(Reason) — It started, as so many bad things do, with Richard Nixon. In 1970, in the midst of a national panic over crime and illegal drugs, the man whose presidency would later become synonymous with official criminality signed the Bank Secrecy Act, which compelled all U.S. financial institutions to create a Currency Transaction Report-containing name, address, bank account data, and Social Security number-every time a client executed a cash transaction larger than $10,000.
“While an act conferring such broad authority over transactions such as these might well surprise or even shock those who lived in an earlier era,” wrote Supreme Court Justice William Douglas four years later, upholding the law in California Bankers Association v. Shultz, “the latter did not…live to see the heavy utilization of our domestic banking system by the minions of organized crime as well as by millions of legitimate businessmen.” Airy principles may sound nice on paper, but these were dangerous times.
Before that moment, banking privacy had been broadly understood to be protected by the Fourth Amendment’s invocation against “unreasonable searches and seizures” of Americans’ “persons, houses, papers, and effects,” unless the searchers were backed by a warrant. Behind that constitutional interpretation was a moral argument, backed by centuries of experience.
