Why aren't Americans' financial privacy rights more robust?

These are the kinds of problems that led to the 1976 ruling in United States v. Miller, which dealt with the gray regions of privacy. When evaluating the issue, the Court determined that when supplying information to a third party, one cannot properly anticipate privacy.

The announcement that the Biden administration proposed a $600 (now $10,000) threshold for bank account surveillance has left many people on social media wondering how such a proposal could be considered constitutional under the Fourth Amendment. They aren’t the first to ask. The question of financial privacy was taken all the way to the Supreme Court in 1976. And it was in United States v. Miller that a person cannot freely disclose information to a financial organization and expect such information to be protected under the Fourth Amendment, the Court reasoned. However, it's possible that it's time to reassess your decision.

The Proposal

The administration’s original IRS reporting proposal would require banks (and non-banks such as Venmo and Coinbase) to report on accounts in which $600 or more is moved over the course of a year. That includes deposits, withdrawals, and transfers. However, after widespread criticisms, Senate Finance Committee Chairman Ron Wyden (D-OR) announced that the reporting threshold would be raised from $600 to $10,000––a change that would require reporting on fewer accounts.

Yet, even in the proposal’s new form, the question remains: How can such surveillance be considered constitutional under the Fourth Amendment in the United States?

The Fourth Amendment and the Third-Party Doctrine

The Fourth Amendment protects American citizens from “unreasonable searches and seizures.” As written, the Fourth Amendment states,

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Although the Founding Fathers may not have anticipated the advancement of technology (and the mass-surveillance that has followed it), the Supreme Court has been clear: The Fourth Amendment applies to much more than just “physical” searches. In 2001, the Court recognized in Kyllo v. United States that technology used to surveil the inside of a home from afar (e.g., thermal imaging) was in fact a violation of the Fourth Amendment.

The Supreme Court's judgment in Kyllo v. United States, on the other hand, was based on a key premise: a reasonable expectation of privacy. When they are in the protection of their own house, it is safe to conclude that most individuals expect some sort of privacy. When lines blur, however, the privacy that one may expect becomes harder to define. Although a phone call may appear to be a private conversation, what if the call is made on a public street? What happens if someone uses the speakerphone to take a call? Is it still possible to expect privacy?

It’s questions like these, about the grey areas of privacy, that led to the decision in United States v. Miller back in 1976. When considering the case, the Court held that one cannot reasonably expect privacy when providing information to a third party. In the case of bank account information, the Court wrote, “The depositor takes the risk, in revealing his [or her] affairs to another, that the information will be conveyed by that person to the Government.” This ruling is what came to be known as the “third-party doctrine.” And it is this ruling that allowed the government to surveil bank accounts long before the $600 proposal came along.

The Current State of Financial Privacy

In a press release to address the criticisms that have been circulating about the proposal, the U.S. Treasury wrote,

In reality, many financial accounts are already reported on to the IRS, including every bank account that earns at least $10 in interest. And for American workers, much more detailed information reporting exists on wage, salary, and investment income.

It’s a curious defense strategy, but it’s true. The government has been closely monitoring bank accounts for quite some time. Such a low bar for reporting may be unprecedented, but financial surveillance is not.

Whenever someone attempts a cash transaction of more than $10,000 with a bank, the bank is required to file a currency transaction report (CTR). And although one might try to be clever and deposit $2,500 four times or $9,000 first and then $1,000 later, banks are required to report that too. In fact, that strategy even has its own name: “structuring,” and it is a federal crime. More so, if structuring, or any other criminal activity, is suspected, the bank must file a suspicious activity report (SAR).

The reason for these reports goes back 50 years to the Bank Secrecy Act (BSA), which was designed to curb financial crime. But the BSA came at a great cost. It effectively let the government access banking records without ever notifying the account holders or offering the opportunity to object. In fact, it was this type of surveillance that led to the 1976 Supreme Court decision in United States v. Miller, which ruled in favor of the government’s ability to surveil accounts.

It wasn’t until 2 years later in 1978 that the Right to Financial Privacy Act (RFPA) was established. Yet, even that failed to overpower the BSA. Under the RFPA, the government must receive consent from the account holder to access banking information without a warrant or subpoena. That requirement by the RFPA was a step in the right direction. However, it does not go far enough. In the list of exceptions to the protection the RFPA offers, federal authorities are given special exceptions for enforcing tax law and provisions under the BSA.


Whether it is $600 or $10,000, the new threshold for bank account surveillance would be difficult to challenge on the grounds of the Fourth Amendment, given the decision in United States v. Miller. However, critics are not wrong for being concerned about the proposal. As said by SEC Commissioner Hester Peirce last year, “Freedom of thought, expression, and action are key to unlocking each person’s unique potential to contribute to society. Untargeted government surveillance programs, even well-intentioned ones, threaten that freedom.”

Much has changed since 1976. Technology is no longer a quirky addition to our daily routines; it is integrated in every step of our day. From using credit cards for purchases large and small to acquiring loans directly from one’s phone, the advancement of technology over the past 50 years has created a new era of banking. So, maybe it’s time to reconsider the third-party doctrine. In fact, Justice Sonia Sotomayor said it herself in United States v. Jones in 2012,

More fundamentally, it may be necessary to reconsider the premise that an individual has no reasonable expectation of privacy in information voluntarily disclosed to third parties. This approach is ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks.

Justice Sotomayor is right. The Biden administration proposal may be considered constitutional, but that does not mean the conversation about financial privacy rights should end here.

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