining order in the
a sound justification when financial information can reveal a U.S. District Court for the Northern District of California in an
person’s relationships, profession, religion, political lean- effort to stop the enforcement of the Bank Secrecy Act.9 The
ings, locations, and more.3 A revised legal and regulatory group principally argued that the Bank Secrecy Act violated
regime for the financial sector must protect citizens against the Fourth Amendment’s protection from unreasonable

2
search and seizure as well as the protections in the First and $10,000 or more.16 For example, at the time, one could pur-
Fifth Amendments. In response, the district court issued a chase two brand-new Corvettes for that price.17 However,
temporary restraining order to halt the Bank Secrecy Act’s Justices Lewis Powell and Harry Blackmun warned in a
10
enforcement while the complaint could be reviewed. How- concurring opinion, “A significant extension of the regula-
ever, the order was lifted after the district court held that most tions’ reporting requirements . . . would pose substantial
of the Bank Secrecy Act was constitutional. Yet efforts to stop and difficult constitutional questions for me. . . . At some
the Bank Secrecy Act did not stop there. point, governmental intrusion upon these areas would
implicate legitimate expectations of privacy.”18
“With the creation of the third- In 1976, the question of financial privacy was again brought
to the Supreme Court in United States v. Miller. When con-
party doctrine, after years of sidering a case in which the Treasury Department’s Bureau
citizens trying to push back of Alcohol, Tobacco, and Firearms presented grand jury
against the Bank Secrecy Act, the subpoenas to collect the records of a suspected bootlegger’s
Court seemingly made it stronger financial activity, the Court held that Americans do not have
a right to privacy when they share information with a third
than ever before.” party (e.g., a bank or other financial institution). The Court
wrote, “The depositor takes the risk, in revealing his [or her]
In 1973, Rep. Fortney Stark (D-CA) led a separate effort in affairs to another, that the information will be conveyed by
Congress to enact legislation—a first draft of what would lat- that person to the Government”19—seemingly positing first
er be enacted as the Right to Financial Privacy Act—seeking to that Americans must choose between a bank account and
11
better protect financial privacy. Representative Stark argued the Fourth Amendment, and second that Americans cannot
that the Bank Secrecy Act undermined the long-held tradition expect the government to consider the Constitution when
12
of confidentiality between banks and customers, and there- presented with information. From this decision (and other
fore, his bill was designed in part to protect and preserve that similar decisions) came what is now commonly known as
13
expectation of confidentiality. the “third-party doctrine.”20 As described by the Electronic
In 1974, Congress made a step forward with the passage Privacy Information Center (EPIC), so long as the “records
14
of a separate piece of legislation, titled the Privacy Act. are developed or maintained during the course of an ordinary
The Privacy Act established requirements for government business relationship by a person other than the subject of
agencies in disclosing, handling, accessing, and maintain- those records, the subject has no expectation of privacy and
ing information. Moreover, should a federal agency fail to thus, no constitutional protection.”21 With the creation of the
adhere to these standards, the Privacy Act gave American third-party doctrine, after years of citizens trying to push back
citizens grounds to sue the agency. Nonetheless, the Privacy against the Bank Secrecy Act, the Court seemingly made it
Act included many exceptions, resulting in privacy protec- stronger than ever before.
tions that do not apply consistently with law enforcement or In 1977, the Privacy Protection Study Commission—a
15
even at all under circumstances deemed “routine use.” commission created by Congress with the passage of the
Also in 1974, the question of financial privacy reached Privacy Act of 1974—issued a report titled Personal Privacy
the Supreme Court after a series of appeals—from both in an Information Society.22 The commission argued that “as
the plaintiffs and the government—in California Bankers records continue to supplant face-to-face encounters in our
Association v. Schultz. After reviewing the case, the Supreme society, there has been no compensating tendency to give the
Court held at the time that the Bank Secrecy Act did individual the kind of control over the collection, use, and
not violate the First, Fourth, or Fifth Amendments. In disclosure of [his or her] information.”23 The commission
the majority opinion, the Supreme Court held that the noted that many challenged the Bank Secrecy Act because of
Bank Secrecy Act was not an undue burden, considering the questions it raises regarding not only the confidential-
it applied to “abnormally large transactions,” those of ity between customers and financial institutions, but also

3
the “relationship between government and citizens in a free And in the case of a subpoena or formal written statement,
24
society.” The commission also argued that the 1974 Privacy customers must also be given at least 10 days to object to the
Act “had not resulted in the general benefits of the public that disclosure of their information. The instructions provided in
either its legislative history or the prevailing opinion as to its the notice for objecting are as follows:
25
accomplishments would lead one to expect.” So while the
1974 Privacy Act may have been a step forward, it did not do 1. Fill out the accompanying motion paper and sworn
enough to protect Americans’ privacy broadly, and it certainly statement or write one of your own, stating that you
did not protect Americans’ financial privacy. are the customer whose records are being requested
by the Government and either giving the reasons
you believe that the records are not relevant to the
THE RIGHT TO FINANCIAL legitimate law enforcement inquiry stated in this
P R I VA C Y A C T O F 1 9 7 8 notice or any other legal basis for objecting to the
Although financial privacy took many heavy hits from the release of the records.
Bank Secrecy Act, Congress did establish some early protec- 2. File the motion and statement by mailing or deliv-
tions. Just two years after the Supreme Court established the ering them to the clerk of any one of the following
26
third-party doctrine, Congress passed the Right to Financial United States district courts: [to be determined]
Privacy Act—an act that was “essentially designed to reverse 3. Serve the Government authority requesting the
the [Supreme Court’s] decision [in United States v. Miller] in records by mailing or delivering a copy of your
the context of financial records and provide standing for indi- motion and statement to [to be determined]
viduals to complain about the improper release of information 4. Be prepared to come to court and present your posi-
27
about them in records maintained by financial institutions.” tion in further detail.
Although well-intentioned, the Right to Financial Privacy Act 5. You do not need to have a lawyer, although you may
did not offer the privacy protections its name suggests. wish to employ one to represent you and protect
your rights.31
“Although well-intentioned, the
The Right to Financial Privacy Act extends these protec-
Right to Financial Privacy Act did tions and requirements to information held by depository
not offer the privacy protections institutions; money service businesses; money order issuers,
its name suggests.” sellers, and redeemers; travelers check issuers, sellers, and
redeemers; the U.S. postal service; securities and futures
At its core, the Right to Financial Privacy Act established industries; futures commission merchants; commodity trad-
a process for notifying the public when the government ing advisers; and casinos and card clubs.
requests their financial information and providing the Unfortunately, the Right to Financial Privacy Act has a
28
public the opportunity to challenge said requests. This major weakness: 12 U.S.C. Sections 3413 and 3414, or the
process begins with 12 U.S.C. Section 3402, which prohibits list of exceptions. Taken broadly, the exceptions provide
government authorities from accessing financial records—a particular situations or conditions in which the law does not
direct response to United States v. Miller and the third-party apply.32 In practice, the exceptions that allow government
doctrine. The law then specifies that the government may access to financial records apply to some of the most routine
only access financial records held at a financial institution instances of financial data collection. Each exception is
if authorized by a customer’s agreement, an administrative broken down into more general terms in Appendix A, but the
subpoena or summons, a search warrant, a judicial subpoe- full list of exceptions as written in the law is as follows:
29
na, or a formal written request. More so, customers must
be notified that their records are sought by the government, 1. Disclosure of financial records not identified with
30
unless the court agrees there is reason to delay the notice. particular customers;

4
2. Disclosure to, or examination by, supervisory agency Setting aside the subject of each exception for a moment,
pursuant to exercise of supervisory, regulatory, the shear scope of the list of exceptions opens the Right to
or monetary functions with respect to financial Financial Privacy Act to the risk of being rendered ineffec-
institutions, holding companies, subsidiaries, institu- tive.34 However, matters are only made worse by the fact
tion-affiliated parties, or other persons; that the exceptions themselves provide broad authority
3. Disclosure pursuant to Title 26 [or the Internal Rev- to law enforcement and other government agencies that
enue Code]; routinely act as the most common collectors of financial
4. Disclosure pursuant to federal statute [e.g., the Bank information. As noted by the Financial Crimes Enforcement
Secrecy Act] or rule promulgated thereunder; Network (FinCEN),
5. Disclosure pursuant to federal rules of criminal pro-
cedure or comparable rules of other courts; The Right to Financial Privacy Act (RFPA) generally pro-
6. Disclosure pursuant to administrative subpoena hibits financial institutions from disclosing a custom-
issued by administrative law judge; er’s financial records to a Government agency without
7. Disclosure pursuant to legitimate law enforcement service of legal process, notice to the customer, and
inquiry respecting name, address, account number, an opportunity to challenge the disclosure. However,
and type of account of particular customers; no such requirement applies when the financial institution
8. Disclosure pursuant to lawful proceeding, investiga- provides the financial records or information to FinCEN or a
tion, etc., directed at financial institution or legal supervisory agency in the exercise of its “supervisory, regula-
entity or consideration or administration respecting tory or monetary functions.”35 (Emphasis added)
government loans, loan guarantees, etc.;
9. Disclosure pursuant to issuance of subpoena or court Other than FinCEN, the other supervisory agencies consid-
order respecting grand jury proceeding; ered relevant and appropriate for these purposes include the
10. Disclosure pursuant to proceeding, investigation, criminal investigative services of the armed forces; the Bureau
etc., instituted by Government Accountability Office of Alcohol, Tobacco, and Firearms; the attorney general,
and directed at a government authority; district attorney, or state’s attorney at the state or local level;
11. Disclosure necessary for proper administration of the Drug Enforcement Administration; the Federal Bureau
programs of certain government authorities; of Investigation; the Internal Revenue Service or tax enforce-
12. Crimes against financial institutions by insiders; ment agencies at the state level; the Office of Foreign Assets
13. Disclosure to, or examination by, employees or agents Control; state or local police departments; the U.S. Attorney’s
of Board of Governors of Federal Reserve System or Office; Immigration and Customs Enforcement; the U.S. Postal
Federal Reserve banks; Inspection Service; and the U.S. Secret Service.36 Thus, given all
14. Disclosure to, or examination by, Resolution Trust the exceptions provided to so many government agencies, the
Corporation or its employees or agents; Right to Financial Privacy Act does not strengthen Americans’
15. Disclosure to, or examination by, Federal Housing financial privacy as its authors initially sought (see Table 1).
Finance Agency or Federal Home Loan Banks;
16. Access to information necessary for administration of
certain veteran benefits laws; LIFE AFTER THE RIGHT TO
17. Disclosure pursuant to federal contractor–issued F I N A N C I A L P R I VA C Y A C T
travel charge card; To understand how the Right to Financial Privacy Act has
18. Disclosure to the Bureau of Consumer Financial failed to live up to its name in practice, one need only look at
Protection; how the past 50 years have been marked by a continued ero-
19. Access to financial records for certain intelligence and sion of Americans’ financial privacy. Legislated expansions
protective purposes; and of financial surveillance, law enforcement investigations
33
20. Emergency access to financial records. and regulatory pressure taking advantage of loopholes, and

