Right to Financial Privacy Act
Community Bankers for Compliance School
DEPOSITS
2016
This publication is designed to provide information in
regard to the subject matter covered. It is provided with the
understanding that the publisher is not engaged in rendering
legal, accounting, or other professional service. If legal advice
or other expert assistance is required, the services of a
professional competent in the area of special need should be
sought.
© Copyright 2016
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Table of Contents
Section 1: Right to Financial Privacy Act - 12 USC 3401 ............................................................................... 1
Purpose ............................................................................................................................................................. 1
Definitions [1101] ............................................................................................................................................ 1
Customer ....................................................................................................................................................... 1
Financial Record ........................................................................................................................................... 1
Government Authority ................................................................................................................................. 1
Law Enforcement Inquiry ............................................................................................................................ 2
Person ........................................................................................................................................................... 2
Confidentiality of Records/Government .......................................................................................................... 2
Releasing Records [1102] ............................................................................................................................. 2
Customer Authorizations [1104] ................................................................................................................ 2
Administrative Subpoena or Summons [1105] ........................................................................................... 2
Search Warrants [1106] ............................................................................................................................... 4
Judicial Subpoena [1107] ............................................................................................................................. 4
Formal Written Request by a Government Agency [1108] ........................................................................ 5
Confidentiality of Records/Financial [1103] .................................................................................................. 6
Exceptions to Notice and Certification Requirements ................................................................................... 7
Exceptions to Notice Requirements (Certification Still Required) [1109, 1113, 1114, and 1122] .............. 8
Delayed Notice Requirements [1109 and 1114] ......................................................................................... 8
Record Retention .......................................................................................................................................... 9
Cost Reimbursement [1115] ........................................................................................................................... 9
Civil Penalties [1117] ...................................................................................................................................... 9
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Section 1: Right to Financial Privacy Act [12 USC 3401]
Purpose
The Right to Financial Privacy Act (RFPA) was enacted to balance the government’s need for
information to assist in criminal investigations and the customer’s right to privacy. There was
concern that government agencies abused their power and/or position to access private
information without giving any consideration to the rights of the people.
The Right to Financial Privacy Act of 1978 became effective on March 10, 1979. As stated
above, it was enacted because customers of financial institutions have a right to expect that
their financial activities have a reasonable amount of privacy from Federal government scrutiny.
The act establishes specific procedures for government authorities that seek information
about a customer’s financial records from a financial institution. It also imposes limitations and
duties on financial institutions prior to the release of information sought by government
agencies. It generally requires that the customer receive the following:
A written notice of the agency’s intent to obtain financial records
An explanation of the purpose for which the records are sought
A statement describing procedures to use if the customer does not wish such records or
information to be made available
There are certain exceptions that allow for delayed notice or no notice to the customer.
Before the RFPA, customers of financial institutions could not challenge government access
to their financial records, nor did they have any way of knowing that personal records were
being turned over to a government authority. In United States v. Miller, (425 U.S. 435 (1976)),
the Supreme Court held that financial records, because they are kept by the institution, are the
property of the institution rather than the customer. As such, customers had no protectable legal
interest in records kept by the financial institution, nor could they limit government access to
those accounts. It was principally in response to this decision that the Right to Financial Privacy
Act was adopted.
Definitions [Section 1101]
Customer
Any person or representative of that person who utilized or is utilizing any service of a
financial institution. The term also includes any person for whom the financial institution is
acting or has acted as a fiduciary. However, customer does not include a corporation or
partnership of six or more individuals.
Financial Record
An original of, a copy of, or information known to have been derived from, any record held by
a financial institution pertaining to a customer’s relationship with the financial institution.
Government Authority
Any agency or department of the United States, or any officer, employee, or agent thereof.
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Law Enforcement Inquiry
A lawful investigation or official proceeding inquiring into a violation of, or failure to comply
with, any criminal or civil statute or any regulation, rule, or order issued pursuant thereto.
Person
An individual or a partnership of five or fewer individuals.
Confidentiality of Records / Government Authorities
Releasing Records [Section 1102]
The bank may release customer account information in response to the guidelines listed
within the act. Financial institutions cannot release customer records to government officials (or
anyone else) except in response to the following:
A written customer authorization, signed and dated, which identifies the records being
sought;
An administrative subpoena or summons;
A search warrant;
A judicial subpoena;
A formal written request by a Federal government agency without subpoena power .
