Consequently, if you try to break up transactions to not trigger the $10,000 reporting threshold, that is a federal crime and you can be prosecuted (headline article at bottom). And remember that giving false information to a federal agent is perjury for which you can be prosecuted and jailed (use a lawyer with Feds). Furthermore, they’ve been adding and adding federal laws for decades, so if you run afoul of the federal government, they most likely can find something you violated at some point in time though no criminal intent ever existed. And I’m dealing with memory, but I believe our credit union representative said any bank transfers exceeding $6,000 per month have to be reported even if just between accounts. And I remember a law passed under Obama that gave the federal government more access to financial records, though I couldn’t pull the information up while searching. Basically, they use anti-money laundering (AML) and know your customer (KYC) laws as a premise to spy on your finances and take away your financial privacy, and it’s only going to get worse (and they steal from people with civil asset forfeiture as well). And we’ve seen reports of special credit card codes for purchases, especially involving gun shops). And if they go the route of Central Bank Digital Currencies, they’ll have complete control and access to your finances with the ability to stop transactions, freeze your assets, or take your assets; which is their dream goal to be connected to a social credit score in regards to fighting the climate change hoax. A good strategy is to use a local credit union under state banking rules and avoid having all your eggs in a megacorp national bank. And even diversify your credit card account(s) as well, and utilize cash while you still can.
https://ij.org/bank-closure-federal-surveillance-program/
By Robert Johnson
Imagine: You go to withdraw cash, but the ATM denies your request. When you check your app, it shows your accounts are frozen. Even your credit cards have stopped working. You have been financially cut off, without warning or explanation.
This is called “de-banking,” and it’s far more common than you might think.
Thousands of Americans have had their accounts closed with little warning or explanation. Why? In large part because of a massive federal surveillance program that few people even know exists.
A Hidden Surveillance System with Real Consequences
Federal law requires banks to monitor their customers and report any “suspicious” activity to law enforcement. If a customer’s transactions trigger too many reports, they risk having their accounts closed.
Most Americans have no idea their financial accounts are being monitored. And that’s by design. The same federal law that mandates this surveillance also prohibits banks from telling customers about these reports. So an account closure is often the first visible sign that a person has been flagged by this hidden surveillance system.
Bryan Delaney, a bar owner in New York City, learned this the hard way in 2023. His bank closed not only his business account, but also his personal checking and credit-card accounts, as well as those of his wife and business partner.
The reason? As the New York Times reported, the bank explained that it had closed the accounts because the bar regularly deposited cash in amounts under $10,000. Now, federal law requires that banks report cash transactions over-$10,000. And banks will also report repeated transactions under $10,000 as “suspicious” because they do not trigger that reporting requirement. But Bryan wasn’t trying to avoid any $10,000 reporting requirement; his bar’s revenue simply happened to fall below that threshold.
Bryan’s experience shows what the feds deem “suspicious” has expanded over the years to become staggeringly broad. It now can include:
- Regular cash deposits or withdrawals;
- Transactions just under $10,000;
- Overseas transfers;
- Donations to controversial organizations;
- Purchases at gun shops; or
- Shopping at stores like Dick’s Sporting Goods or Cabela’s
Beyond these specific red flags, federal law provides that any transaction can be “suspicious” if the “bank knows of no reasonable explanation for the transaction.” In other words, ordinary financial activities are presumed guilty until proven innocent.
Banks have no choice but to comply with these mandates. They file tens of millions of reports with law enforcement every year. And banks have faced fines of millions or even billions of dollars if federal regulators, after the fact, decide they were not doing a good enough job spying on their customers. Capital One, for instance, was fined $390 million in 2021 for “depriving law enforcement of this information.”
When pressed, Bryan’s bank expressly tied the closure of his accounts to its surveillance obligations, stating: “We must know our customers and monitor the transactions that flow through our bank.” Similar cases have been reported across the country, where customers have had their accounts closed for things like frequent cash withdrawals or overseas transactions—or even for no clear reason at all.
A Dangerous Financial Honeypot
Account closures are only the tip of the iceberg. These surveillance laws more broadly harm Americans by creating a vast database of financial information that is susceptible to abuse by bad actors both within and outside government.
FinCEN, the federal agency that maintains the database of bank reports, gives access to myriad law enforcement agencies—including federal, state, local, and even foreign authorities. Officials do not need a warrant to access this information. Not even reasonable suspicion is required.
This lack of oversight has led to troubling abuses. Law enforcement agencies have scoured the database of bank reports to identify accounts to target for meritless civil forfeiture actions. And when law enforcement raided an entire vault of safe deposit boxes in Los Angeles—seeking to civilly forfeit everything worth over $5,000—they ran the names of all the box holders through the database of bank reports in an attempt to retroactively justify the forfeitures.
And the risk isn’t limited to government actors. Recently, hackers announced that they had stolen a confidential database containing millions of customer records used by banks to comply with their surveillance obligations. And in 2020, federal officials leaked thousands of confidential bank reports to the media.
A Fourth Amendment Nightmare
The Fourth Amendment guarantees our right to be “secure” in our “persons, houses, papers, and effects.” That protection for “papers” should, on its face, extend to the kind of sensitive financial information held by banks.
But in 1976, the U.S. Supreme Court eviscerated that protection in a case called United States v. Miller—holding that bank customers have no Fourth Amendment rights in their financial information because those records are “the business records of the banks.”
The Court’s logic in Miller became known as the Third Party Doctrine, and it has been broadly applied to hold that individuals have no Fourth Amendment protection in information held by businesses where they are customers. In the years since Miller, that reasoning has been extended to all manner of information—including information held by phone and internet companies.
Miller was troubling when it was decided, but today it has become untenable. With the rise of the internet, third parties hold vast reams of information about Americans’ confidential affairs. And, in the financial sector, the move from cash to electronic transactions means that bank records today reveal far more detail about their customers’ lives. Under the Third Party Doctrine, all that information is available to law enforcement, no warrant required.
Fighting To Reclaim Financial Privacy
At the Institute for Justice, we are fighting to reclaim Americans’ right to financial privacy. Our Project on the 4th Amendment aims to restore a broad reading of the Fourth Amendment, under which bank records would be entitled to greater protection from law enforcement.
As part of that mission, the Institute for Justice is considering action to directly target federal bank surveillance laws. If your bank account has been closed, or if you have otherwise been affected by federal bank surveillance, reach out to contact us here.