The Trump administration expanded financial surveillance last year by decreasing the reporting thresholds for currency transaction reports from $10,000 to just $200. After public pushback and a legal challenge by the Institute for Justice, the threshold was raised to $1,000.

Yet, the damage was done. Evangelina Ornelas told The Guardian that her business was already destroyed. Ornelas runs a small, family-owned grocery store that used to have long lines of customers waiting for their money services (e.g., check cashing and remittances). Those lines have dried up, however, due to privacy concerns under the new surveillance.

Another small business said the policy is “going to put us out of business” because it has been swamped by the new reporting requirements now that so many transactions need to be filed with the government. To put that into perspective, one small business estimated that it would likely go from filing nine reports per week to filing 50,000 reports per week under the initial order. That is nothing short of an impossible standard to comply with.

Advocates of the surveillance argue that it is necessary to stop cartels, terrorists, and money launderers. However, the data are not on their side. Financial institutions filed 28.7 million reports under the Bank Secrecy Act last year. Yet, only 275 investigations were launched by the Internal Revenue Service because of a report. Adding insult to injury, the government has been unable to say how many criminals have been stopped.

Rob Johnson of the Institute for Justice didn’t mince words when asked what he thought of this financial surveillance system: “It’s invasive, and it’s unconstitutional.” Johnson is right. Warrantless financial surveillance should be shut down, not expanded.

Choke Point, Again

The Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC) came together to warn banks about offering services to “individuals who are not legally authorized to work in the United States.” In other words, the regulators are pressuring banks to cut off anyone suspected of being an undocumented immigrant.

These tactics are all too familiar. Regulators (namely, the FDIC) applied similar pressure through Operation Choke Point during the 2010s to target payday lenders, pawnshops, and other businesses. Then, regulators did it again with Operation Choke Point 2.0during the early 2020s to target cryptocurrency companies. Now, it seems we are entering Operation Choke Point 3.0.

Where Does It End?

The Trump administration’s core argument is that undocumented immigrants present a risk to the financial system because if they are deported, then they will lose their jobs and be unable to repay their loans. Setting aside all of the problems with the immigration system (something my colleague David Bier has covered extensively), this argument can apply to no shortage of issues.

Should banks be required to investigate marital conditions because a divorce could impact a customer’s ability to repay? Should banks be required to investigate mental health conditions because a sudden crisis could result in a lost job? A line has to be drawn somewhere.

Strict immigration advocates may counter that the line is drawn at illegal activity. However, banks are not immigration officers. And there’s already a history of failure with this approach—the experience with the Bank Secrecy Act has shown that treating banks as an arm of law enforcement is not effective.

Representative French Hill (R‑AR) noted this reality at a recent congressional hearing when he said, “I question whether [financial surveillance at the border is] really serving the goals created or that they are just creating more bureaucracy.” Representative Hill went on to ask Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki how many criminals have been stopped at the border because of financial surveillance. She didn’t know.

Collateral Damage

American citizens are unlikely to be spared from this war. The costs are likely to be felt by everyone. First, higher compliance costs are likely to be passed on to customers. That means lower interest rates on savings accounts, higher interest rates on loans, and then higher fees for other services. Yet, the trouble won’t end there. As people are cut off from the system, there will be fewer deposits in the system to fund loans. In effect, interest rates on loans will be driven even higher.

The costs won’t just hit our wallets. There will also be increased violations of our privacy as banks investigate our citizenship and employment. In practice, that means banks will conduct more extensive background checks on every customer.

Together, these heightened costs are likely to result in the debanking of customers, reduced financial inclusion, and higher barriers to entry.

Conclusion

President Donald Trump campaigned on ending debanking. Yet, it seems he was only concerned about debanking when it came to his allies. The Trump administration has increasingly weaponized the financial system against its opponents. It started with Antifa and has now moved to immigrants. Where it moves next is anyone’s guess. But the correct policy is one that allows banks to be banks, rather than forcing them to be a police force.

In the press release for the settlement, US Attorney Brian D. Miller said, “It is simply unacceptable for financial institutions to permit fraud under their noses.” Ironically, however, Miller could just as well have been describing the conduct of law enforcement. EagleBank reported the fraud concerns to the government through suspicious activity reports (SARs) within days of the account in question being opened in 2010.

Despite these reports, law enforcement seemingly did nothing. Over the years, EagleBank filed more suspicious activity reports. Still, there was no visible action taken by law enforcement. In 2017, another bank sued the account holder for writing bad checks. Yet, law enforcement was still nowhere to be found.

It wasn’t until 2020 that law enforcement seemed to get involved. And it appears that the investigation only kicked off because one bank employee personally emailed the Federal Bureau of Investigation (FBI) and another bank employee personally emailed the Secret Service.

Imagine if someone were repeatedly breaking into your home, and it took the police 10 years to arrive despite your alarm system notifying them each time. Worse yet, they only ever arrived because your neighbor had a friend who is a cop. That’s effectively what happened here.

Now, EagleBank is not without fault (as it admitted in the settlement). The Department of Justice uncovered a clear conflict of interest between the fraudster and bank leadership. Whether it was out of hope of recouping lost money or outright corruption is unclear, but there is no denying that leadership at EagleBank overruled its own compliance team’s closure recommendations and backdated loan records to conceal delinquencies.