5
even often-hidden factors like inflation have intruded on the Protecting Financial Privacy Act of 2021 with 65 cospon-
Americans’ financial privacy. sors.43 To address these criticisms and defend its position, the
Treasury issued a press release, stating that

Legislative Expansions In reality, many financial accounts are already

The lack of financial privacy in the United States caught reported on to the IRS, including every bank account
the attention of most Americans when the U.S. govern- that earns at least $10 in interest. And for American
ment considered surveilling all bank accounts with at least workers, much more detailed information reporting
37
$600 of annual activity. The saga began in the spring of exists on wage, salary, and investment income.44
2021 when the Treasury released its annual revenue pro-
posals.38 Nestled on page 88 was a proposal to “introduce While true, the Treasury’s statement reveals the dismal
comprehensive financial account reporting to improve tax state of financial privacy in the United States.45 Because
compliance.”39 The plan was to require banks and other the Treasury is right: a great deal of financial surveillance is
financial institutions to “report gross inflows and outflows already taking place. Moreover, it has been steadily expand-
with a breakdown for physical cash, transactions with a ing for years, long after the Bank Secrecy Act was enacted.
foreign account, and transfers to and from another bank In 1992, for example, the Annunzio-Wylie Anti–Money
account with the same owner” so long as the account in Laundering Act was one of the first major expansions of the
40
question had at least a gross flow threshold of $600. Bank Secrecy Act.46 Much like when the Bank Secrecy Act gave
As the proposal gained favor in Congress and attention the secretary of the Treasury the authority to require cur-
across the country, many Americans were left asking how rency transaction reports, the Annunzio-Wylie Anti–Money
such a proposal could be considered constitutional, and some Laundering Act gave the secretary of the Treasury the authority
members of Congress quickly responded with legislative pro- to require financial institutions to “report any suspicious trans-
posals to stop what was a violation of the spirit of the Fourth action relevant to a possible violation of law or regulation.”47
Amendment.41 For example, Sen. Tim Scott (R-SC) intro- In doing so, the law also barred financial institutions from
duced the Prohibiting IRS Financial Surveillance Act with 49 notifying the public of when a report was filed. To oversee this
42
cosponsors. Likewise, Rep. Ashley Hinson (R-IA) introduced new reporting regime, the Money Laundering Suppression Act

Table 1
The Right to Financial Privacy Act of 1978 fails to protect financial privacy under most conditions
Agency or condition Does the act protect nancial privacy here?
Internal Revenue Service No
Federal Reserve No
Financial Crimes Enforcement Network (FinCEN) No
Consumer Financial Protection Bureau No
Government Accountability Of ce No
Social Security records No
Tax records No
Bank Secrecy Act No
Criminal or civil court cases No
Legitimate law enforcement requests No
Administrative subpoena No
Grand jury subpoena No

Source: 12 U.S.C. § 3413.

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of 1994 authorized the secretary of the Treasury to designate and the nature of the transaction. Failure to report, incorrect
the Financial Crimes Enforcement Network (FinCEN) as the information, or missing information may result in a $25,000
48
agency supervising suspicious activity reports (SARs). fine or five years in prison.54
In 2022, the Special Measures to Fight Modern Threats
“So instead of protecting the Act was introduced as an amendment to a larger bill to build

privacy of their depositors, off of the tools provided by the USA PATRIOT Act to expand
the Treasury’s powers and authority by removing the checks
financial institutions are and balances designed to protect American citizens.55 The
forced to protect the secrecy House Committee on Financial Services initially described
of government investigations the proposal as streamlining “the process by which special

into the financial activity of measures may be introduced and modernizes the authori-
ties granted to the Financial Crimes Enforcement Network
Americans, whether those (FinCEN).”56 In practice, said “streamlining” would have
investigations have a legitimate been achieved by removing the requirements to notify the
criminal predicate or not.” public of when the Treasury uses special measures as part of
its enforcement. For the Treasury to use its special measures
In 2001, the Uniting and Strengthening America by authority, the current law requires a notice of proposed
Providing Appropriate Tools Required to Intercept and rulemaking as well as a 120‐day limit on the enforcement.
Obstruct Terrorism (USA PATRIOT) Act was enacted to deter However, as originally written, the bill would eliminate both
terrorism. Although stopping terrorism is indeed a worth- the requirement to notify the public and the 120‐day limit on
while endeavor, the law dramatically reduced financial enforcement. As Jerry Brito and Peter Van Valkenburgh first
privacy in the United States in its effort to identify and thwart described it in their analysis of the bill, “in other words, it is
49
terrorist financing. For example, the law introduced “know an attempt . . . to use the moral panic surrounding criminal
your customer” requirements to force financial institutions usage of cryptocurrencies . . . to strip our surveillance laws
to collect identifying information and run checks on poten- of all public processes.”57 Despite still seeking to expand the
tial customers. The law also expanded the requirements for Treasury’s powers, the bill was later amended and reintro-
financial institutions to file SARs—further turning financial duced several times without the language that would have
institutions into de facto deputy law enforcement investi- removed the checks on the Treasury’s power.58
gators.50 And as mentioned earlier, although one would be Similarly, another bill, the Transparency and Accountability
correct to wonder why such news is not more widely reported, in Service Providers Act, was introduced in 2022 to “expand
both employees from financial institutions and the govern- the scope and authorities of anti–money laundering
ment are prohibited under the law from notifying customers [procedures].”59 To do so, the bill would require so‐called
when a SAR is filed.51 So instead of protecting the privacy of financial gatekeepers to adopt anti–money laundering pro-
their depositors, financial institutions are forced to protect the cedures to actively monitor for potential criminal activity.
secrecy of government investigations into the financial activ- The bill calls for the Treasury to require this of any person
ity of Americans, whether those investigations have a legiti- involved in the exchange of foreign currency, digital cur-
52
mate criminal predicate or not. rency, or digital assets; managing, advising, or consulting
In 2021, Congress passed the Infrastructure Investment with respect to money or other assets; the provision of cash
and Jobs Act, which not only established a de facto ban vault services; the processing of payments; the wiring of
on legal cryptocurrency mining, but also mandated that money; the direct or indirect filing of any return on behalf
individuals must report on one another when exchang- of a foreign individual, trust, or fiduciary; the formation,
53
ing cryptocurrency worth $10,000 or more. The reports registration, acquisition, or disposition of a corporation,
must include the name, address, and taxpayer identification limited liability company, trust, foundation, limited liabil-
number of the payer, as well as the amount paid, the date, ity partnership, partnership, association, or arrangement;