Customer Authorizations [Section 1104]
The bank may release customer records if it has a written authorization that is signed and
dated by the customer. Such an authorization must:
Grant disclosure for a period of no more than three months.
State that the customer may revoke the authority to disclose at any time prior to the
records being released.
Identify the records which may be released.
Specify the purpose for which, and the government authority to which, the records may
be released.
State the customer’s rights under the RFPA.
This authorization must not be required as a condition of doing business with any financial
institution.
In addition, the customer has the right to obtain a copy of the records that were released and
the identity of the government authority to which the records were released, unless a court order
has been obtained against such action.
Administrative Subpoena or Summons [Section 1105]
A government authority may obtain financial records pursuant to an administrative
subpoena or summons if all of the following conditions are met:
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1. There is reason to believe that the records are relevant to a legitimate law enforcement
inquiry.
Records or information concerning your transactions held by the financial institution named in
the attached subpoena or summons are being sought by this (agency or department) in
accordance with the Right to Financial Privacy Act of 1978 for the following purpose:_________
If you desire that such records or information not be made available, you must:
1. Fill out the accompanying motion paper and sworn statement or write one of your own,
stating that you 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
legitimate law enforcement inquiry stated in this notice or any other legal basis for
objecting to the release of the records.
2. File the motion and statement by mailing or delivering them to the clerk of any one of the
following United States district courts: ___________________________.
3. Serve the government authority requesting the records by mailing or delivering a copy of
your motion and statement to ______________________________.
4. Be prepared to come to court and present your position in further detail.
5. You do not need to have a lawyer, although you may wish to employ one to represent you
and protect your rights.
If you do not follow the above procedures, upon the expiration of ten days from the date of
service or fourteen days from the date of mailing of this notice, the records or information
requested therein will be made available. These records may be transferred to other government
authorities for legitimate law enforcement inquiries, in which event you will be notified after the
transfer.
2. A copy of the subpoena or summons has been served or mailed to the last known address
of the customer on or before the date the subpoena or summons was served upon the
bank, together with the above notice which must state with reasonable specificity the
nature of the law enforcement inquiry.
3. Ten days have expired from the date of service of the notice or 14 days have expired from
the date of mailing the notice to the customer and
a. within such time period the customer has not filed a sworn statement and motion to
quash in an appropriate court, or
b. the customer has complied with the challenge provisions of the act.
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Search Warrants [Section 1106]
A government agency may obtain financial records if it obtains a search warrant pursuant to
the Federal rules of criminal procedure and follows the notification requirements cited in the
act.
No later than 90 days after the government authority serves the search warrant, it must
mail to the customer’s last known address a copy of the search warrant together with the
following notice:
“Records or information concerning your transactions held by the financial institution named in
the attached search warrant were obtained by this (agency or department) on (date) for the
following purpose: ____________. You may have rights under the Right to Financial Privacy Act
of 1978.”
Upon application of the government authority, a court may grant a delay in the mailing of
the above required notice which must not exceed 180 days following the service of the warrant, if
the court makes the appropriate findings. If the court so finds, it must enter an ex parte order
granting the requested delay and an order prohibiting the financial institution from disclosing
that records have been obtained or that a search warrant for such records has been executed.
Additional delays of up to 90 days may be granted by the court upon application, but only in
accordance with this law.
Upon expiration of the period of delay of notification of the customer, the following notice
must be mailed to the customer along with a copy of the search warrant:
“Records or information concerning your transactions held by the financial institution named in
the attached search warrant were obtained by this (agency or department) on (date).
Notification was delayed beyond the statutory ninety day delay period pursuant to a
determination by the court that such notice would seriously jeopardize an investigation
concerning ____________. You may have rights under the Right to Financial Privacy Act of
1978.”
Judicial Subpoena [Section 1107]
A government authority may obtain financial records pursuant to a judicial subpoena if all of
the following conditions are met:
1. The subpoena is authorized by law and there is reason to believe that the records sought
are relevant to a legitimate law enforcement inquiry.
2. A copy of the subpoena has been served upon the customer or mailed to his last known
address on or before the date on which the subpoena was served on the financial
institution together with the following notice which must state with reasonable
specificity the nature of the law enforcement inquiry:
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Records or information concerning your transactions which are held by the financial
institution named in the attached subpoena are being sought by this (agency or department or
authority) in accordance with the Right to Financial Privacy Act of 1978 for the following
purpose: _______________________________________________________________________
If you desire that such records or information not be made available, you must:
1. Fill out the accompanying motion paper and sworn statement or write one of your own,
stating that you 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
legitimate law enforcement inquiry stated in this notice or any other legal basis for
objecting to the release of the records.
