California Bankers Assn. v. Shultz, 416 U.S. 21 (1974)

Contents:
Author: Justice Powell

Show Summary

California Bankers Assn. v. Shultz, 416 U.S. 21 (1974)

MR. JUSTICE POWELL, with whom MR. JUSTICE BLACKMUN joins, concurring.

I join the Court’s opinion, but add a word concerning the Act’s domestic reporting requirements.

The Act confers broad authority on the Secretary to require reports of domestic monetary transactions from the financial institutions and parties involved. 31 U.S.C. §§ 1081 and 1082. The implementing regulations, however, require only that the financial institution

file a report on each deposit, withdrawal, exchange of currency or other payment or transfer, by, through, or to such financial institution, which involves a transaction in currency of more than $10,000.

31 CFR § 103.22 (italics added). As the Court properly recognizes, we must analyze plaintiffs’ contentions in the context of the Act as narrowed by the regulations. Ante at 64. From this perspective, I agree that the regulations do not constitute an impermissible infringement of any constitutional right.

A significant extension of the regulations’ reporting requirements, however, would pose substantial and difficult constitutional questions for me. In their full reach, the reports apparently authorized by the open-ended language of the Act touch upon intimate areas of an individual’s personal affairs. Financial transactions can reveal much about a person’s activities, associations, and beliefs. At some point, governmental intrusion upon these areas would implicate legitimate expectations of privacy. Moreover, the potential for abuse is particularly acute where, as here, the legislative scheme permits access to this information without invocation of the judicial process. In such instances, the important responsibility for balancing societal and individual interests is left to unreviewed executive discretion, rather than the scrutiny of a neutral magistrate. United States v. U.S. District Court, 407 U.S. 297, 316-317 (1972). As the issues are presently framed, however, I am in accord with the Court’s disposition of the matter.

1. The House Report, No. 91-975, p. 10, states:

Petty criminals, members of the underworld, those engaging in "white collar" crime and income tax evaders use, in one way or another, financial institutions in carrying on their affairs.

That was the reason for requiring the report of large domestic cash transactions.

Criminals deal in money -- cash or its equivalent. The deposit and withdrawal of large amounts of currency or its equivalent (monetary instruments) under unusual circumstances may betray a criminal activity. The money in many of these transactions may represent anything from the proceeds of a lottery racket to money for the bribery of public officials.

Id. at 11.

A sponsor on the floor of the House stated:

With respect to full financial recordkeeping, the problem can be simply stated; in the past decade, as organized crime and criminals have become more sophisticated, more and greater use has been made by criminal elements of our Nation’s financial institutions. Law enforcement officials believe that an effective attack on organized crime requires the maintenance of adequate and appropriate records by financial institutions.

116 Cong.Rec. 16950.

Congressman Patman, author of the bill, stated:

This is really a bill which, if enacted into law, will be the longest step in the direction of stopping crime than any other we have had before this Congress in a long time.

Id. at 16951.

While it started with a different objective, it was changed to serve an additional purpose:

We also discovered that secret foreign bank accounts were not the only criminal activities related to the banking field. The major law enforcement authority -- the Justice Department -- of the U.S. Government called our attention to the urgent need for regulations which would make uniform and adequate the present recordkeeping practices, or lack of recordkeeping practices, by domestic banks and other financial institutions.

Id. at 16952.

2. The Senate Report No. 91-1139, is replete with the same philosophy. See pp. 1, 5, 7, 8.

3. The Act authorizes the Secretary to issue regulations to carry out its purposes, 12 U.S.C. § 1829b(b). It empowers him to define institutions or persons affected, 12 U.S.C. §§ 1953(a), (b)(5), to make exceptions, exemptions, or other special arrangements, 12 U.S.C. §§ 1829b(c), (f); to seek injunctions, 12 U.S.C. § 1954; and to assess and collect civil penalties, 12 U.S.C. § 1955.