7
the sourcing, pooling, organization, or management of institutions to collect information on account holders,
capital; and the process of acting as a trustee. Operation Choke Point was the next step forward in terms
With Congress enacting such sweeping powers and of the government taking action on information that had
attempting to go even further on many occasions, it should otherwise been sitting idle.65
be little surprise that Americans have steadily become more But Operation Choke Point was not an anomaly. Just a
60
wary of the government’s activities. In 2017, a Reuters and few years after the full scope of Operation Choke Point was
Ipsos poll found that 75 percent of adults—up from 67 percent revealed,66 Sen. Ron Wyden (D-OR) helped bring to light
in 2013—would not voluntarily let investigators monitor that the U.S. Immigration and Customs Enforcement (ICE)
61
their internet activity to combat terrorism. In fact, as Figure had been collecting records on money transfers to or from
1 shows, Americans are overwhelmingly unwilling to give up Mexico greater than $500.67 ICE had collected approximate-
their privacy in the name of the war on terror.62 Yet it isn’t just ly 6 million transaction records between 2019 and 2022—all
the war on terror that the U.S. government has used to justify without a warrant. Instead, ICE issued eight administra-
further encroaching on Americans’ financial privacy. tive subpoenas, or court orders, instructing Western Union
and Maxitransfers Corporation to turn over records for six
months at a time.68 As Matthew Guariglia, a policy analyst
Law Enforcement Investigations at the Electronic Frontier Foundation, explained, “this is a
and Regulatory Pressure blatantly illegal exploitation of the government subpoena
The wars on drugs, crime, and poverty have been power—and an all too familiar one that must stop.”69
used for decades as a justification to peer into the lives In August 2022, attention shifted to the U.S. Department
of Americans. Most infamously, Operation Choke Point of Treasury when it declared Tornado Cash—a decentral-
was an initiative by the Department of Justice to go after ized software protocol designed to enhance cryptocurrency
so-called controversial businesses (e.g., state-licensed privacy—a sanctioned entity and thus barred all Americans
cannabis dispensaries, payday lenders, pawn shops, or from using the service after it was found that a North Korean
gun shops) with the intent of, as one official described state-sponsored hacking group had used the service.70 Much
it, “choking them off from the very air they need to like when the government used Operation Choke Point to
63
survive.” In other words, as reported in the Wall Street target financial infrastructure instead of individual actors, it
Journal, “rather than just targeting individual firms, the seems that the Treasury opted to go after an entire software
government is now going after the infrastructure that protocol dedicated to improving financial privacy rather
enables companies to withdraw money from people’s than the bad actors that it was after on paper.71 The blurring
bank accounts.”64 After already having forced financial of lines was made abundantly clear when U.S. Secretary of

Figure 1
Most Americans are unwilling to give up their privacy to help the U.S. government foil terrorist plots

Give up these privacies? No, unwilling Yes, willing

Email privacy 76% 24%

Internet privacy 75% 25%

Phone records privacy 75% 25%

Text message privacy 73% 27%

Source: Dustin Volz, “Most Americans Unwilling to Give Up Privacy to Thwart Attacks: Reuters/Ipsos Poll,” Reuters, April 4, 2017.

8
State Antony Blinken tweeted (and then deleted) the claim Hidden Expansions
that Tornado Cash was a North Korean state-sponsored Were legislated expansions, law enforcement investiga-
72
hacking group. It’s certainly possible that Treasury officials tions, and regulatory pressures not enough on their own,
similarly did not recognize that Tornado Cash was a decen- each year that passes with a positive inflation rate offers
tralized software protocol (i.e., there’s no person in control another hidden increase in the level of financial surveillance,
of it), but there is little excuse to shut down an entire service because the Bank Secrecy Act reporting thresholds were not
in pursuit of criminals when there are ample tools to go after crafted with an adjustment for inflation. The original report-
73
the criminals themselves. ing threshold for currency transaction reports (CTRs) was
$10,000—a relatively large transaction in the 1970s.77 If, for
example, the threshold had been adjusted for inflation, then
“Trudeau froze the bank accounts of CTRs would now be required only for transactions of at least
protestors and expanded the reach $72,000 (see Figure 2).78
of existing anti–money laundering The erosion of financial privacy in the wake of ever-

laws in Canada to stop the protests expanding financial surveillance is especially important to
consider given that Supreme Court Justices Lewis Powell
over COVID-19 restrictions.” and Harry Blackmun noted in their 1974 support of the Bank
Secrecy Act that the $10,000 requirement was high enough
Looking just beyond America’s borders, the public was to not create an undue burden.79 It is unclear if Justices
also confronted with how much financial privacy has Powell and Blackmun would have believed that the current,
deteriorated and how real the risk of financial oppres- inflation-adjusted threshold was low enough to now be
sion can be in other free nations when Canadian Prime unduly burdensome, but their opinion suggests so:
Minister Justin Trudeau invoked the Emergencies Act for
the first time in Canadian history.74 In doing so, Trudeau The implementing regulations, however, require only
froze the bank accounts of protestors and expanded the that the financial institution “file a report on each
reach of existing anti–money laundering laws in Canada deposit, withdrawal, exchange of currency or other
to stop the protests over COVID-19 restrictions. Although payment or transfer, by, through, or to such financial
not in the United States, it’s important to recognize that institution, which involves a transaction in currency of
freezing the accounts of political rivals is a tactic that is more than $10,000.” 31 CFR § 103.22 (italics added).
usually reserved for authoritarian countries like Russia or . . . A significant extension of the regulations’ report-
China—not the sixth-freest nation in the world, as rated ing requirements, however, would pose substantial
75
by the Cato Institute’s Human Freedom Index. Mercatus and difficult constitutional questions for me. In their
Center scholar Brian Knight was correct to note that “the full reach, the reports apparently authorized by the
events in Canada should serve as a wake-up call [for the open-ended language of the Act touch upon intimate
United States] and prompt us to change the laws, regula- areas of an individual’s personal affairs. Finan-
tions, and institutions that govern who controls [your cial transactions can reveal much about a person’s
76
financial activity].” In light of these actions by an oth- activities, associations, and beliefs. At some point,
erwise nonautocratic country, and the demonstrable governmental intrusion upon these areas would
willingness of Congress to expand the weaponization of implicate legitimate expectations of privacy.80
the financial infrastructure, it’s reasonable to think the
United States will do the same if presented with a similar At a 2022 congressional hearing dedicated to the over-
emergency situation. Operation Choke Point, the mass sight of FinCEN, Reps. Barry Loudermilk (R-GA), Joyce
collection of records on money transfers, the sanctioning Beatty (D-OH), French Hill (R-AR), Bryan Steil (R-WI), and
of Tornado Cash, and similar intrusions by the U.S. govern- Roger Williams (R-TX) all expressed concern over inflation
ment are already proof of how real that risk is. silently increasing the scope of financial surveillance.81 In

9
Figure 2
Inflation has steadily increased, but the threshold for currency transaction reports has never been adjusted
$80K
$72,790.75
$70K

$60K

$50K tion After adjusting for inflation,

d for infla
te
adjus the current threshold is 7.2
$40K hres hold
al t times more restrictive than
Origin
when originally introduced
$30K

$20K
Threshold for filing a report $10,000
$10K

$0
0
37
5
77
97
18
38
5
7
98
19
39
59
7
99
10
30
50
70
9
11
31
51
71
91
1
32
7

8
8

2
91
91
91
91
91
91
91
91
91
91
91
91
91
91
02
02
02
02
02
02
02
02
02
02
02
02
Source: Author’s calculations based on data from Bureau of Labor Statistics, “Consumer Price Index (CPI) Databases,” U.S. Department of Labor.

particular, Representative Steil pointed out at the hear- significant enough to warrant an increase for the monetary
ing that by increasing the range of financial surveillance, penalties that FinCEN charges to the public.86
the “haystack” investigators must search has been ever The “invisibility” with which financial surveillance is being
increasing in size—effectively hiding the “needle,” or expanded should concern all Americans. Howard Anglin, for-
82
actual criminal activity, that investigators are looking for. mer deputy chief of staff for Canadian prime minister Stephen
Over the years, other members of Congress have tried to Harper, pointed out this reality when the Canadian govern-
rectify the issue with legislative amendments to add inflation ment began to freeze the bank accounts of protestors in 2022,
adjustments to the reporting required by the Bank Secrecy but his words were an eye-opening description of both the
Act. For example, Rep. Steven Pearce (R-NM) and Rep. Blaine limited consideration of inflation and the broader consider-
Luetkemeyer (R-MO) introduced the Counter Terrorism and ation of financial surveillance as a whole:
Illicit Finance Act in 2018 to increase the reporting thresholds
for CTRs, SARs, and money service businesses. In addition, The government’s action is troubling enough, but
the bill would have also required FinCEN to conduct a formal what should really disturb us is the ease and invis-
83
review of the effectiveness of those reporting thresholds. ibility with which it is being done. When we can’t see
Ultimately, only the requirement for a formal review was the consequences of government conduct, the risks of
passed in the National Defense Authorization Act for Fiscal government misconduct increases. A government that
84
Year 2021, in Sections 6204 and 6205. In short, those sec- sends in riot troops to dispel a crowd will rightly pay a
tions required FinCEN to provide several reports regarding price if the police commit abuses. But the diffuse and
the possibility of raising the reporting thresholds to account anonymous nature of financial enforcement mean
for inflation. FinCEN Acting Director Himamauli Das testified that sweeping repression can easily go undetected.
before Congress in April 2022 that the reports should be ready It is the political equivalent of using drone strikes
by the end of 2022 (as of March 2023, the reports have not instead of boots on the ground.87
been made public).85 The decision to increase the reporting
thresholds per inflation should be a simple one considering The relative invisibility of inflation is likely one contrib-
that in 2016 FinCEN judged inflation as having been uting reason why the American people have not objected

10
Figure 3
Americans believe it is reasonable to expect financial privacy from the government

Yes, expect privacy No

Should the government need a warrant

to access your nancial records? 83% 17%

Is it unreasonable for your bank to share

your records with the government? 79% 21%

Source: Cato Institute, “Cato Institute 2022 Financial Privacy National Survey,” September 2022.