At the same time, however, EagleBank’s compliance team was actively reporting the fraudster to the government through suspicious activity reports. Yet, even with these reports sitting in the government’s hands, this fraud went unstopped for a decade. At some point, we have to ask, “What is the Bank Secrecy Act even doing?”

Good policymaking means assessing both the costs and the benefits. We know the Bank Secrecy Act intrudes on the privacy of countless Americans and costs financial institutions billions of dollars to comply with. Yet, this story seems to be an indictment of the policy, not a celebration. It’s just another instance of reports getting filed and thrown into the void. That doesn’t seem to be benefiting anyone.

The close of the program is welcome news, but it should never have gotten off the ground to begin with. Postal banking ended in 1966 for a simple reason: it wasn’t popular. There was no reason to think that had changed in 2021 when this program kicked off, and the data confirm this.

Looking forward, Congress should remove the postal banking loophole by amending the Postal Accountability and Enhancement Act to prohibit the United States Postal Service from engaging in new financial services without congressional approval. It’s time to put postal banking to rest once and for all.

The ban was passed as part of the 21st Century ROAD to Housing Act. As the name suggests, the legislative package is primarily about housing policy—something my colleagues have written about at length. It’s only at the very end that Congress included a prohibition on the creation of both a retail and intermediated CBDC.

Given the risks of CBDCs, this passage marks a great win for financial freedom.

At the same time, however, this battle is not over. Unfortunately, Congress decided to have the ban expire at the end of 2030. This decision makes little sense. President Donald Trump already issued an executive order to ban the creation of a CBDC during his presidency. Once a new administration takes office and 2031 rolls around, these protections will disappear, and the door will reopen.

So celebrate today’s win, but don’t mistake it for the end of the story. The fight against the rise of CBDCs is not over yet.

Chatrie v. United States

If you have not been following the case, the issue centers around how the police investigated a bank robbery. In short, the police used a geofence warrant to get Google to hand over the location history of anyone who had been in the area during the robbery. After sifting through the data, the police eventually landed on Okello Chatrie.

Building on a similar case (Carpenter v. United States), the Court reminded everyone that the Fourth Amendment serves as a check on the government’s power:

The Fourth Amendment protects individuals’ reasonable expectations of privacy, and governmental “intrusion into that private sphere generally qualifies as a search.” The Amendment’s “basic purpose” is “to safeguard the privacy and security of individuals against arbitrary invasions by governmental officials,” and it was designed “to place obstacles in the way of a too permeating police surveillance.”

Why does this reminder matter? Well, even though the government had a warrant, it argued that it didn’t need one because of the third-party doctrine. And in doing so, the government argued that any criticism of the warrant was meritless because one was never needed. That part is important because the defense argued that the warrant lacked particularity and probable cause. The warrant effectively said, “Give us everything on everyone, and we’ll figure it out later.”

The Supreme Court agreed with the defense, stating that “an individual has a legitimate expectation of privacy in his cellphone location data.” In other words, there’s no third-party doctrine defense for the government here.

In a world where privacy is becoming harder to defend, this Supreme Court decision is welcome news.

Location Privacy, But Not Financial Privacy

What makes this decision unfortunate is that the Supreme Court explicitly said location tracking “is ‘qualitatively different’ from ‘telephone numbers and bank records’” because location data is “incomparably ‘revealing’ and is ‘not truly “shared” as one normally understands the term’ given that cell phones are ‘indispensable to participation in modern society.’”

Yet, if we compare the Court’s description of location tracking against financial activity, it’s difficult to understand where the line is being drawn.

Financial data is arguably more revealing than location data. While location data says where you are, financial data also says what you were doing. Getting pinged at a church could mean any number of things. Perhaps you asked for directions, inquired about renting space for an event, or simply had questions as you explored switching religions. Yet, a donation to that church reveals who you are as a person. The difference between where you stood and what you did is immense.

The Supreme Court’s own list of concerns—the risk of revealing travel to “the psychiatrist, the plastic surgeon, the abortion clinic, the AIDS treatment center, the strip club, the criminal defense attorney, the by-the-hour motel”—works just as well as a description of what your credit card statement reveals. The Court said location data can provide “a wealth of detail about [a person’s] familial, political, professional, religious, and sexual associations.” Yet so too can financial data. Donations reveal our religious and political associations. Wages reveal our professional associations. Gas and ticket purchases reveal our travel.

The Supreme Court’s voluntariness distinction also applies to financial records. It said that location data isn’t voluntarily handed off to providers because phones are indispensable to modern life. Yet, the same can be said of bank accounts. Nobody meaningfully chooses to hand over their private information to a bank any more than they choose to do so with Google. And that’s especially the case given that much of the information banks collect is required by law. There’s simply no way to have a bank account without giving the bank financial information.

Gorsuch’s Warning

Although he agreed with the decision, Gorsuch addressed these very issues. As he notes, the idea of a reasonable expectation of privacy is just some abstract idea “left to the judicial imagination” and often divorced from reality. Gorsuch asked, “Do we seriously mean to suggest that most Americans think they have no ‘reasonable expectation of privacy’ in records held for them by their banks[?].”

