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The Treasury Department’s decision to restrict congressional access to financial intelligence on the basis of protecting confidential information and ongoing investigations has created friction with U.S. lawmakers, who say they require the data to perform their constitutional oversight role.

In the latest run-in, Treasury Assistant Secretary Jonathan Davidson told Rep. James Comer (R-KY), ranking member of the House Oversight Committee, in a Sept. 2 letter that the department responds to detailed requests for suspicious activity reports and in certain circumstances may allow lawmakers to review SARs in a secure reading room but would not provide them copies.

In his letter to Comer, who two months earlier had requested copies of any SARs allegedly filed on the family of President Joe Biden, Davidson described the reports as preliminary, raw information that if leaked to the public, can unfairly damage reputations and potentially harm national security, including by tipping off terrorist financiers to an ongoing investigation.

“Safeguarding BSA [Bank Secrecy Act] information is critical to law enforcement efforts to investigate money laundering, terrorist financing, and other illicit financial activity,” Davidson wrote.

Comer characterized the letter as a rejection of his request and accused Davidson of engaging in a political cover-up, but Treasury outlined the same SAR request process to Rep. Maxine Waters (D-CA), chair of the House Financial Services Committee, in May, and received a comparable reaction from the powerful Democrat.

Seeking information on potentially illicit funds flowing into the U.S. from former Soviet states, Waters introduced a bill on May 12 that would require Treasury to hand over SARs to congressional committees or subcommittees within 30 days of a request, and require banks to directly provide them to committees or subcommittees under subpoena.

“Unfortunately, Treasury has severely restricted congressional access to … SARs, by requiring congressional staff to review all material in a reading room … and restricting information collection to notetaking alone,” Waters said in a floor speech July 26. She noted that federal, state and local agencies obtain SARs without similar restrictions.

Waters said Treasury’s prohibition on providing copies runs against “decades-long” practice and lacks a legislative or legal foundation.

Rep. John Rose (R-TN) objected to Waters’ legislation, arguing that releasing copies of SARs raised the possibility of confidential financial intelligence on bank transactions and customers once again being leaked into the public realm.

“Having served on a community bank board, I know how subjective SARs can be and I fear that this information will put our entire system in jeopardy,” he said.

Waters’ bill, the Timely Delivery of Bank Secrecy Act Reports Act, passed the House on July 26 and now awaits consideration by the Senate Finance Committee, but may have to overcome a veto if it reaches the White House.

“SARs need to remain strictly confidential,” Ola Tucker, JD, a former compliance officer at Commonwealth Trust Company in Wilmington, Delaware, told ACAMS moneylaundering.com.

While unfamiliar with the details of the recent congressional requests, Tucker, founder of consultancy Compliance Notes in Delaware, said that financial institutions must have reasonable assurances from the federal government that the confidential data they include on SARs only exists to serve law enforcement, and will not be exposed in furtherance of a political agenda.

Recent years have seen individuals within the federal government leaking SARs to news outlets and encountering serious legal troubles as a result.

Natalie Mayflower Sours Edwards, a former advisor at Treasury’s Financial Crimes Enforcement Network, FinCEN, was sentenced to six months in prison in June 2021 for sharing 24,000 documents including SARs and other confidential information with Buzzfeed News reporter Jason Leopold, who used them to expose Russian interference in the 2016 presidential election.

Former IRS investigative analyst John Fry was sentenced to five years of probation in January 2020 pursuant to a plea deal in which he admitted leaking SARs that exposed payments that now-disbarred attorney Michael Cohen sent to adult film entertainer Stormy Daniels on behalf of his client, Donald Trump, in the run-up to the election.

Banks, money services businesses, insurance companies and other financial institutions filed a record high of more than 3 million SARs in 2021, an increase of roughly 500,000 from the previous year’s total. About 500,000 of last year’s SARs flagged suspected attempts to structure cash transactions below $10,000 threshold for filing currency transaction reports in the U.S.

“The BSA mandates the sharing of this highly sensitive information only with other agencies, for limited purposes and subject to restrictions on further disclosure,” Davidson, the Treasury official, told Comer in his Sept. 2 letter.

U.S. officials amended federal record-access rules in 1987 to allow lawmakers to view SARs “under appropriate circumstances,” Davidson wrote, adding that congressional requests for a particular report or reports should originate from a committee or subcommittee with appropriate jurisdiction, describe the data being sought in detail, and explain the “criminal, tax or regulatory purpose” of the inquiry.

Contact Fred Williams at fwilliams@acams.org