widely to the government’s increased financial surveillance. Fourth Amendment was not limited to physical intru-
By relying on inflation—instead of the legislative process— sions. In United States v. Jones (2012), the Supreme Court
to steadily increase the scope of surveillance, the Bank held that attaching and monitoring a tracking device on an
Secrecy Act regime has been allowed to proceed undetected individual’s vehicle “constitutes a search or seizure within
and unquestioned. Employing such actions may be a favor- the meaning of the Fourth Amendment.”91 In Carpenter
able strategy for an authoritarian leader, but it should not be v. United States (2018), the Supreme Court likewise held
the strategy of representative governments—especially ones that the government’s acquisition of cellphone tracking
88
that are considered the freest nations in the world. data was a search under the Fourth Amendment.92 And
across all of these cases, there were moments where the
Supreme Court turned back to Katz v. United States (1967),
A R E A S O N A B L E E X P E C TAT I O N in which the Supreme Court had held that the “Fourth
O F P R I VA C Y Amendment protects people, not places.”93 In Katz, Justice
At the core of much of the financial surveillance taking place John Marshall Harlan wrote that
in the United States is the third-party doctrine and a so-
called reasonable expectation of privacy. Soon after Congress a person has a constitutionally protected reasonable
enacted the Bank Secrecy Act, the Supreme Court held in expectation of privacy; [that] electronic, as well as
United States v. Miller that a person cannot reasonably expect physical, intrusion into a place that is in this sense
privacy when providing information to a third party (e.g., a private may constitute a violation of the Fourth
financial institution). But is it so unreasonable to expect pri- Amendment, and [that] the invasion of a constitu-
vacy, or confidentiality, with your banker? The Cato Institute tionally protected area by federal authorities is, as the
surveyed Americans in August 2022 and found that the Court has long held, presumptively unreasonable in
answer is decidedly no (Figure 3). When asked if it is unrea- the absence of a search warrant. . . . My understanding
sonable for your bank to share your records and transactions of the rule that has emerged from prior decisions is
with the federal government, 79 percent of respondents said that there is a twofold requirement, first that a person
89
yes. Likewise, when asked if the government should need to has exhibited an actual (subjective) expectation of
obtain a warrant to access their financial records, 83 percent privacy and, second, that the expectation be one that
of the respondents said yes. society is prepared to recognize as “reasonable.”94
In recent years, the Supreme Court appears to have
recognized the need for change. In Kyllo v. United States Between rolling passwords, security questions, multifac-
(2001), the Supreme Court had to weigh the constitution- tor authentication requirements, and closed-door meetings,
ality of law enforcement using thermal imaging to surveil one can make the case that most people exhibit an actual
90
the inside of a home from afar. Ultimately, the Court expectation of privacy with respect to their financial
held that the right to be secure in one’s home under the records. Moreover, as the Cato Institute’s national survey

11
demonstrates, a majority of Americans from across political investigating certain business activity permits the person
ideologies do in fact find it reasonable to expect privacy with to effectively cover up or pull out of the jurisdiction.”99
one’s financial records. These facts suggest that Congress When an act is faced with such a critique, there are three
should better protect Americans’ financial privacy. questions worth considering. First, what limit should there
be to what the government may seize in pursuit of combat-
ting crime? In one of the more extreme examples, the walls
THE ELEPHANT IN THE ROOM: around one’s home are sufficient to provide privacy for
G R E AT E R F I N A N C I A L P R I VA C Y W I L L any number of possible crimes. Yet the Supreme Court has
C R E AT E A G R E AT E R B U R D E N O N L AW defended the home even from spying from afar.100
E N F O R C E M E N T A N D R E G U L AT O R S Second, given that there is some established limit to what
While financial privacy is in the interest of most Americans, the government can seize, what amount of suspected illegal
it is not necessarily in the interest of law enforcement, regula- activity must there be to justify crossing that limit? Although
95
tors, or other government agencies. Unsurprisingly, these some policymakers may be quick to respond that they would
government agencies have been more interested in expand- eliminate all illegal activity, that policy is simply untenable.101
ing their investigations than expanding citizens’ privacy The Bank Secrecy Act is already an example of this reality.
protections. As noted by the Electronic Privacy Information With each expansion of the Bank Secrecy Act, it has become
Center, “much of the opposition to the [Right to Financial harder for financial institutions to stay in business and harder
Privacy Act] has been by federal law enforcement officials who for consumers to have access to affordable services. It is
are concerned that the proposed privacy protections would estimated that complying with the Bank Secrecy Act in 2019
impede federal authorities in their investigation and prosecu- cost the U.S. financial industry $26.4 billion.102 Yet as it stands,
tion of white-collar and organized crime.”96 In fact, the North despite the millions of Bank Secrecy Act reports filed each
American Securities Administration Association (NASAA) was year, there is little to show for its attempts to eliminate illegal
quick to state its opposition in 1977 as the Right to Financial activity.103 Instead, it is only the American public that is bear-
Privacy Act was gaining momentum: ing the cost of this financial surveillance policy.

Agencies assigned the monumental task of ensuring “Between rolling passwords,

that consumer/investor losses occur only as a result
of normal business-market place risks shall be hard
security questions, multifactor
pressed by the policies and procedures set forth by authentication requirements, and
this act. Persons will be tempted to commit such closed-door meetings, one can
crimes so long as the chance of discovery and perse- make the case that most people
cution are kept remote.97
exhibit an actual expectation
The NASAA went on to argue that obtaining warrants of privacy with respect to their
and subpoenas is sometimes too hard or takes too much financial records.”
time—an argument also made by U.S. attorney for the
Southern District of New York Robert Morgenthau in his So, with it established that there exists some limit to gov-
supportive testimony for the Bank Secrecy Act nearly ernment surveillance that may legally take place and that
10 years earlier in 1967 and an argument made by the this surveillance puts a direct cost on Americans, the third
Department of Justice in support of expanding the Bank question becomes: how can government agencies get the
98
Secrecy Act 45 years later in 2022. The NASAA also took information they need without intruding on the rights of
issue with the Right to Financial Privacy Act’s require- American citizens? The Fourth Amendment clearly provides
ment to seek permission from the account holder, stating the “framework to balance the competing interests of individ-
that “to provide notice to a target that an agency is uals’ financial privacy and the government’s ability to gather

12
evidence to enforce laws.”104 Yes, requiring that a warrant be of the Bank Secrecy Act that require financial institutions
obtained by showing probable cause will make it harder for to report on their customers.105 To do so, Congress should
law enforcement and other government agencies. However, amend 12 U.S.C. Sections 3402, 3413, and 3414 as well as
the Constitution exists for a reason: it was designed to protect 31 U.S.C. Sections 5313–16, 5318(a)(2), 5318A, 5321, 5325,
American citizens from unchecked state powers. 5326, 5331–32, 5341–42, and 5351–55.
To the extent that reporting requirements may still exist
after amending the Right to Financial Privacy Act and the
R E C O M M E N D AT I O N S F O R A Bank Secrecy Act, Congress should require annual inflation
B E T T E R F R A M E WO R K F O R adjustments for all Bank Secrecy Act reporting thresholds.
F I N A N C I A L P R I VA C Y To do so, Congress could use the following language:106
To establish a stronger Right to Financial Privacy Act,
Congress should remove the exceptions to its protections. (1) Not later than the end of the 180-day period
Doing so would merely require that law enforcement and beginning on the date of the enactment of this
other government agencies seek a warrant for Americans’ Act, and annually thereafter, the Secretary of
financial records. Otherwise, offering protections everywhere the Treasury shall revise regulations issued with
except where they really matter offers no protections at all. To respect to Section 5313 of Title 31, United States
do so, Congress should strike 12 U.S.C. Section 3413(a)–(r) and Code, to update each $10,000 threshold in such
12 U.S.C. Section 3414(a)–(e). Removing these sections will regulations to [insert inflation-adjusted amount
not affect the exceptions provided for customer disclosures, as of the current day].
subpoenas, or warrants in 12 U.S.C. Section 3402. (2) Section 5331 of Title 31, United States Code, is
amended by striking “10,000” each place such
“Congress should also eliminate term appears in heading or text and inserting
“[insert inflation-adjusted amount as of the cur-
26 U.S.C. Section 6050I because rent day].”
no American should be forced by (3) Not later than the end of the 180-day period
law to report on the activity of beginning on the date of the enactment of
another American—especially this Act, and annually thereafter, each Federal
department or agency that issues regulations
when that activity is between with respect to reports on suspicious transac-
only two parties.” tions described under Section 5318(g) of Title
31, United States Code, shall update each $5,000
The Right to Financial Privacy Act should also be strength- threshold amount in such regulations to [insert
ened with respect to the formal written requests that it allows inflation-adjusted amount as of the current day]
government authorities to issue when there is no warrant or and each $2,000 threshold amount in such regu-
subpoena authority available. Congress should strike 12 U.S.C. lation to [insert inflation-adjusted amount as of
Section 3408(2), as regulations should not be considered an the current day].
avenue for circumventing the Fourth Amendment protections
this law sought to establish. Likewise, Congress should strike Likewise, if such reporting requirements are permitted
12 U.S.C. Section 3408(4)(A)2, because Americans should not to continue, Congress should require FinCEN to publicly
be forced to sue the government to have their rights respected report the number of SARs and CTRs that effectively curb
when it has already been judged that the authority for a war- financial crime. The report should detail how many reports
rant or subpoena does not exist. are received, reviewed, and requested by other governmen-
Congress should repeal the Bank Secrecy Act in its entirety. tal agencies. In addition, FinCEN should report how many
Short of that, it should, at the very least, repeal the sections reports resulted in conviction, settlement, or additional