4. Title 31 CFR § 103.34, at the time this litigation was commenced, provided that banks shall:

(a) . . . secure and maintain a record of the taxpayer identification number of the person maintaining the account; or in the case of an account of one or more individuals, such bank shall secure and maintain a record of the social security number of an individual having a financial interest in that account.

(b) Each bank shall, in addition, retain either the original or a microfilm or other copy or reproduction of each of the following:

(1) Each document granting signature authority over each deposit or share account;

(2) Each statement, ledger card or other record on each deposit or share account, showing each transaction in, or with respect to, that account;

(3) Each check, clean draft, or money order drawn on the bank or issued and payable by it, except those drawn on accounts which can be expected to have drawn on them an average of at least 100 checks per month over the calendar year or on each occasion on which such checks are issued, and which are (i) dividend checks, (ii) payroll checks, (iii) employee benefit checks, (iv) insurance claim checks, (v) medical benefit checks, (vi) checks drawn on governmental agency accounts, (vii) checks drawn by brokers or dealers in securities, (viii) checks drawn on fiduciary accounts, (ix) checks drawn on other financial institutions, or (x) pension or annuity checks;

(4) Each item other than bank charges or periodic charges made pursuant to agreement with the customer, comprising a debit to a customer’s deposit or share account, not required to be kept, and not specifically exempted, under subparagraph (b)(3) of this section;

(5) Each item, including checks, drafts, or transfers of credit, of more than $10,000 remitted or transferred to a person, account or place outside the United States;

(6) A record of each remittance or transfer of funds, or of currency, other monetary instruments, checks, investment securities, or credit, of more than $10,000 to a person, account or place outside the United States;

(7) Each check or draft in an amount in excess of $10,000 drawn on or issued by a foreign bank, purchased, received for credit or collection, or otherwise acquired by the bank;

(8) Each item, including checks, drafts or transfers of credit, of more than $10,000 received directly and not through a domestic financial institution, by letter, cable or any other means, from a person, account or place outside the United States;

(9) A record of each receipt of currency, other monetary instruments, checks, or investment securities, and of each transfer of funds or credit, of more than $10,000 received on any one occasion directly and not through a domestic financial institution, from a person, account or place outside the United States; and

(10) Records prepared or received by a bank in the ordinary course of business, which would be needed to reconstruct a demand deposit account and to trace a check deposited in such account through its domestic processing system or to supply a description of a deposited check. This subparagraph shall be applicable only with respect to demand deposits.

37 Fed.Reg. 6914.

During this litigation, the above provision was amended by the Secretary making it unnecessary to microfilm copies of checks "drawn for $100 or less," 31 CFR § 103.34(b)(3) (1973). Since banks must copy all checks, it is hard to see how this new exemption is meaningful.

5. Like requirements are placed on brokers and dealers in securities, 31 CFR § 103.35.

6. Hearings on Foreign Bank Secrecy and Bank Records (H.R. 15073) before the House Committee on Banking and Currency, 91st Cong., 1st and 2d Sess., 320 (1969-1970).

7. And see Roe v. Wade, 410 U.S. 113, 155; Police Dept. of Chicago v. Mosley, 408 U.S. 92, 101; Gooding v. Wilson, 405 U.S. 518, 522; Shuttlesworth v. Birmingham, 394 U.S. 147, 151; Cameron v. Johnson, 390 U.S. 611, 617; Zwickler v. Koota, 389 U.S. 241, 250; Whitehill v. Elkins, 389 U.S. 54, 62; Ashton v. Kentucky, 384 U.S. 195, 201; Elfbrandt v. Russell, 384 U.S. 11, 18.

The same view is often expressed in concurring opinions. See Doe v. Bolton, 410 U.S. 179, 216 (DOUGLAS, J., concurring); Gregory v. Chicago, 394 U.S. 111, 119 (Black, J., concurring); United States v. Robel, 389 U.S. 258, 270 (BRENNAN, J., concurring in result).

8. 31 U.S.C. § 1101.

