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Why aren't Americans' financial privacy rights stronger?

Following the disclosure that the Biden administration suggested a $600 (now $10,000) barrier for bank account surveillance, many users on social media questioned if such a plan could be considered acceptable under the Fourth Amendment. They are not the first to inquire. In 1976, the issue of financial privacy was litigated all the way to the Supreme Court. The Court reasoned in United States v. Miller that a person cannot willingly submit information to a financial institution and expect that information to be protected by the Fourth Amendment. However, it's possible that it's time to revisit that decision.

The Proposal

The administration's initial IRS reporting proposal would have required banks (as well as nonbanks like Venmo and Coinbase) to report on accounts with $600 or more in transfers over the course of a year. Deposits, withdrawals, and transfers are all included. However, in response to considerable criticism, Senate Finance Committee Chairman Ron Wyden (DOR) said that the reporting threshold would be raised from $600 to $10,000, requiring reporting on fewer accounts.

Even in its altered form, the question remains: How can such surveillance be regarded constitutional in the United States under the Fourth Amendment?

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 could not have predicted the progress of technology (and the ensuing mass monitoring), the Supreme Court has made it clear that the Fourth Amendment applies to much more than simply "physical" searches. In Kyllo v. United States, the Court ruled in 2001 that technologies used to spy on the inside of a home from afar (e.g., thermal imaging) violated the Fourth Amendment.

The Court's judgment in Kyllo v. United States, on the other hand, was based on a critical assumption: a reasonable expectation of privacy. Most individuals, it is reasonable to assume, expect some sort of privacy when they are in the comfort of their own home. However, as distinctions get blurred, it is impossible to identify the privacy that one could expect. A phone call may be a private chat, but what if the call is made while walking along the street? What happens if someone answers a phone call on speakerphone? Is it still possible to expect privacy?

Questions like these, about the gray zones of privacy, prompted the 1976 ruling in United States v. Miller. When evaluating the issue, the Court determined that disclosing information to a third party cannot be expected to be private. In the case of bank account information, the Court stated, "The depositor assumes the risk, in disclosing his [or her] affairs to another, that the information will be given to the Government by that person." This decision became known as the "third party doctrine." And it was because of this judgement that the government was able to spy on bank accounts long before the $600 suggestion.

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 an odd defense tactic, but it works. For quite some time, the government has been actively monitoring bank accounts. Although such a low reporting requirement is uncommon, financial surveillance is not.

When someone attempts a cash transaction with a bank for more than $10,000, the bank is required to file a currency transaction report (CTR). And, even if one tries to be clever by depositing $2,500 four times or $9,000 first and then $1,000 later, banks are compelled to record this as well. That tactic, in fact, has its own name: "structuring," and it is a federal felony. Furthermore, if structuring or other illegal behavior is suspected, the bank is required to file a suspicious activity report (SAR).

The origins of these reports can be traced back 50 years to the Bank Secrecy Act (BSA), which was enacted to combat financial crime. However, the BSA came at a high cost. It effectively granted the government access to banking records without ever informing account holders or giving them the opportunity to resist. Indeed, it was this form of monitoring that resulted in the 1976 Supreme Court ruling in United States v. Miller, which found in favor of the government's power to monitor accounts.

The Right to Financial Privacy Act (RFPA) was not enacted until two years later, in 1978. Even so, it was insufficient to overcome the BSA. The RFPA requires the authorities to obtain agreement from the account holder before accessing banking information without a warrant or subpoena. The RFPA's demand was a step in the right direction. It does not, however, go far enough. Federal agencies are allowed exceptional exceptions to the RFPA's protection in the list of exclusions for enforcing tax law and provisions under the BSA.


Given the result in United States v. Miller, the new threshold for bank account surveillance, whether it be $600 or $10,000, would be difficult to contest on Fourth Amendment grounds. However, critics are not mistaken in their concerns about the concept. "Freedom of opinion, expression, and action are critical to unleashing each person's unique ability to contribute to society," stated SEC Commissioner Hester Peirce last year. Untargeted government surveillance measures, even if wellintended, endanger that freedom."

Since 1976, a lot has changed. Technology is no longer an odd addition to our daily lives; it is integrated into every aspect of our lives. From utilizing credit cards for large and small purchases to obtaining loans directly from one's phone, technological advancements over the last 50 years have ushered in a new era of banking. So, perhaps it's time to rethink the third-party doctrine. Indeed, in the 2012 case of United States v. Jones, Justice Sonia Sotomayor stated,

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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