2. File the motion and statement by mailing or delivering them to the clerk of the
____________ Court.
3. Serve the government authority requesting the records by mailing or delivering a copy of
your motion and statement to ____________.
4. Be prepared to come to court and present your position in further detail.
5. You do not need to have a lawyer, although you may wish to employ one to represent you
and protect your rights.
If you do not follow the above procedures, upon the expiration of ten days from the date of service
or fourteen days from the date of mailing of this notice, the records or information requested therein
will be made available. These records may be transferred to other government authorities for
legitimate law enforcement inquiries, in which event you will be notified after the transfer.
3. Ten days have expired from the date of service of the notice or 14 days have expired from
the date of mailing the notice to the customer and
a. within such time period the customer has not filed a sworn statement and motion to
quash in an appropriate court, or
b. the customer has complied with the challenge provisions of the act.
Formal Written Request by a Government Agency [Section 1108]
A government authority may obtain financial records pursuant to a formal written request
only if all of the following conditions are met:
1. No administrative summons or subpoena authority reasonably appears to be available to
that government authority to obtain financial records for the purpose for which the
records are sought.
2. The request is authorized by regulations promulgated by the head of the agency or
department.
3. There is reason to believe that the records sought are relevant to a legitimate law
enforcement inquiry.
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4. A copy of the request has been served upon the customer or mailed to his or her last
known address on or before the date on which the request was made to the financial
institution together with the following notice which must state with reasonable
specificity the nature of the law enforcement inquiry:
Records or information concerning your transactions held by the financial institution named in
the attached request are being sought by this (agency or department) in accordance with the
Right to Financial Privacy Act of 1978 for the following purpose:
___________________________________________________________________________________
If you desire that such records or information not be made available, you must:
1. Fill out the accompanying motion paper and sworn statement or write one of your own,
stating that you 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
legitimate law enforcement inquiry stated in this notice or any other legal basis for
objecting to the release of the records.
2. File the motion and statement by mailing or delivering them to the clerk of any one of the
following United States District Courts: __________________________
3. Serve the government authority requesting the records by mailing or delivering a copy of
your motion and statement to ____________.
4. Be prepared to come to court and present your position in further detail.
5. You do not need to have a lawyer, although you may wish to employ one to represent you
and protect your rights.
If you do not follow the above procedures, upon the expiration of ten days from the date of
service or fourteen days from the date of mailing of this notice, the records or information
requested therein may be made available. These records may be transferred to other
government authorities for legitimate law enforcement inquiries, in which event you will be
notified after the transfer.
5. Ten days have expired from the date of service of the notice or 14 days have expired from
the date of mailing the notice to the customer and
a. within such time period the customer has not filed a sworn statement and motion to
quash in an appropriate court, or
b. the customer has complied with the challenge provisions of the act.
Confidentiality of Records / Financial Institutions [Section 1103]
No financial institution, or officer, employees, or agent of a financial institution, may provide
to any government authority access to or copies of, or the information contained in, the financial
records of any customer except in accordance with the above provisions.
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In addition, a financial institution must not release the financial records of a customer until
the government authority seeking the records certifies in writing to the financial institution that
it has complied with the applicable provisions of the RFPA.
Exceptions to Notice and Certification Requirements
The Right to Financial Privacy Act specifically allows a financial institution to do the
following:
1. Notify a government authority that such institution or officer, employee, or agent has
information that may be relevant to a possible violation of any statute or regulation. Such
information may include only the name or other identifying information concerning any
individual, corporation, or account involved in and the nature of any suspected illegal
activity. Any financial institution or officer, employee, or agent thereof making this type
of disclosure of information will not be liable to the customer under any law or regulation
of the United States or any constitution, law, or regulation of any state or political
subdivision thereof for the disclosure or for any failure to notify the customer of such
disclosure. [Section 1103]
2. Inform law enforcement personnel when it has information pertaining to a violation of
law.
3. Submit copies of financial records to any court or agency when perfecting a security
interest, proving a claim in bankruptcy proceedings, or collecting a debt. [Section 1103]
4. Initiating contact with an appropriate government authority – as an incident to
processing an application for assistance to a customer in the form of, or to processing a
default on, or administering, a government-guaranteed or government-insured loan – for
the purpose of providing any financial record necessary to permit such authority to carry
out its responsibilities under a loan, loan guaranty, or loan insurance agreement.
