California Bankers Association v. Shultz

Congress passed the Bank Secrecy Act of 1970 (BSA) in response to extensive hearings about the unavailability of foreign and domestic bank records of customers thought to be engaged in illegal activities. Under the BSA, the Secretary of the Treasury (the secretary) (defendant) was authorized to prescribe by regulation record-keeping and reporting requirements for banks and other financial institutions. Congress was concerned with a need to ensure that domestic banks and financial institutions continued to maintain adequate records of their financial transactions with customers because a lack of such records impaired the ability of the federal government to enforce various criminal, tax, and regulatory provisions of laws passed by Congress. Congress was also concerned about the use of foreign financial institutions with strict laws of secrecy as to bank activity to violate or evade domestic criminal, tax, and regulatory enactments. Therefore, the BSA authorized the secretary to impose recordkeeping requirements and to require the reporting of large domestic financial transactions in currency or its equivalent. California Bankers Association filed suit in district court and argued that the BSA and the regulations violated the Fourth Amendment’s guarantee against unreasonable searches and seizures. The district court upheld the constitutionality of the recordkeeping requirements of the BSA and the accompanying regulations but concluded that the domestic-reporting provisions of the BSA violated the Fourth Amendment.