No answer was provided, but there is data on this very question. When the Cato Institute surveyed the American public, 79 percent of respondents said it was reasonable to expect privacy with their bank records. So clearly something is wrong.

Reflecting on the decision, Gorsuch asked, “Why is Location History data Mr. Chatrie voluntarily shared with Google not ‘truly shared’ when a person’s bank records are?”

Conclusion

The Supreme Court concluded that, “The Fourth Amendment must, as ever, protect against unjustified governmental intrusion on the privacy of the individual.” Yet nobody can credibly say phones are too indispensable to count as voluntary exposure while insisting bank accounts are optional. Either both should be protected, or neither should. Based on the arguments made in Chatrie v. United States, it’s time to recognize that the Bank Secrecy Act and warrantless surveillance of financial activity are an unjustified intrusion into people’s privacy.

Want to learn more? The Cato Institute filed an amicus brief in this case and was ultimately cited by Justice Gorsuch. Find the amicus brief here.

The rumors began when former Commodity Futures Trading Commission Chair Timothy Massad said, “We don’t have a central bank president who is going to get out there and speak about wholesale or retail CBDC, but that does not mean that we are not looking at how to create one.” Now those rumors have been confirmed. The Bank for International Settlements (BIS) revealed that the Federal Reserve Bank of New York (New York Fed) is still an active participant in Project Agorá.

Project Agorá Explained

Project Agorá centers on using tokenization for cross-border payments. For the unfamiliar, tokenization simply means that they are creating representations of money on a blockchain or shared ledger. It’s like creating a certificate of ownership so you don’t have to carry around the asset in question. However, because these are digital representations, they can also be programmed through smart contracts.

In Project Agorá, the assets being tokenized are central bank reserves and commercial bank deposits. And it’s the tokenization of central bank reserves that has our attention today.

A CBDC by Any Other Name

The Bank for International Settlements has been careful to avoid the term “CBDC” when describing Project Agorá. However, at the same time, it doesn’t deny that Project Agorá is a CBDC project. In a call for participation, the Bank for International Settlements included a frequently asked questions section. Among the questions considered, it was asked whether CBDCs are being used in Project Agorá. The suggestion was neither confirmed nor denied:

Agorá will experiment with integrating tokenised wholesale central bank money and tokenised commercial bank money. Tokenised wholesale central bank money is a version of the reserves that commercial banks currently hold in accounts with the central bank. The general public does not hold or use this money for transactions.

Yet, Project Agorá effectively uses a wholesale CBDC.

Unlike a retail CBDC designed for the general public, a wholesale CBDC is typically defined as a central bank digital liability restricted to financial institutions for interbank settlement. With that in mind, the difference between wholesale CBDCs and tokenized reserves is razor-thin (Table 1).

If a wholesale CBDC were ever actually deployed, it would almost certainly look functionally identical to what Project Agorá built. The legal distinction seems to largely be a political and institutional workaround. Central banks have seen the pushback CBDCs have received, so now they are calling “tokenized reserves” a “technical upgrade” to sidestep the fight entirely.

Conclusion

Because the project operates in a grey area, the Federal Reserve should be questioned. Why exactly does it view participation in this project as being compliant under the executive order? Is it that the tokenization element creates a loophole? Is it that the regional Federal Reserve isn’t required to comply with the executive order? Or is something else at play? Both Congress and the president should get answers here.

Human rights activists have been increasingly attacked through the system created under the Bank Secrecy Act in what has come to be known as transnational repression. Authoritarians in Russia, Nicaragua, and elsewhere recognize that the Bank Secrecy Act regime has created the perfect system to surveil and control their opposition—even when they flee to other countries like the United States.

Consider one example. The Anti-Corruption Foundation has been repeatedly targeted by the Russian government. Most recently, the Russian government named the think tank a terrorist organization and named its members extremists. By using this tactic, the Putin regime was able to reach across national borders and debank Anti-Corruption Foundation employee Anna Checkhovich here in the United States.

In another example, Félix Maradiaga paid the price for organizing peaceful protests against the Ortega regime in Nicaragua. Maradiaga was debanked, had his assets frozen, and was put on an international watch list despite being a celebrated human rights defender.

Maradiaga described his experience, saying, “[D]emocratic governments are being made unwitting accomplices to dictatorships, as such regimes cynically manipulate financial-surveillance systems set up to fight crime and terrorism, misusing these powerful instruments to harass, spy on, and hamper dissidents at home and abroad.” Since then, Maradiaga has seen these tools “used to close thousands of civil society organizations and expropriate their assets.”

Congress should not let this abuse go on. It’s time to face the truth: the Bank Secrecy Act costs too much and provides too little in return.

Inflationary Surveillance

Most Americans have felt the pain of inflation in recent years. However, what they don’t often see is that inflation also erodes financial privacy. The Financial Crimes Enforcement Network (FinCEN) adjusts its penalties for inflation, but it does not adjust reporting thresholds. In the most egregious case, the $10,000 reporting threshold now used for currency transaction reports (CTRs) has not been changed since the number was first established in 1945 by an executive order. That’s equal to around $180,000 today. When the Bank Secrecy Act was ultimately passed in 1970, you could buy two new Corvettes for $10,000. Today, you could spend all of that on just the engine.

