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Right to Financial Privacy Act

19. What is the “Right to Financial Privacy Act of 1978” (RFPA)?

The RFPA places limitations on the ability of the Federal Government to seek financial records about an individual from banks or other financial institutions. The RFPA applies only to the Federal Government. It does not govern requests for financial records made by private businesses or state or local governments. Further, the RFPA only protects the records of individuals and partnerships with 5 or fewer partners. It does not protect the financial information of other business entities. The Federal Government may access such records in the following instances:

•    the customer authorizes access;
•    there is an appropriate administrative subpoena or summons;
•    there is a qualified search warrant;
•    there is an appropriate judicial subpoena; or
•    there is an appropriate written request from an authorized government authority.

If the Federal Government seeks to obtain these records, it must notify the individual whose records are requested. The customer then has 10 days from the date of written notice to challenge the disclosure. The RFPA allows for statutory damages of $100 for each violation.

•    Note: The FRPA allows for disclosure without notice to the individual consumer in a number of instances, including use in a civil or criminal proceeding or certain national security investigations.

•    Discussion: Why do you think Congress placed limitations on the ability of the Federal Government to access the financial records of individuals? Do you believe the requirement to notify the individual of the request and the period to dispute the disclosure adequately protect the individual’s privacy rights? Why or why not?

•    Practice Question: Clayton is suspected of tax evasion and racketeering. The IRS and FBI open an joint investigation into his conduct. These agencies want to access Clayton’s financial records with several banks. What process must the IRS and FBI follow before sending a request to these financial institutions for Clayton’s records?

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