13
charges in investigations unrelated to money laundering. by enacting protections for two-party, or peer-to-peer,
The reports should make a clear distinction between crimi- transactions. Holding cryptocurrency in a “self‐​hosted”
nal investigations that originated with SARs or CTRs and wallet is merely the digital equivalent of holding physical
criminal investigations that merely used existing SARs or cash in a traditional wallet. It gives the owner complete
CTRs to strengthen existing cases. To do so, Congress could control over what’s held inside it and, to the extent that they
107
use the following language: want to do so, the ability to maintain their privacy. Congress
should not let financial surveillance further encroach on
Annual Report.—Not later than one year after the date Americans’ privacy by being expanded to cover self-hosted
of enactment of this Act, and annually thereafter, the wallets and peer-to-peer exchanges. To do so, Congress
Attorney General, in consultation with the Secretary could use the following language:110
of the Treasury, Federal law enforcement agencies, the
Director of National Intelligence, Federal functional In General—No agency head may prohibit or other-
regulators, and the heads of other appropriate Federal wise restrict the ability of a covered user to—
agencies, shall publish a publicly available report that (A) use cryptocurrency or its equivalent for such
contains statistics, metrics, and other information user’s own purposes, such as to purchase goods
on the use of data derived from financial institutions and services for the user’s own use; or
reporting under the Bank Secrecy Act, including the (B) conduct transactions through a self-hosted
number of reports that— wallet.
(A) have been received by the Financial Crimes
Enforcement Network;
(B) have been reviewed by the Financial Crimes CONCLUSION
Enforcement Network; In a concurring opinion in United States v. Jones, Justice
(C) have been requested by other governmental Sonia Sotomayor wrote,
agencies;
(D) have led to a secondary investigation by the More fundamentally, it may be necessary to recon-
Financial Crimes Enforcement Network; sider the premise that an individual has no reason-
(E) have led to further procedures by law enforce- able expectation of privacy in information voluntarily
ment agencies, including the use of a subpoena, disclosed to third parties. This approach is ill suited to
warrant, or other legal process; the digital age, in which people reveal a great deal of
(F) have resulted in a conviction or settlement; and information about themselves to third parties in the
(G) have resulted in additional charges in investiga- course of carrying out mundane tasks.111
tions unrelated to money laundering.
Considering how much has changed since the Bank
Congress should also eliminate 26 U.S.C. Section 6050I Secrecy Act, United States v. Miller, and the Right to Finan-
because no American should be forced by law to report on the cial Privacy Act took effect in the 1970s, Justice Sotomayor
activity of another American—especially when that activ- is right: it is time to reconsider the third-party doctrine,
ity is between only two parties. Yet, 26 U.S.C. Section 6050I the reasonable expectation of privacy, and financial pri-
requires exactly that when Americans choose to use cash or vacy. “Having technology” in the 1970s meant having a
108
cryptocurrencies. This section should be repealed in its television and an electric typewriter. Less than 20 percent
entirety. Between blockchain forensics and traditional inves- of families had a credit card issued by a bank.112 Today,
tigations, there already exist plenty of tools available to law technology is an integral part of modern life: Americans
enforcement; Americans should not and need not be forced to use credit or debit cards for nearly all purchases, acquire
109
become informants on one another against their will. loans directly on their phones, and leave a digital trail
Finally, Congress should turn its focus toward the future nearly everywhere they go. So, while such financial records

14
may have offered only limited insights into one’s life in how financial privacy is treated in the United States. There
the 1970s, these financial records now offer a full, detailed will still be much to do in the long run, but the recommen-
representation of one’s life. dations proposed here could help to significantly restore
Such unrivaled access to the lives of all Americans makes the financial privacy protections that have been eroded
it evident that now, more than ever, it is time to rethink over the past 50 years.

APPENDIX A
To better understand the exceptions provided in the Right Disclosure pursuant to federal rules of criminal
to Financial Privacy Act, this appendix breaks down and procedure or comparable rules of other courts. The
113
explains each of the 20 exceptions. Right to Financial Privacy Act does not apply to financial
records sought under the rules and procedures that govern
Disclosure of financial records not identified with par- civil and criminal cases in the U.S. court system. Examples
ticular customers. The Right to Financial Privacy Act does could include records sought during an ongoing court case.
not apply to financial records if the records do not identify
particular customers. Examples could include benefit pack- Disclosure pursuant to administrative subpoena
ages for employees, budgeting outlays, and similar high-level issued by administrative law judge. The Right to
records that might be maintained by a financial institution. Financial Privacy Act does not apply to financial records if
an administrative law judge issues a subpoena. Examples
Disclosure to, or examination by, supervisory could include relevant papers, books, electronically stored
agency pursuant to exercise of supervisory, regula- information, or documents.
tory, or monetary functions with respect to financial
institutions, holding companies, subsidiaries, insti- Disclosure pursuant to legitimate law enforcement
tution-affiliated parties, or other persons. The Right to inquiry respecting name, address, account number, and
Financial Privacy Act does not apply to financial records type of account of particular customers. The Right to Finan-
shared with any regulatory agency that has oversight over cial Privacy Act does not apply when law enforcement officials
the institution in question. Examples could include records have a “legitimate inquiry” for only the name, address, account
requested by the Federal Deposit Insurance Corporation or number, and account type of a particular customer.
Federal Reserve during an audit.
Disclosure pursuant to lawful proceeding, investiga-
Disclosure pursuant to Title 26 [or the Internal tion, etc., directed at financial institution or legal entity,
Revenue Code]. The Right to Financial Privacy Act does or consideration or administration respecting govern-
not apply to financial records shared in accordance with ment loans, loan guarantees, etc. The Right to Financial
the Internal Revenue Code or tax system. Examples could Privacy Act does not apply to financial records in connection
include credit card statements, check records, invoices, to a government loan program on the condition that they are
and receipts. only used for their initial purpose with the government loan
program. However, if a civil, criminal, or regulatory violation
Disclosure pursuant to federal statute [e.g., the Bank is suspected, the official overseeing the government loan
Secrecy Act] or rule promulgated thereunder. The Right program can instruct the relevant agency to independently
to Financial Privacy Act does not apply to financial records seek out the records.
sought in connection with federal statutes. For example,
this exception means there are no protections regarding Disclosure pursuant to issuance of subpoena or court
suspicious activity reports or currency transaction reports. order respecting grand jury proceeding. The Right to

15
Financial Privacy Act does not apply to financial records Disclosure to, or examination by, the Federal Housing
sought by a grand jury subpoena. Examples could include Finance Agency or Federal Home Loan Banks. The Right
relevant papers, books, electronically stored information, to Financial Privacy Act does not apply to financial records
or documents. sought by the Federal Housing Finance Agency or Federal
Home Loan Banks. Examples could include bank reserves,
Disclosure pursuant to proceeding investigation, etc., capital ratios, and balance sheets.
instituted by Government Accountability Office and
directed at a government authority. The Right to Financial Access to information necessary for administration
Privacy Act does not apply to financial records requested by of certain veteran benefits laws. The Right to Financial
the Government Accountability Office as part of an ongoing Privacy Act does not apply to financial records disclosed to
proceeding, investigation, examination, or audit of another the Department of Veterans Affairs solely for the purpose
government authority. of properly carrying out benefits programs. Examples
could include credit card statements, check records,
Disclosure necessary for proper administration invoices, and receipts.
of programs of certain government authorities. The
Right to Financial Privacy Act does not apply to financial Disclosure pursuant to federal contractor–issued travel
records required to carry out the Social Security or Railroad charge card. The Right to Financial Privacy Act does not
Retirement Acts. Examples could include credit card state- apply to financial records disclosed regarding a contractor-
ments, check records, invoices, and receipts. issued travel card issued for official government travel.
Examples could include receipts, invoices, and statements.
Crimes against financial institutions by insiders. The
Right to Financial Privacy Act does not apply to financial Disclosure to the Bureau of Consumer Financial
records concerning the possible commission of a crime Protection. The Right to Financial Privacy Act does not
by an executive, employee, or customer of a financial apply to financial records disclosed to the Bureau of
institution furnished to either the attorney general or the Consumer Financial Protection. Examples could include
secretary of Treasury, or other enforcement agency. Exam- bank reserves, capital ratios, and balance sheets.
ples could include credit card statements, check records,
invoices, and receipts. Access to financial records for certain intelligence and
protective purposes. The Right to Financial Privacy Act
Disclosure to, or examination by, employees or agents does not apply to financial records disclosed to a govern-
of Board of Governors of Federal Reserve System or ment authority authorized to conduct counterintelligence,
Federal Reserve banks. The Right to Financial Privacy Act foreign intelligence, or investigations of international ter-
does not apply to financial records sought by employees of rorism. For example, this exception provides an open-door
the Federal Reserve System. Examples could include bank policy for the Secret Service, Central Intelligence Agency,
reserves, capital ratios, and balance sheets. Federal Bureau of Investigation, and others.

Disclosure to, or examination by, the Resolution Trust Emergency access to financial records. The Right to
Corporation or its employees or agents. The Right to Financial Privacy Act does not apply to financial records
Financial Privacy Act does not apply to financial records disclosed if the government determines that delaying
sought by the Resolution Trust Corporation. Examples could access would lead to someone being physically injured,
include bank reserves, capital ratios, and balance sheets. property being damaged, or a criminal going on the run.