In practice, that means the Bank Secrecy Act regime is swallowing up more transactions every year as inflation decreases the value of the dollar. No bills are passed; no regulations are open to the public. Yet, the wheel is turning, and financial surveillance increases without any checks or balances.

When the Supreme Court effectively signed off on the Bank Secrecy Act, it only did so because $10,000 was considered “abnormally large” in the 1970s. However, Supreme Court Justices Lewis Powell and Harry Blackmun warned that “A significant extension of the regulations’ reporting requirements … would pose substantial and difficult constitutional questions for [us.] At some point, governmental intrusion upon these areas would implicate legitimate expectations of privacy.”

We have hit that point. In fact, that point was crossed a long time ago. Recognizing what has happened, Representatives Joyce Beatty (D‑OH), Barry Loudermilk (R‑GA), French Hill (R‑AR), Bryan Steil (R‑WI), and Roger Williams (R‑TX) all pointed out the need for change during a 2022 oversight hearing. Yet, FinCEN has been silent.

Targeting the Border

Beyond inflation, FinCEN has dramatically expanded financial surveillance at the southern border through geographic targeting orders by lowering the $10,000 threshold to just $200. One small business estimated that it would likely go from filing nine reports per week to filing 50,000 reports per week under the initial order. That is nothing short of an impossible standard to comply with. In effect, both entrepreneurs and customers will suffer, likely pushing more people into illegal markets.

Reflecting on the geographic targeting orders, a Texas court described the $200 surveillance order as “unreasonable” because it “overreaches,” “defies common sense,” and “likely violates the Fourth Amendment.” “It appears the Government did not think,” wrote the court. The “tactic employed here is akin to using a blunderbuss to target a fly.”

The court issued an injunction to put the geographic targeting order on ice until each side could make its case. A similar injunction was issued in California. This news was welcome until FinCEN went around the courts and reissued the order at a higher threshold and over a vastly greater area—affecting 3.2 million people living across 126 zip codes in Arizona, California, and Texas.

FinCEN Director Andrea Gacki said, “The reports generated by this Geographic Targeting Order will continue to help law enforcement investigate powerful illicit networks operating along the southwest border and beyond.” Yet strangely, when Director Gacki appeared before Congress just a few days later, she was unable to say how many criminals were caught because of this surveillance regime.

Trump’s Latest Executive Order

Were these expansions not enough, President Donald Trump has also called for the Bank Secrecy Act to be expanded under executive orders.

Most recently, President Trump issued an executive order that said banks need to start acting as immigration agents and report people they suspect of being in the country illegally. This reporting would be done through suspicious activity reports (SARs). In doing so, President Trump also created another new avenue for debanking by instructing the Consumer Financial Protection Bureau (CFPB) to warn all banks that undocumented immigrants pose a credit risk because of their “potential deportation.” In other words, he said that anyone suspected of being undocumented should be debanked.

President Trump made a similar move in 2025 when he designated Antifa as a domestic terrorist organization. The White House then published a memo outlining how the Bank Secrecy Act should be used to “identify and disrupt financial networks that fund” Antifa to “ensure such activity is rooted out at the source.”

People have certainly done wrong under the Antifa banner, but this designation poses a problem because Antifa is not a formal group with official members. Instead, it’s more akin to a political ideology. With that in mind, it is unclear how banks are supposed to avoid Antifa. Should banks blacklist anyone who comes in wearing an Antifa pin? Should they review photos of protests to identify potential Antifa-aligned customers? Should onboarding documents include a questionnaire about a customer’s feelings about fascism? In any event, this executive order will likely result in more people being debanked.

Conclusion

Contrary to concerns, restoring financial privacy will not stop law enforcement from investigating and prosecuting crimes. Rather, it would just make the process outlined in the Constitution the official standard. Congress has multiple options to restore financial privacy. Indexing reporting thresholds to inflation, strengthening the Right to Financial Privacy Act, and ending the Bank Secrecy Act are all things within Congress’s power. However, until they act, financial surveillance will continue to get worse every day.

The Questions from Congress and My Answers

Representative Juana Vargas (D‑CA): Instead of value, Bank Secrecy Act reporting is just volume. Proponents say it’s valuable, but would someone like to counter that?

My Answer: The Internal Revenue Service’s Criminal Investigation division only started 275 cases because of a Bank Secrecy Act report. This news is shocking, considering 28.7 million reports were filed on bank customers. Yet, it’s even more shocking because the Bank Secrecy Act regime is built upon the idea that banks and other financial institutions must be forced to report their customers to the government because crime would otherwise go unnoticed. However, the available numbers suggest that most of the reported financial information is helpful only after criminal activity is noticed and law enforcement takes a closer look. If that is indeed the case, there is no reason to justify mandating that these reports be filed rather than requiring law enforcement to obtain them through the warrant process.

Representative Sean Casten (D‑IL): Does the Fourth Amendment give American citizens an affirmative right to hide illicit financial transactions? Does the Fourth Amendment preclude law enforcement from investigating crime?