[Section 1103]
5. Disclose records that are not identified with or identifiable as being derived from the
financial records of a particular customer. [Section 1113]
6. Records that are sought by a supervisory agency in connection with any of its functions
(i.e., supervisory, regulatory, or monetary functions), including any regular examinations
or any investigations associated with customer complaints. [Section 1113]
7. Records that are sought in accordance with procedures authorized by the Internal
Revenue Code. [Section 1113]
8. Provide any records that are required by any federal law or regulation. [Section 1113]
9. Provide records obtainable under the Federal Rules of Civil and Criminal Procedure, if a
customer and the agency are parties to a suit. [Section 1113]
10. Provide financial records sought by a government authority under an administrative
subpoena issued by an administrative law judge in an adjudicatory proceeding to which
the government authority and the customer are parties. [Section 1113]
11. Provide records when a government authority by a means described in section 1102 and
for a legitimate law enforcement inquiry is seeking only the name, address, account
number, and type of account of any customer or ascertainable group of customers
associated (1) with a financial transaction or class of financial transactions, or (2) with a
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foreign country or subdivision thereof in the case of a government authority exercising
financial controls over foreign accounts in the United States under the Trading with the
Enemy Act, the International Emergency Economic Powers Act, or the United Nations
Participation Act. [Section 1113]
12. Provide financial records in response to a subpoena issued in conjunction with
proceedings before a grand jury. [Section 1113]
13. Provide records sought by the General Accountability Office for an authorized proceeding,
investigation, examination, or audit directed at a government authority. [Section 1113]
Exceptions to Notice Requirements (Certification Still Required)
[Sections 1109, 1113, 1114, and 1122]
Notification requirements have been waived in the following situations. However, the agency
seeking access to customer records must provide the financial institution with the written
certificate of compliance for the following:
1. When a financial institution, rather than a customer, is being investigated. [Section
1113]
2. If records are required to process a government loan, loan guaranty, loan insurance
agreement, or default upon a government guaranteed or insured loan. In addition to the
certificate of compliance, the federal agency is required to notify the loan applicant of its
access rights when the customer initially applies for the loan. The financial institution is
required to record all disclosures made to government authorities, and the customer is
entitled to inspect this record. [Section 1113]
3. If the government is engaging in authorized foreign intelligence activities or when the
Secret Service is conducting its protective functions. In addition, in these situations, the
customer does not have the right to challenge any information access by the agency.
[Section 1114]
4. If the Securities and Exchange Commission (SEC) obtains an order from a United States
district court. In addition to the written certificate of compliance, the SEC must provide
the bank the court order prohibiting disclosure of the fact that the documents have been
obtained. The court order will set a delay of notification date after which the institution
will notify the customer that the SEC has obtained his or her records. [Section 1122]
Delayed Notice Requirements [Sections 1109 and 1114]
In certain circumstances customers may receive a delayed notice that government
authorities have obtained their financial records. These delayed notices are granted by the
courts if the governments can convince the court that prompt notification would result in
endangering the life or physical safety of any person, flight from prosecution, destruction of or
tampering with evidence, or intimidation of potential witnesses, or would otherwise seriously
jeopardize or unduly delay an investigation, trial, or official proceeding. The courts may delay
customer notification for periods up to 90 days. Delayed notice of no later than 90 days is also
allowed for search warrants.
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Record Retention
There are no guidelines, but the bank must retain a record of all disclosures to a government
authority such as the documents and copies of the information released. The retention should be
for seven years to allow the statute of limitations to run out.
Cost Reimbursement [Section 1115]
In many instances, the bank may seek reimbursement for the costs to assemble, reproduce,
or transport the records, or any other costs reasonably incurred in gathering the information.
No reimbursement is required for information submitted to:
Perfect a security interest;
Prove a claim in bankruptcy;
Otherwise collect on a debt in court;
Provide information to a government authority to process an application or provide
assistance to a customer for a government loan or loan guaranty/insurance program; or
To fulfill many information requests subject to the customer notice exceptions in section
1113.
Civil Penalties [Section 1117]
The bank may be liable for:
$100 regardless of the volume of the records;
All damages to the customer;
All costs of the action, including court costs and attorney’s fees; and
Punitive damages as the court sees fit.