9. 31 U.S.C. § 1121. The Secretary requires reports in yearly tax returns of any "financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country," 31 CFR § 103.24.

10. 31 U.S.C. §§ 1056, 1102-1103; 31 CFR §§ 103.47-103.48.

11. 31 U.S.C. §§ 1058-1059; 31 CFR § 103.49.

12. 31 U.S.C. § 1061. The regulations read as follows:

The Secretary may make any information set forth in any report received pursuant to this part available to any other department or agency of the United States upon the request of the head of such department or agency, made in writing and stating the particular information desired, the criminal, tax or regulatory investigation or proceeding in connection with which the information is sought and the official need therefor.

31 CFR § 103.43.

13. 31 U.S.C. § 1060. The Court in Kastigar v. United States, 406 U.S. 441, held that "use immunity" satisfies the Self-Incrimination Clause of the Fifth Amendment. I disagreed then, and persist in my view that it is "transactional" immunity, not "use" immunity, that is required to lift this constitutional protection. See id. at 462-467 (dissenting opinion). But since "use" immunity is "the law" of the present Court -- though I doubt if it can long survive -- I do not write this dissent against the narrow immunity that is granted.

14. 31 CFR § 103.22.

15. 31 U.S.C. § 1082.

16. At that time, 31 CFR § 103.45 read as follows:

(a) The Secretary, in his sole discretion, may by written order or authorization make exceptions to, grant exemptions from, impose additional recordkeeping or reporting requirements authorized by statute, or otherwise modify, the requirements of this part. Such exceptions, exemptions, requirements or modifications may be conditional or unconditional, may apply to particular persons or to classes of persons, and may apply to particular transactions or classes of transactions. They shall, however, be applicable only as expressly stated in the order or authorization, and they shall be revocable in the sole discretion of the Secretary.

(b) The Secretary shall have the authority to further define all terms used herein.

Since then, the language "impose additional recordkeeping or reporting requirements authorized by statute, or otherwise modify" has been deleted from § 103.45.

17. A criminal prosecution in this country for not reporting an overseas transaction is still a criminal prosecution under the Bill of Rights; and to these the Fourth Amendment has been applicable from the beginning. Cases of immigration officers stopping people at the border who are leaving or entering the country are obviously inapposite, and certainly the Court cannot be serious in saying that the monetary value of the article being seized is relevant to whether the search and seizure without a warrant was constitutional. As said in Katz, it is "persons," not "places," that the Fourth Amendment protects; and it would labor the point to engage in lengthy argument that "things," as well as "places," are not the object of the Fourth Amendment’s concerns.

Contents:

Related Resources

None available for this document.

Download Options


Title: California Bankers Assn. v. Shultz, 416 U.S. 21 (1974)

Select an option:

*Note: A download may not start for up to 60 seconds.

Email Options


Title: California Bankers Assn. v. Shultz, 416 U.S. 21 (1974)

Select an option:

Email addres:

*Note: It may take up to 60 seconds for for the email to be generated.

Chicago: Powell, "Powell, J., Concurring," California Bankers Assn. v. Shultz, 416 U.S. 21 (1974) in 416 U.S. 21 416 U.S. 79. Original Sources, accessed October 21, 2019, http://www.originalsources.com/Document.aspx?DocID=16456ENBPW2NGKP.

MLA: Powell. "Powell, J., Concurring." California Bankers Assn. v. Shultz, 416 U.S. 21 (1974), in 416 U.S. 21, page 416 U.S. 79. Original Sources. 21 Oct. 2019. www.originalsources.com/Document.aspx?DocID=16456ENBPW2NGKP.

Harvard: Powell, 'Powell, J., Concurring' in California Bankers Assn. v. Shultz, 416 U.S. 21 (1974). cited in 1974, 416 U.S. 21, pp.416 U.S. 79. Original Sources, retrieved 21 October 2019, from http://www.originalsources.com/Document.aspx?DocID=16456ENBPW2NGKP.