Federal Agencies' Initial Problems With the Right to Financial Privacy Act of 1978

U.S. Government Accountability Office

Federal Agencies' Initial Problems With the Right to Financial Privacy Act of 1978

GGD-80-64: Published: May 29, 1980. Publicly Released: Jun 30, 1980.

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The Right to Privacy Act of 1978 established procedures to safeguard the privacy of personal financial records maintained by financial institutions. Every Federal agency which utilizes records obtained from financial institutions, especially the law enforcement agencies such as the Departments of Justice and Treasury, is affected by the Act and must follow certain procedures before obtaining access to these records. Approximately 15,000 banks, 4,600 savings and loan associations, and numerous credit unions, credit card issuers, and other financial institutions are also affected since they are responsible for releasing customer financial records to Federal agencies only after the proper procedures have been followed. In addition, the Act gives customers the right to challenge in court any access to their records by Federal agencies. A review was made to determine the progress Federal agencies had made in implementing the Act and the problems they encountered.

Despite some initial problems, agency efforts to comply with the Act have generally been successful. Agencies have issued regulations, revised manuals and procedures, instructed employees in the provisions of the Act, developed forms, and taken steps to compile required evaluation data. Some agencies have also provided instructions to financial institutions. However, it is too soon for GAO to assess whether or not these efforts will assure future compliance with the Act. The problems which have occurred affect mainly law enforcement agencies and bank supervisory agencies. These problems include: controversy between some supervisory agencies and Federal law enforcement agencies over the interpretation of criminal referral procedures; refusal by financial institutions to provide sufficient data on suspected criminal violations or to honor formal requests for information by law enforcement agencies; and uncertainty over whether banking supervisory agencies have the authority to exchange information derived from customer records. Most of the problems are attributable to the newness of the Act and may be resolved as agencies gain more experience with it.