My Answer: The Fourth Amendment does not give Americans the right to commit a crime, but it does put the burden of proof on law enforcement. Law enforcement must prove an investigation is justified before conducting searches and seizures.

Representative Frank Lucas (R‑OK): What progress does the April notice of proposed rulemaking make on the status quo?

My Answer: It’s a mixed bag. Shifting the focus of the Bank Secrecy Act and its related policies from compliance theatre to risk-based policy is a welcome change. However, the changes proposed by FinCEN leave much to be desired. FinCEN is five years late in reporting key statistical information about how the Bank Secrecy Act is used. That data should be step one for figuring out where the law works, where it fails, and where there is a grey area. Instead, Congress, financial institutions, and the broader public are stuck in the dark.

Representative Young Kim (R‑CA): What is the most common reason that banks are reporting their customers under the Bank Secrecy Act? Is it suspicion of terrorism or human trafficking?

My Answer: No, it is neither terrorism nor trafficking. The most common reason a Bank Secrecy Act report is filed is that someone approached the $10,000 threshold for a currency transaction report (CTR), or that a bank was unsure about where a customer obtained their funds.

Representative Young Kim (R‑CA): Can you talk about how governments like Russia abuse the Bank Secrecy Act to go after human rights activists?

My Answer: We’re seeing it growing more and more each year with bad actors like Russia, Nicaragua, and China. They recognize that the U.S. exported the Bank Secrecy Act to the rest of the world and got them all on this standard. And they recognize that they can use it for their means when they have their opponents or dissidents flee to other countries in exile. Although the US is supposed to be a haven, authoritarians are able to reach across their borders and use the financial system to target activists. We’ve seen that most recently with the Anti-Corruption Foundation. This trend should be something that’s deeply concerning for us because, effectively, the US has handed this tool to authoritarians on a silver platter.

Representative Bill Foster (D‑IL): Governments are increasingly launching digital ID. What do you make of digital ID?

My Answer: One thing that deeply concerns me about the digital ID proposal is that police officers have been caught abusing government surveillance systems here in the United States. In recent years, several officers have used law enforcement resources to stalk their exes. License plate scanners, originally pitched as a tool to catch criminals, have become one of the most frequently abused law enforcement databases. Before adding another surveillance layer on top of the Bank Secrecy Act regime, we should take seriously what the existing layers have already enabled.

Conclusion

Hearings are just a small piece of the legislative process. There is still much to be done if the Bank Secrecy Act is going to be reformed. However, I’m thankful that Congress was willing to hear my stance and consider what true reforms would look like.

Ahoj. (Hello.)

Proč jsme tady? (Why are we here?)

Is it love? Is it fear? Is it a yearning for freedom?

Whatever reason brings you here, you are all working to build a better future where free people can transact, communicate, and interact without the restrictive shackles that have become all too common in this world.

Yet, while we are gathered here today to break those shackles, governments are hammering away to forge new chains.

These governments are working to build central bank digital currencies, or CBDCs.

A CBDC is not just a digital crown, a digital euro, or a digital dollar. It is programmable money. Money that can be turned off. Money that expires. Money that cannot be spent on things the state disapproves of. It is a surveillance system dressed in the language of financial innovation.

At the Human Rights Foundation, we built the CBDC Tracker to reveal this threat in real time.

I encourage you to look at it at hrf​.org/​c​b​d​c​t​r​acker.

There you will see that red means a CBDC is live—deployed, in people’s hands, reshaping what money can and cannot do. And when you look at the map today, there is more red than there was last year. And more is coming. The European Central Bank plans to launch a CBDC by 2029—with a single flip of a switch, 350 million more people will be exposed to CBDCs.

CBDCs Are Closer Than You Think

This is not a distant threat. It is not a story about authoritarian governments in faraway places. It is a story about the architecture of money itself—and who controls it. That affects all of us.

When money becomes programmable, the question is no longer just “How much do you have?” It becomes “What are you allowed to do with it?” That is different from the power to tax or the power to inflate. It’s the power to permit.

That distinction matters. Because once that infrastructure exists—once it is built, normalized, and woven into daily life—the conditions that make it dangerous do not need to arrive all at once. They can come gradually. A spending restriction here. An expiration date there. A quiet freeze on the account of someone who said the wrong thing.

That is why we must push back now.

It’s Time to Build

Every privacy tool you ship makes surveillance harder. Every protocol you harden makes control more expensive. Every line of open-source code you commit is a vote cast not in a ballot box that can be rigged, but in transparency that cannot be stopped.

You are building the infrastructure of dissent.

You are building the thing that lets a journalist in Berlin pay a source, without putting his life in danger. You are building the thing that lets a dissident in Tehran receive support from people who love her, without a government in the middle deciding whether that love is permitted. You are building the thing that lets people everywhere experience true freedom.

This work is urgent now, while we can still choose the world we are creating rather than react to the one that was created for us.

So I will ask you again: Why are you here?

I hope the answer is freedom. I hope the answer is: “Because I would rather fight for freedom while I have it than mourn it after it is gone.”

Tracking CBDCs is only half the battle. It’s up to you to keep freedom tech alive.

Děkuji. (Thank you.)