16
APPENDIX B
To understand the erosion of financial privacy over time at y 2001—Uniting and Strengthening America by Pro-
a glance, this appendix provides a brief timeline of signifi- viding Appropriate Tools Required to Intercept and
cant events between 1970 and 2022. Obstruct Terrorism (USA PATRIOT) Act
y 2010—Adjusting CTR threshold for inflation puts it at
y 1970—Bank Secrecy Act approximately $53,000
y 1972—Currency transaction report (CTR) is set at y 2012—United States v. Jones
$10,000 y 2013–2017—Operation Choke Point
y 1972—American Civil Liberties Union, California Bank- y 2018—Carpenter v. United States
ers Association, and Security National Bank apply for a y 2020—Adjusting CTR threshold for inflation puts it at
temporary restraining order in the U.S. District Court approximately $63,000
for the Northern District of California y 2021—U.S. Treasury seeks to monitor bank accounts
y 1973—Rep. Fortney Stark (D-CA) seeks to better pro- with $600 of annual activity
tect financial privacy, arguing that the Bank Secrecy y 2021—Infrastructure Investment and Jobs Act man-
Act undermined the long-held tradition of confidenti- dates citizens report on each other’s cryptocurrency
ality between bankers and customers use
y 1974—California Bankers Association v. Shultz y 2022—Adjusting CTR threshold for inflation puts it at
y 1974—Privacy Act approximately $68,000
y 1976—United States v. Miller and the creation of the y 2022—Canadian Prime Minister Justin Trudeau
third-party doctrine freezes more than 200 bank accounts in attempt to
y 1977—Privacy Protection Study Commission releases stop protestors
a report titled Personal Privacy in an Information Society, y 2022—Rep. Jim Himes (D-CT) introduces bill to expand
criticizing the 1974 Privacy Act for failing to deliver the Treasury’s ability to censor financial transactions
protections one would expect y 2022—ICE revealed to have been collecting approxi-
y 1978—Right to Financial Privacy Act mately 6 million records from 2019 to 2022 for money
y 1980—Adjusting CTR threshold for inflation puts it at transfers greater than $500 to and from Mexico
approximately $19,000 y 2022—Treasury sanctions Tornado Cash
y 1990—Adjusting CTR threshold for inflation puts it at
approximately $31,000
y 1990—Financial Crimes Enforcement Network AC K N OW L E D G M E N T S
(FinCEN) is created The author thanks Norbert Michel, Jordan Brewer, Ann
y 1992—Annunzio-Wylie Anti–Money Laundering Act Rulon, Jennifer Schulp, Laura Bondank, Patrick Eddington,
y 1994—Money Laundering Suppression Act Zachary Wong, JP Koning, Marta Belcher, Dante Disparte,
y 1996—Suspicious activity report Christian Kameir, and Nicholas Thielman for their sugges-
y 2000—Adjusting CTR threshold for inflation puts it at tions. The author also thanks Emily Ekins for surveying the
approximately $41,000 American public on questions regarding financial privacy.
y 2001—Kyllo v. United States Any errors belong to the author alone.

17
NOTES

1. Nancy M. Kirschner, “The Right to Financial Privacy Act Jennifer J. Schulp, “Revising the Bank Secrecy Act to Protect
of 1978–The Congressional Response to United States v. Privacy and Deter Criminals,” Cato Institute Policy Analysis
Miller: A Procedural Right to Challenge Government Ac- no. 932, July 26, 2022.
cess to Financial Records,” University of Michigan Journal of
Law Reform 13 (1979). For examples of the tension between 9. California Bankers Association v. Shultz, 416 U.S. 21 (1974).
privacy and security, see Dante Disparte, “Apple vs. FBI:
Much Ado about Nothing or a Temporary Truce?,” Huffpost, 10. California Bankers Association v. Shultz, 416 U.S. 21 (1974).
March 31, 2016.
11. Nancy M. Kirschner, “The Right to Financial Privacy Act of
2. Chris Van Hollen, “Van Hollen, Whitehouse Ask GAO to 1978–The Congressional Response to United States v. Miller: A
Dig Deeper into Issue of Money Laundering and Real Es- Procedural Right to Challenge Government Access to Financial
tate,” Press Release, October 3, 2018. Records,” University of Michigan Journal of Law Reform 13 (1979).

3. Justice Thurgood Marshall argued, “By compelling an 12. Hearing on the Safe Banking Act, Before the Committee
otherwise unwilling bank to photocopy the checks of on Banking, Finance, and Urban Affairs, Subcommittee
its customers the Government has as much of a hand in on Financial Institutions Supervision, Regulation, and
seizing those checks as if it had forced a private person to Insurance, 95th Cong. 1st Sess. (October 3, 1977); Nancy M.
break into the customer’s home or office and photocopy Kirschner, “The Right to Financial Privacy Act of 1978–The
the checks there. Our Fourth Amendment jurisprudence Congressional Response to United States v. Miller: A Proce-
should not be so wooden as to ignore the fact that through dural Right to Challenge Government Access to Financial
microfilming and other techniques of this electronic age, Records,” University of Michigan Journal of Law Reform 13
illegal searches and seizures can take place without the (1979).
brute force of the general warrants which raised the ire
of the Founding Fathers.” California Bankers Association v. 13. Committee on Banking and Currency, Right to Financial
Shultz, 416 U.S. 21 (1974). See also Cato Institute, “Financial Privacy Act of 1978, U.S. House, 93rd Cong., 1st Sess., Report
Privacy in a Digital Era,” Live Online Policy Forum, April 21, no. 93-10181, 1973.
2022.
14. Privacy Act of 1974, 5 U.S.C. § 552a. For a background on
4. 12 U.S.C. § 3402 prohibits government authorities from the Privacy Act of 1974, see Electronic Privacy Information
accessing financial records unless they are able to obtain a Center, “The Privacy Act of 1974.”
customer’s consent, a warrant, a subpoena, or a formal writ-
ten request. 15. Privacy Act of 1974, 5 U.S.C. § 552a(b)(1)–(12).

5. Recent examples of governments violating financial free- 16. California Bankers Association v. Shultz, 416 U.S. 21 (1974).
dom will be discussed at length later in this paper. However,
those examples include the proposals to expand financial 17. Scott Kolecki, “1970 C3 Chevrolet Corvette Model Guide,”
surveillance in the United States to all bank accounts with Corvsport.
at least $600 in yearly activity, the decision by the Canadian
government to freeze the bank accounts of protestors, the 18. California Bankers Association v. Shultz, 416 U.S. 21 (1974).
U.S. Department of Treasury’s decision to sanction a privacy
service, and other similar events. 19. United States v. Miller, 425 U.S. 435 (1976).

6. For a full discussion of the Bank Secrecy Act, see Norbert J. 20. The third-party doctrine was later reaffirmed in 1979
Michel and Jennifer J. Schulp, “Revising the Bank Secrecy Act during Smith v. Maryland, 422 U.S. 735 (1979). Nicholas
to Protect Privacy and Deter Criminals,” Cato Institute Policy Anthony, “Why Don’t Americans Have Stronger Financial
Analysis no. 932, July 26, 2022. Privacy Rights?,” Cato at Liberty (blog), October 28, 2021;
Marta Belcher, Jennifer J. Schulp, and Caleb O. Brown, “Marta
7. Privacy Protection Study Commission, Personal Privacy in Belcher and Jennifer Schulp on Financial Privacy in a Digital
an Information Society (Washington: U.S. Government Print- Era,” Cato Institute Audio, June 1, 2022.
ing Office, 1977).
21. Electronic Privacy Information Center, “Right to Finan-
8. Pub. L. No. 91-508 § 101 (1970); Norbert J. Michel and cial Privacy Act.”

18
22. Privacy Protection Study Commission, Personal Privacy in the Right to Financial Privacy Act through the fourth,
an Information Society (Washington: U.S. Government Print- eleventh, nineteenth, and twentieth exceptions. This sub-
ing Office, 1977). ject will be discussed further in a later section, but for an
introduction to the issue, see Matthew Guriglia, “Here’s
23. Privacy Protection Study Commission, Personal Privacy in How ICE Illegally Obtained Bulk Financial Records from
an Information Society (Washington: U.S. Government Print- Western Union,” Electric Frontier Foundation, March 10,
ing Office, 1977). 2022.

24. Privacy Protection Study Commission, Personal Privacy in 35. Financial Crimes Enforcement Network, “Suspicious Ac-
an Information Society (Washington: U.S. Government Print- tivity Report Supporting Documentation,” FIN-2007-G003,
ing Office, 1977). June 13, 2007; 12 U.S.C. § 3413(b).

