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SALT LAKE CITY — Sen. Mike Lee wants to keep government agencies from looking at people's private financial information.
He introduced a bill with Sen. Rick Scott, R-Fla., known as the Saving Privacy Act. It would prevent federal agencies from creating databases with personally identifiable information of Americans unless Congress passes a law to create such a database.
It would also get rid of the Consolidated Audit Trail — a database that tracks all activity in U.S. markets. This database also includes a unique code for identifying every account holder.
"The federal government has no business surveilling the financial activities of millions of innocent Americans," said Lee in a release. "The current system erodes the privacy rights of citizens while doing little to effectively catch true financial criminals."
Lee said his bill would both protect Americans' information and ensure government agencies follow the Constitution.
A release for the bill said financial institutions submitted 25.4 million suspicious activity reports and currency transaction reports to the Financial Crimes Enforcement Network during fiscal year 2023. This information is found in FinCEN's annual report.
"Yet less than 0.3% of these reports resulted in relevant IRS-CI and FBI cases," said the release for the bill.
Norbert Michel, Jennifer Schulp and Nicholas Anthony of the Cato Institute said the reform Lee and Scott introduced is "long overdue."
"This kind of reform restores the proper balance — as provided by the Fourth Amendment — between Americans' privacy rights and law enforcement's ability to gather evidence to enforce laws. It would protect individuals' financial privacy and improve federal agencies' abilities to prosecute criminal activity rather than sift through millions of low-value reports.
Bryan Bashur, director of financial policy for Americans for Tax Reform, said the bill should get support from lawmakers because it would "preserve financial privacy and prevent the federal government from easily accessing this information."
"Enacting this legislation will also protect consumers from other existential threats to financial privacy — such as tracking stock trading and electronic payment activity," said Bashur in a release.
Breaking down the bill
The bill Lee introduced is 37 pages. It would amend different parts of existing law to prevent the collection of financial information without a warrant.
Here's a breakdown of what exactly the bill would do:
The first part of the bill would amend the Right to Financial Privacy Act of 1978 to prevent any government authority from accessing or getting copies of financial records from financial institutions. The exception it carves out is in the case of a search warrant.
It would also add language to the Right to Financial Privacy Act saying the federal government cannot access either the financial records or the information of any individuals "in a manner that is prohibited by the Fourth Amendment."
The Fourth Amendment secures the right of people to not be met with unreasonable search and seizures. Only warrants with probable causes allow for search and seizure.
Another part of the bill would keep federal agencies from establishing databases that collect personally identifiable information of citizens without a law passed by Congress. Personally identifiable information includes IP addresses, Social Security numbers, addresses, telephone numbers and emails.
It would get rid of the Consolidated Audit Trail, which allows regulators to track all activity across U.S. markets. As part of the activity tracking, the Securities and Exchange Commission requires each account holder to be assigned a unique code to identify the user.
In addition to repealing the Consolidated Audit Trail, the bill said all regulations would need to be amended to prevent federal agencies from collecting identifying information.
The bill also would forbid the creation of a central digital currency. The Federal Reserve bank would not be allowed to "hold digital currencies minted or issued by the United States Government as assets or liabilities on a balance sheet of the bank."
Part of the bill also aims "to increase accountability for and transparency in the Federal regulatory process." In other words, it deals with who gets to make the rules: Congress or federal agencies. The bill says that over time, Congress has delegated some of its authority "while failing to conduct appropriate oversight and retain accountability for the content of the laws it passes."
This part of the bill is similar to the REINS Act but is geared toward financial federal agencies like the Federal Reserve and the Securities and Exchange Commission.
The bill would impact both major and non-major agency rules. Think of agency rules as regulations stemming from executive authority that have a similar force as laws, but are not necessarily passed by Congress.
A major rule can fall into a handful of categories, as the bill defines it. If the rule has an annual effect on the economy of at least $100 million or could result in a major increase in costs or prices, then it would be a major rule.
A rule that would have "significant adverse effects" on employment or competition or would result in "an increase in mandatory vaccinations" also is considered a major rule under this definition. A non-major rule is defined as any rule that is not a major rule.
Under the bill, Congress would have to pass a joint resolution for a major rule to take effect and also Congress would be able to reject a non-major rule by passing a joint resolution.
It has an exemption for monetary policy proposed by the Federal Reserve System or the Federal Open Market Committee.
And finally, the bill establishes an avenue for Americans and financial institutions who allege harm by violations of the provisions to seek recourse.