If the Bank Secrecy Act is new to you, this set of laws and regulations requires banks and other financial institutions to report customer transactions under certain circumstances. According to FinCEN, more than 28.7 million reports were filed in fiscal year 2025 (Table 1). That’s roughly 78,000 reports a day. And the vast majority of these reports are not filed because someone is suspected of terrorism or human trafficking. Rather, it’s because they used “too much” cash.

Is the Bank Secrecy Act Effective?

For the fourth year in a row, Bank Secrecy Act reports are less valuable than they were in the previous year (Figure 1). Only 11.7 percent of Internal Revenue Service (IRS) investigations were initiated by a suspicious activity report (9.2 percent by a currency transaction report).

Although FinCEN failed again to provide context and only reported the percentage of investigations, we can turn to the Internal Revenue Service’s (IRS’s) Data Book series to find out just how many investigations took place because of a Bank Secrecy Act report (Figure 2). IRS data for 2025 is not yet available, but we can estimate that 2,631 investigations took place in 2025 by averaging previous years’ figures. If that’s the case, only around 275 investigations originated from a Bank Secrecy Act report.

So, despite the most recent estimate that financial institutions spend $59 billion a year complying with the Bank Secrecy Act and filing more than 28.7 million reports on customers to the government, the reports initiated only around 275 criminal investigations (Figure 3).

For unknown reasons, FinCEN dropped references to Homeland Security investigations in this year’s report. However, it includes data from the Federal Bureau of Investigation (FBI). Crucially, FinCEN did not say how many FBI investigations were initiated by a Bank Secrecy Act report—either because the numbers are awful or the FBI refused to provide them. Instead, it just said that the FBI arrested 5,957 subjects “tied to [Bank Secrecy Act] Reports.”

So, let’s steelman FinCEN’s case and assume these arrests were prompted by a Bank Secrecy Act report. Even on that generous reading, 28.7 million reports possibly aiding 5,957 arrests amounts to an effective success rate of 0.02 percent.

Get a Warrant

Why is it important to distinguish between investigations initiated by a Bank Secrecy Act report and investigations that utilized one later?

The Bank Secrecy Act regime is built upon the idea that banks and other financial institutions must be forced to report their customers to the government because crime would otherwise go unnoticed. However, the numbers FinCEN provided suggest that most of the financial information that is reported is helpful only after criminal activity is noticed and law enforcement takes a closer look. If that is indeed the case, there is no reason to justify mandating that these reports be filed rather than requiring law enforcement to obtain them through the warrant process.

There is no denying that allowing law enforcement to proceed without warrants would make their jobs easier. But that is not how the system is supposed to work in this country. The founders saw firsthand how dangerous an overly aggressive government could be. Therefore, the Constitution was established to limit government power and protect the people from abuses of power. More specifically, the Fourth Amendment was enacted to protect Americans from unreasonable searches.

FinCEN Is Misrepresenting the Facts

With the data as unfavorable as it is, FinCEN took many opportunities to pad its numbers. Let’s walk through some examples.

Kicking off the report, FinCEN proclaims “Effectiveness +90%” as a success story. Yet the fine print reveals that the “90 percent” figure has nothing to do with effectiveness. It just says that 90 percent of the law enforcement officials who were surveyed said they value the data. There are two problems with this framing.

First, of course, law enforcement values more information than less. Beneficiaries of a subsidy will always report that the subsidy is beneficial. FinCEN boasts that authorized users (read: federal, state, and local law enforcement, regulatory agencies, national security agencies, and “federal partners”) searched the database of Americans’ financial records 63.9 million times last year. However, those are 63.9 million searches that should have required a warrant.

Second, this survey says nothing of substance about how these data are used. As it happens, I was just on a panel with former FinCEN Director William Fox. Fox shared how he was ecstatic when he learned the FBI used FinCEN’s data. When he asked what they used it for, they said it was a good place to get a verified name and address for a suspect. Yes, that’s right. It was about as useful as a phone book.

The next problem comes from another survey where FinCEN claims more than 85 percent of respondents said that Bank Secrecy Act reports “helped in identifying new leads,” “revealed previously unknown information,” and revealed “data used to open a new investigation or examination.” The claim here runs in direct conflict with the data showing that less than 12 percent of investigations by the Internal Revenue Service’s criminal unit are started with a report. FinCEN’s failure to address this divergence is telling.

However, the icing on the cake is that despite using these survey results as success stories, FinCEN itself admits that the data are unreliable. In a footnote on page 10, FinCEN wrote, “FinCEN survey response rates are below 80%. Low response rates and the lack of nonresponse bias analysis may impact the usefulness of the survey results.”

Stepping away from the survey, there is also a glaring omission: the costs of the Bank Secrecy Act. The agency operates on a $300 million budget, while 335,000 financial institutions spend an estimated $59 billion on complying with the regime. And that’s to say nothing of the costs incurred by people who have been debanked because of this regime. A “year in review” that reports only gross benefits is not an honest accounting.

Conclusion

FinCEN is busy telling banks how to comply with the law while it is actively breaking the law. Comprehensive reports on Bank Secrecy Act data were due five years ago. If this report is the best the agency can do, it’s time to end the Bank Secrecy Act.

