It is always somewhat disconcerting when someone is approached by a law enforcement officer. Your first fear is that you did something wrong and that he or she is after you. Your second fear is that you will say or do something to irritate the officer that will cause you to become a target. Normally when someone is asked a question by a law enforcement officer he or she is free to answer the question. That is unless the person is a financial institution and the question involves one of the institution's account holders. In that case if the law enforcement officer represents a federal government department or agency, The Right to Financial Privacy Act sets out a very rigorous procedure that must be followed before the institution may provide the information requested. If the officer is with a state or local government agency the procedure for the institution to follow is a matter of state law.
Now, all of that said, there are circumstances in which you can provide account holder information to a government agency without any action on the agency's part. First, your examiners have the right to review any financial institution records that they wish to see, including all of your account holder records.
Second, if there is a federal law that requires you to provide information to a government agency you are required to follow the law and do so. A good example is the suspicious activity reporting requirements under the Bank Secrecy Act. If you detect reportable suspicious activity on the part of an account holder you are required to file a Suspicious Activity Report with FinCEN and provide all of the account holder information that the report requires. You are also deemed to have filed with the report any documentary evidence you might have to support your suspicion, so if a government agent subsequently requests those documents you are required to provide them without any further action on the part of the government. Also you may respond if the only information being sought is the name in which an account holder holds an account, the account holder’s address, the account number and the type of account that the account holder holds. You must also respond to a request in a judicial subpoena issued pursuant to the federal rules of criminal or civil procedure in a lawsuit to which the government and the account holder are parties.
Lastly, you may provide information to a government agency if you have a written authorization from your account holder that you do so. However there are very strict rules for what the written authorization must contain. It must:
- authorize the disclosure for a definite period of time, not to exceed three months;
- it must state that the account holder may revoke the authorization at any time up until the disclosure is made;
- it must identify the records that may be disclosed;
- it must specify the government agency to whom disclosure may be made; and
- it must state the account holder’s rights under The Right to Financial Privacy Act.
If you receive a written authorization from an account holder to provide information to a government agency, make sure that it contains all of the required elements.
If a government agency wants information about one of your account holders and none of the exceptions apply it must obtain either an administrative or judicial subpoena, a summons or issue a formal written request. The general rule is that it must serve the request upon your account holder or mail it to the account holder prior to or simultaneously with serving it upon you. When you receive the request assemble the information requested. Generally, the account holder has 10 days to protest the request. If the account holder does not protest, then at the end of the 10 day period the government is allowed to obtain the information that it requested from you provided that it delivers to you its certificate in writing that it has complied with the requirements of The Right to Financial Privacy Act.
Now you do not care if it has complied or not. All you need is its certificate that it has complied and you are off the hook when you provide the requested information. Usually you are allowed to communicate with your account holder about any government request that you receive unless there is a court order directing you not to do so. The better policy is to not communicate with your account holder. If the government has followed the rules he or she has received a copy of the request and is well aware of it.
Finally, in certain pretty serious situations the government may have enough stroke to obtain a court ordered search warrant. If that is the case let them in and show them what they are searching for. There is no waiting period and you should not advise your account holder.
The federal and state privacy rules are not applicable to civil suits in which your account holder may be a party. If you receive a court subpoena under those circumstances follow your state rules of civil procedure in answering them. Because the rules for responding to governmental and judicial requests for information are complex, we recommend that all such requests for information be funneled to one person in the financial institution who is responsible for seeing that they are answered appropriately. That way, only one employee has to be an expert on the rules. All the other employees need to know is the employee to whom the requests should be directed.