25. Privacy Protection Study Commission, Personal Privacy in 36. Financial Crimes Enforcement Network, “SAR Activity
an Information Society (Washington: U.S. Government Print- Review: Trends, Tips & Issues,” Bank Secrecy Act Advisory
ing Office, 1977). Group, October 2005; Federal Financial Institutions Exami-
nation Council, “Suspicious Activity Reporting—Overview,”
26. Nicholas Anthony, “Why Don’t Americans Have Stronger BSA/AML Manual.
Financial Privacy Rights?,” Cato at Liberty (blog), October 28,
2021. 37. Nicholas Anthony, “Why Don’t Americans Have Stronger
Financial Privacy Rights?,” Cato at Liberty (blog), October 28,
27. Electronic Privacy Information Center, “Right to Finan- 2021.
cial Privacy Act.” The Right to Financial Privacy Act was
enacted in Title XI of the Financial Institutions Regulatory 38. U.S. Department of the Treasury, “General Explanations
and Interest Rate Control Act. Committee on Banking, Fi- of the Administration’s Fiscal Year 2022 Revenue Proposals,”
nance, and Urban Affairs, Financial Institutions Regulatory May 2021.
and Interest Rate Control Act, U.S. House, 95th Cong., 2nd
Sess., Report no. 95-14279, 1978. 39. U.S. Department of the Treasury, “General Explanations
of the Administration’s Fiscal Year 2022 Revenue Proposals,”
28. See 12 U.S.C. §§ 3401–3423. Or, for a general overview, May 2021.
see Electronic Privacy Information Center, “Right to Finan-
cial Privacy Act.” 40. U.S. Department of the Treasury, “General Explanations
of the Administration’s Fiscal Year 2022 Revenue Proposals,”
29. Right to Financial Privacy Act of 1978, 12 U.S.C. §§ May 2021.
3404–3408.
41. Nicholas Anthony, “Why Don’t Americans Have Stronger
30. For the process for delaying notice, see 12 U.S.C. § 3409. Financial Privacy Rights?,” Cato at Liberty (blog), October 28,
2021.
31. For an example of the process for objecting to the release
of one’s records, see 12 U.S.C. § 3405(2). 42. Tim Scott, “Scott, Colleagues Introduce Bill to Block
Democrats’ IRS Snooping Proposal,” Press Release, October
32. Notably, the exceptions included in the final version of 21, 2021; Committee on Banking, Housing, and Urban Affairs,
the law were not part of the original 1973 proposal. Com- Prohibiting IRS Financial Surveillance Act, U.S. Senate, 117th
mittee on Banking and Currency, Right to Financial Privacy Cong., 1st Sess., Report no. 117-2056, 2021.
Act of 1978, U.S. House, 93rd Cong., 1st Sess., Report no. 93-
10181, 1973. 43. Committee on Financial Services, Protecting Financial
Privacy Act of 2021, U.S. House, 117th Cong., 1st Sess., Report
33. Right to Financial Privacy Act of 1978, 12 U.S.C. §§ 3413 no. 117-5451, 2021.
and 3414.
44. U.S. Department of the Treasury, “Fact Sheet: Tax Compli-
34. For example, it was revealed in 2022 that millions of ance Proposals Will Improve Tax Fairness While Protecting
records were being collected by U.S. Immigration and Cus- Taxpayer Privacy,” Featured Stories, October 19, 2021.
toms Enforcement (ICE) through the use of administrative
subpoenas. These subpoenas are covered under the sixth 45. This defense brings Maya Angelou’s famous quote to
exception. However, ICE could have just as easily skirted mind: “When people show you who they are, believe them.”

19
The defense may have been true, but that does not mean it Sess., Report no. 117-7128, 2022; Nicholas Anthony, “America
was a defensible position. COMPETES Act Gives Treasury Unchecked Power,” Cato at
Liberty (blog), January 27, 2022.
46. Committee on Banking, Finance, and Urban Affairs,
Housing and Community Development Act of 1992, U.S. Sen- 56. U.S. House Committee on Financial Services, “America
ate, 102nd Cong., 2nd Sess., Report no. 102-5334, 1992. COMPETES Act Contains Key Provisions Authored by Com-
mittee Democrats,” Press Release, January 25, 2022.
47. Committee on Banking, Finance, and Urban Affairs,
Housing and Community Development Act of 1992, U.S. Sen- 57. Jerry Brito and Peter Van Valkenburgh, “New Bill Would
ate, 102nd Cong., 2nd Sess., Report no. 102-5334, 1992. Hand Treasury Blank Check to Ban Crypto at Exchanges,”
Coin Center, January 26, 2022.
48. For a larger discussion of the Bank Secrecy Act, see
Norbert J. Michel and Jennifer J. Schulp, “Revising the Bank 58. U.S. House Committee on Financial Services, “Waters
Secrecy Act to Protect Privacy and Deter Criminals,” Cato Announces Committee Victories in 2023 National Defense
Institute Policy Analysis no. 932, July 26, 2022. and Authorization Act,” Press Release, July 18, 2022; Com-
mittee on Armed Services, National Defense Authorization
49. For the relevant portions of the USA PATRIOT Act, see Act for Fiscal Year 2023, U.S. House, 117th Cong., 2nd Sess.,
§§ 311, 314, 326, 352, 356, and 359. Committees on Judicia- Report no. 117-7900, 2022; Nicholas Anthony, “The Trea-
ry, Intelligence, Financial Services, International Relations, sury’s Special Enforcement Measures, Again,” Cato at Liberty
Energy and Commerce, Education and the Workforce, (blog), May 4, 2022.
Transportation and Infrastructure, and Armed Services,
Uniting and Strengthening America by Providing Appro- 59. At the time of this writing, no member of Congress has
priate Tools Required to Intercept and Obstruct Terrorism claimed ownership of the Transparency and Accountability
(USA PATRIOT) Act of 2001, U.S. House, 107th Cong., 1st in Service Providers Act. Instead, in a moment of irony, the
Sess., Report no. 107-3162, 2001. bill, one that seeks to further remove financial privacy, was
published anonymously. Committee on Financial Services,
50. Bank Secrecy Act, 31 U.S.C. § 5318(g). Transparency and Accountability in Service Providers Act,
U.S. House, 117th Cong., 2nd Sess., 2022.
51. Bank Secrecy Act, 31 U.S.C. § 5318(g)(2)(A)(i)–(ii).
60. To be clear, the Special Measures to Fight Modern
52. The law also established a formalized anti–money Threats Act and the Transparency and Accountability in
laundering program requirement where financial institu- Service Providers Act have not yet been passed.
tions are required to develop internal policies, employ a
compliance officer, train employees, and conduct audits to 61. Dustin Volz, “Most Americans Unwilling to Give Up Pri-
guard against money laundering and terrorist financing. vacy to Thwart Attacks: Reuters/Ipsos Poll,” Reuters, April 4,
See 31 U.S.C. § 5318(h). 2017.

53. Nicholas Anthony, “The Infrastructure Investment and 62. Dustin Volz, “Most Americans Unwilling to Give Up Pri-
Jobs Act’s Attack on Crypto: Questioning the Rationale for vacy to Thwart Attacks: Reuters/Ipsos Poll,” Reuters, April 4,
the Cryptocurrency Provisions,” Cato Institute Briefing 2017.
Paper no. 129, November 15, 2021; Abraham Sutherland,
“Research Report on Tax Code Section 6050I and Digital 63. Alan Zibel and Brent Kendall, “Probe Turns Up Heat on
Assets,” Proof of Stake Alliance, September 17, 2021; Marta Banks,” Wall Street Journal, August 7, 2013.
Belcher, “Tucked Inside Biden Infrastructure Bill: Uncon-
stitutional Crypto Surveillance,” Coin Desk, January 25, 64. Alan Zibel and Brent Kendall, “Probe Turns Up Heat on
2022. Banks,” Wall Street Journal, August 7, 2013.

54. Internal Revenue Service, “Reporting Cash Payments of 65. Brian Knight, “How Financial Regulatory Tools Are Used
over $10,000,” Publication 1544, revised September 2014; Against Law-Abiding Americans—And How to Fix It,” The
An Act Relating to the Administration of Certain Collected Hill, March 3, 2022.
Taxes, 26 U.S.C. § 7203.
66. Dennis Shaul, “There’s No Downplaying the Impact of
55. Committee on Financial Services, Special Measures to Operation Choke Point,” American Banker, November 28,
Fight Modern Threats Act, U.S. House, 117th Cong., 2nd 2018.

20
67. Michelle Hackman and Dustin Volz, “Secret Surveillance 78. Nicholas Anthony, “How Inflation Erodes Financial
Program Collects Americans’ Money-Transfer Data, Senator Privacy,” Cato at Liberty (blog), June 10, 2022; Norbert
Says,” Wall Street Journal, March 8, 2022. Michel and Nicholas Anthony, “Review of Bank Secrecy Act
Regulations and Guidance,” Cato Institute, February 7, 2022.
68. Matthew Guriglia, “Here’s How ICE Illegally Obtained
Bulk Financial Records from Western Union,” Electric Fron- 79. California Bankers Association v. Shultz, 416 U.S. 21 (1974).
tier Foundation, March 10, 2022.
80. The concern shared by Justices Powell and Blackmun
69. Matthew Guriglia, “Here’s How ICE Illegally Obtained was also shared in the decision in Burrows v. Superior Court.
Bulk Financial Records from Western Union,” Electric Fron- See California Bankers Association v. Shultz, 416 U.S. 21 (1974);
tier Foundation, March 10, 2022. Burrows v. Superior Court, 12 Cal. 3d 239 (1974).

70. U.S. Department of the Treasury, “U.S. Treasury Sanc- 81. Hearing on the Oversight of the Financial Crimes En-
tions Notorious Virtual Currency Mixer Tornado Cash,” Press forcement Network, Before the Committee on Financial
Release, August 8, 2022. Services, 117th Cong. 1st Sess. (April 28, 2022).