Crossposted from Cato.org

Representative Davidson went on to point out that the Bank Secrecy Act’s “reporting thresholds have never been adjusted for inflation. $10,000, the initial threshold established in the 70s for [currency transaction reports], would be more than $80,000 today.”

Looking to the future, Representative Davidson also warned that central bank digital currencies (CBDCs) are the next step in financial surveillance and financial control.

He ended his opening remarks with a powerful message about the need for change:

If we truly want to stop money laundering by the criminals, scammers, and terrorists of this century, not the last, it’s time we change course. … Put simply, we can continue to pile up reports on lawful activity, or we can exchange volume for actionable intelligence. It’s time to make this trade.

The congressman is correct on all counts.

The Bank Secrecy Act is a bloated surveillance machine. It forced banks to file 28 million reports on their customers last year. The $10,000 has never been adjusted for inflation—meaning that more transactions get reported each year as the dollar loses value. And a CBDC would take this surveillance to the next level by giving governments access to your money by default.

As Representative Davidson often says, freedom surrendered is rarely reclaimed. But the tide is turning. More people are recognizing, each day, just how bloated and ineffective the Bank Secrecy Act has become, and more are seeing CBDCs for what they are: surveillance tools. The question now is which of Davidson’s colleagues will step up and join the fight to defend financial freedom.

Cross-posted from Cato.org

A New Hope

Starting in the 1990s, as part of their broader efforts to manage financial institutions’ overall risks, federal banking agencies began to monitor “reputational risk.” As the name suggests, reputational risk regulation allows regulators to grade banks not on how they manage their money but on how they manage their reputations. According to the Office of the Comptroller of the Currency’s (OCC’s) 2018 bank examination handbook, “reputation risk is the risk to current or projected financial condition and resilience arising from negative public opinion,” and it “is inherent in all bank activities.”

In the worst case, this tool has been used to force banks to change their operating behavior and even shut down accounts of so-called controversial clients. Yet, after more than a decade of backlash following Operation Choke Point, it seemed this tool would finally be taken off the books. The Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) all announced in 2025 that they were ending the practice. In August 2025, President Donald Trump even ordered the end of reputational risk regulation in Executive Order 14331. The end seemed near.

In April 2026, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation announced the official elimination of reputational risk regulation from their supervisory programs. According to the summary of the final rule, the regulators are now officially prohibited from “encouraging an institution to close an account … on the basis of a person or entity’s political, social, cultural, or religious views or beliefs, constitutionally protected speech, or solely on the basis of politically disfavored but lawful business activities perceived to present reputation risk.” By all accounts, this battle seemed to be one in which financial freedom finally won.

The summary in the final rule suggests that regulators can no longer use this tool to cut someone off from the financial system just because they are deemed controversial. More so, it suggests that banks are now free to shape their reputations as they see fit.

Read the Fine Print, You Must

Yet, there’s a problem. A closer look at the final rule shows that regulators carved out an exception that allows reputational risk to be considered so long as it affects a bank’s financial or operational condition. Given the original regulatory definition, which explicitly identified reputational risk as a risk to the “current or projected financial condition” of the bank, this carve-out raises the danger that future regulators will be able to abuse the reputational risk language just as they have under previous administrations.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation claim that they needed to preserve bank examiners’ ability to address financial difficulties at the banks, but this carve-out seems to go too far.

The regulators could, for example, have included a rule of construction stating that other regulations remain in effect, thereby preserving examiners’ ability to adequately monitor banks’ financial condition. But the wording in the final rule effectively codifies a dangerous part of the OCC’s older definition of reputational risk.

Consider a few scenarios.

1. Moira runs a firearms business that becomes the target of a coordinated social media campaign. The campaign goes viral, and activists begin calling for a boycott of the bank that holds the business’s accounts, threatening to withdraw their own deposits en masse. Citing concerns that the public outcry could trigger a deposit run and threaten the bank’s projected financial condition, regulators encourage the bank to close the account—technically not because of the business’s lawful activities, but because of the “financial impact” the controversy is creating.

2. Brianna is a religious extremist who protests outside the funerals of gay veterans. News spreads that she is a customer of a particular bank. Customers complain to regulators and threaten to organize a boycott. As customer complaints mount, regulators could order that Brianna’s account be closed on the grounds that the bank’s financial condition is under threat.

3. Christine is a fossil fuel executive whose company holds significant accounts at a bank. Bank employees find out about an oil spill by Christine’s company and stage a walkout in opposition to servicing her company, disrupting branch operations. Because of this development, regulators could argue that Christine’s account should be closed because she poses a reputational risk to the bank, one that threatens the financial and operational condition of the bank.

No one here necessarily broke the law. Rather, they were just so controversial that they impacted the financial and operational conditions of their banks. And because there is an explicit carve-out for these cases, regulators would still be able to regulate based on reputational risk, as prior to the new rule.

The Regulators Strike Back

In the final rule, the regulators acknowledge that some people spoke out about problems with this definition of reputational risk. However, they argued that the financial condition carve-out is “necessary to maintain the ability of the agencies to address public concerns that directly relate to an institution’s financial condition and solvency because those concerns can lead to runs.” The regulators try to ease people’s fears by adding that “Unlike public concerns about an institution doing business with politically controversial people or entities, concerns about an institution’s financial condition have been shown repeatedly to lead to a direct negative impact on the institution that can cause failure.”