71. Alan Zibel and Brent Kendall, “Probe Turns Up Heat on 82. “Finding a needle in the haystack is dependent on a
Banks,” Wall Street Journal, August 7, 2013. number of things,” said Representative Steil at the hearing,
“one of them being how big the haystack is. So if we can find
72. Nikhilesh De, “U.S. Secretary of State Tweets, Deletes a way to get the haystack down, I think it may actually put
Claim That Crypto Mixer Tornado Cash Is North Korea– us in the position to more easily find the needle.” Hearing on
Sponsored,” Coin Desk, August 8, 2022. the Oversight of the Financial Crimes Enforcement Network,
Before the Committee on Financial Services, 117th Cong. 1st
73. Nicholas Anthony and Ivane Nachkebia, “How the Mar- Sess. (April 28, 2022).
ket, Not Government, Regulates Cryptocurrency Crimes,”
Cato at Liberty (blog), August 23, 2022; Nicholas Anthony, 83. Committee on Financial Services, Counter Terrorism and
“Treasury’s Tornado Warning,” Cato at Liberty (blog), Illicit Finance Act, U.S. House, 115th Cong., 2nd Sess., Report
August 9, 2022; Jerry Brito and Peter Van Valkenburgh, no. 115-6068, 2018. Notably, Rep. Dina Titus (D-NY) also had
“Analysis: What Is and What Is Not a Sanctionable Entity in a bill to increase the threshold for reporting winnings from
the Tornado Cash Cast,” Coin Center, August 15, 2022. slot machines so that it would adjust according to inflation.
Committee on Ways and Means, To Amend the Internal
74. Norbert Michel and Nicholas Anthony, “Keep Your Revenue Code of 1986 to Increase the Information Reporting
Coins, Canada,” Cato at Liberty (blog), February 15, 2022; Ian Threshold for Slot Winnings, U.S. House, 117th Cong., 2nd
Vásquez et al., Human Freedom Index 2021 (Washington: Cato Sess., Report no. 117-6937, 2022.
Institute, 2021).
84. Committee on Armed Services, William M. (Mac)
75. Sumeet Chatterjee and Clare Jim, “Hong Kong Bank Thornberry National Defense Authorization Act for Fiscal
Account Freezes Rekindle Asset Safety Fears,” Reuters, Year 2021, U.S. House, 116th Cong., 2nd Sess., Report no. 116-
December 8, 2020; Andrew Osborn, “Russia Freezes Bank 6395, 2021.
Accounts Linked to Opposition Politician Navalny,” Reuters,
August 8, 2019. 85. Hearing on the Oversight of the Financial Crimes En-
forcement Network, Before the Committee on Financial
76. Brian Knight, “If You Use a Bank Account, Don’t Get Services, 117th Cong. 1st Sess. (April 28, 2022).
on the Wrong Side of the Government,” Discourse, April 1,
2022. 86. “Civil Monetary Penalty Adjustment and Table,” 81 Fed.
Reg. 42503 (June 30, 2016).
77. In 2016, Aaron Klein and Kristofer Readling highlighted
how the price of a new car, a down payment on a home, 87. Howard Anglin, “In Our Cashless Society, We Need to
and college tuition were all well below the $10,000 thresh- Take Digital Jail Seriously,” The Hub, February 22, 2022.
old in the 1970s. In 2015, however, nearly all those items
had at least doubled in price. See Aaron Klein and Kristofer 88. Ian Vásquez et al., Human Freedom Index 2021
Readling, “Why Do 1970s Prices Dictate Anti–Money (Washington: Cato Institute, 2021).
Laundering Rules?,” Bipartisan Policy Institute, March 17,
2016. 89. Justice Harlan described a two-step test in which a

21
person must exhibit an expectation of privacy and it must 103. Nicholas Anthony, “Reporting FinCEN’s Suspicious
be one “that society is prepared to recognize as reasonable.” Activity,” Cato at Liberty (blog), April 13, 2022. When
Katz v. United States, 389 U.S. 347 (1967). considering FinCEN’s performance, Rep. John Rose (R-TN)
was right to express his concern about how “the federal
90. Kyllo v. United States, 533 U.S. 27 (2001). government deputizes financial institutions,” considering
the financial industry suffers costs in the billions for its
91. United States v. Jones, 565 U.S. 400 (2012). role in the process and it is largely unknown what benefit
has come out of it all. Nicholas Anthony, “Stop Deputizing
92. Carpenter v. United States, 138 S. Ct. 2206 (2018). For ad- Banks as Law Enforcement Agents,” Cato at Liberty (blog),
ditional context, see Patrick Eddington, “Needed: A Bill of May 3, 2022; Nicholas Anthony, “Oversight of the Financial
Rights for the Digital Age,” The Hill, June 26, 2018. Crimes Enforcement Network,” Cato Institute Statement
for the Records, April 28, 2022.
93. Katz v. United States, 389 U.S. 347 (1967).
104. Norbert J. Michel and Jennifer J. Schulp, “Revising the
94. Katz v. United States, 389 U.S. 347 (1967). Bank Secrecy Act to Protect Privacy and Deter Criminals,”
Cato Institute Policy Analysis no. 932, July 26, 2022.
95. Nicholas Anthony, “Update: Two Thirds of Com-
menters Concerned about CBDC,” Cato at Liberty (blog), 105. Norbert J. Michel and Jennifer J. Schulp, “Revising the
July 27, 2022. Bank Secrecy Act to Protect Privacy and Deter Criminals,”
Cato Institute Policy Analysis no. 932, July 26, 2022.
96. Electronic Privacy Information Center, “Right to Finan-
cial Privacy Act.” 106. This language is slightly modified from the Counter
Terrorism and Illicit Finance Act. Committee on Financial
97. Hearing on the Safe Banking Act, Before the Committee Services, Counter Terrorism and Illicit Finance Act, U.S.
on Banking, Finance, and Urban Affairs, Subcommittee on House, 115th Cong., 2nd Sess., Report no. 115-6068, 2018.
Financial Institutions Supervision, Regulation, and Insur-
ance, 95th Cong. 1st Sess. (October 3, 1977). 107. This language is slightly modified from the Financial
Crimes Enforcement Network Improvement Act and the
98. Hearing on the Safe Banking Act, Before the Committee National Defense Authorization Act for Fiscal Year 2021.
on Banking, Finance, and Urban Affairs, Subcommittee on Committee on Financial Services, Financial Crimes Enforce-
Financial Institutions Supervision, Regulation, and Insur- ment Network Improvement Act, U.S. House, 117th Cong.,
ance, 95th Cong. 1st Sess. (October 3, 1977). 2nd Sess., Report no. 117-7623, 2022; Committee on Armed
Services, William M. (Mac) Thornberry National Defense
99. Hearing on the Safe Banking Act, Before the Committee Authorization Act for Fiscal Year 2021, U.S. House, 116th
on Banking, Finance, and Urban Affairs, Subcommittee on Cong., 2nd Sess., Report no. 116-6395, 2021.
Financial Institutions Supervision, Regulation, and Insur-
ance, 95th Cong. 1st Sess. (October 3, 1977); Norbert J. Michel 108. Nicholas Anthony, “The Infrastructure Investment
and Jennifer J. Schulp, “Revising the Bank Secrecy Act to and Jobs Act’s Attack on Crypto: Questioning the Rationale
Protect Privacy and Deter Criminals,” Cato Institute Policy for the Cryptocurrency Provisions,” Cato Institute Brief-
Analysis no. 932, July 26, 2022; U.S. Department of Justice, ing Paper no. 129, November 15, 2021; Abraham Sutherland,
“The Role of Law Enforcement in Detecting, Investigating, “Research Report on Tax Code Section 6050I and Digital
and Prosecuting Criminal Activity Related to Digital Assets,” Assets,” Proof of Stake Alliance, September 17, 2021.
The Report of the Attorney General, September 6, 2022.
109. Nicholas Anthony and Ivane Nachkebia, “How the
100. Carpenter v. United States, 138 S. Ct. 2206 (2018). Market, Not Government, Regulates Cryptocurrency
Crimes,” Cato at Liberty (blog), August 23, 2022. For
101. John Paul Koning (@jp_koning), “Policymakers choose example, two Chinese intelligence officers attempted to
a level of payments fraud they wish to tolerate, and that bribe a U.S. government employee with Bitcoin, but the
level is not zero; a zero-fraud policy would also mean an use of cryptocurrency did little to halt their identification.
unusable payments system,” Twitter post, September 5, Department of Justice, “Two Chinese Intelligence Officers
2022, 8:52 a.m. Charged with Obstruction of Justice in Scheme to Bribe
U.S. Government Employee and Steal Documents Related
102. LexisNexis Risk Solutions, “True Cost of AML Compli- to the Federal Prosecution of a PRC-Based Company,” Press
ance Study,” 2019. Release, October 24, 2022.

22
110. This language is slightly modified from the Keep 112. Thomas A. Durkin, “Credit Cards: Use and Con-
Your Coins Act. Committee on Financial Services, Keep sumer Attitudes, 1970–2000,” Federal Reserve Bulletin,
Your Coins Act, U.S. House, 117th Cong., 2nd Sess., Report September 2000.
no. 117-6727, 2022.
113. Right to Financial Privacy Act of 1978, 12 U.S.C. §§ 3413
111. United States v. Jones, 565 U.S. 400 (2012). and 3414.

23
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C I TAT I O N
Anthony, Nicholas. “The Right to Financial Privacy: Crafting a Better Framework for Financial Privacy in
the Digital Age,” Policy Analysis no. 945, Cato Institute, Washington, DC, May 2, 2023.

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