When defending the addition of operational conditions, the regulators state that “public perception that an institution could be susceptible to a breakdown in the provision of services due to operational issues such as a cyberattack or a natural disaster could have a direct impact on customers’ willingness to do business with an institution and thus on the institution’s financial solvency.”

The regulators deserve credit for taking the time to address people’s concerns. They could have said nothing. Yet the problem is that these terms and definitions allow exactly the same kind of abuse that the earlier definitions did. By including this carve-out in the final rule, future administrations will be able to implement the same kind of harmful policies we’ve seen in the past without even having to go through the process of publicly amending the rules.

Conclusion

The regulators say all the right things in the introduction of the new final rule. They point out that reputational risk regulation is ineffective, that it distracts regulators from bigger concerns, and that it has chilled potentially profitable business ventures. However, it’s difficult to celebrate the end of these reputational risk regulation problems when so much of the original definition is still on the table.

The situation is certainly improved, but there are few great options left to fully fix the problem. Regulators could outline the scenarios above in formal guidance to say that the examples outlined above are, in fact, off the table. That would go a long way in establishing the intent of the rule. Still, guidance can be quickly undone by future administrations. Therefore, this experience is a reminder of why Congress should still act even though the possibility of reputational risk regulation abuse has been lessened.

Crossposted from Cato.org

The Fourth Amendment to the US Constitution says,

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.

Everyone in this room knows this, but it bears repeating because there are too many problems with the Bank Secrecy Act for me to describe all of them in just five minutes.

There’s inflationary surveillance, transnational repression, a lack of oversight, shifting goalposts, and much more.

Frankly, I even take issue with the fact that “FBAR” is an abbreviation that stands for “report on foreign bank and financial account.” But I don’t have enough time to cover every issue and will therefore leave many comments to my written testimony.

A Broken System

Instead, I want to leave you with three numbers: 59 billion, 28 million, and 275.

In a single year, US financial institutions spend an estimated $59 billion complying with the Bank Secrecy Act. That regime forced them to file 28 million reports on their customers. And yet those reports only tipped off 275 investigations by the IRS.

$59 billion in compliance costs. 28 million privacy violations. 275 leads.

It’s as clear as thunder on a summer’s night that we have a problem. And as the Grateful Dead might say, “If the thunder don’t get you, then the lightning will.”

When surveyed by the Cato Institute, 83 percent of Americans said the government should need a warrant to access financial records, and 79 percent said banks sharing records without a warrant is unreasonable (Figure 1).

The Problem is Getting Worse

Yet, financial surveillance is expanding.

The Financial Crimes Enforcement Network (FinCEN) adjusts its penalties for inflation, but never its reporting thresholds. The $10,000 currency transaction report threshold has not been touched since 1945 (Figure 2). When the Bank Secrecy Act codified it in 1970, $10,000 bought two new Corvettes. Today it barely buys the engine.

No bills are passed; no regulations are open to public comment. Yet, the inflationary wheel is turning. The Bank Secrecy Act swallows up more transactions every year.

Recognizing what has happened, Representatives Joyce Beatty (D‑OH), Barry Loudermilk (R‑GA), French Hill (R‑AR), Bryan Steil (R‑WI), and Roger Williams (R‑TX) all pointed out the need for change during a 2022 oversight hearing. Yet, FinCEN has been silent.

Beyond inflation, FinCEN has dramatically expanded financial surveillance at the border by lowering the $10,000 threshold to just $200. One small business estimated that it would likely go from filing 9 reports per week to filing 50,000 reports.

A Texas court said the order “defies common sense,” “likely violates the Fourth Amendment,” and is like “using a blunderbuss to target a fly.”

Authoritarians Have Entered the Chat

This system is also being weaponized.

In addition to researching financial surveillance, I’m also affected by it. As a cofounder of a small human rights nonprofit—the Activist Atlas—public filing requirements have effectively handed my address to authoritarians on a silver platter.

The danger isn’t hypothetical. Authoritarians recognize that the Bank Secrecy Act has created the perfect system to surveil and control their opposition. For example, the Russian government branded the Anti-Corruption Foundation as a terrorist group, and banks—bound by zero-tolerance rules—debanked its employees here in the United States.

The Nicaraguan government branded human rights defender Félix Maradiaga as a terrorist for organizing peaceful protests against the Ortega regime. After being debanked, Maradiaga warned that

“[D]emocratic governments are being made unwitting accomplices to dictatorships, as such regimes cynically manipulate financial-surveillance systems set up to fight crime and terrorism, misusing [the Bank Secrecy Act] to harass, spy on, and hamper dissidents at home and abroad.”

Conclusion

The good news is that momentum is building. Awful ideas like the Biden administration’s proposal to monitor bank accounts with as little as $600, the global rise of central bank digital currencies (CBDCs), and the recent expansion of surveillance along the border have more Americans than ever realizing that financial privacy in the United States is little more than an illusion.

Now is the time to reclaim financial freedom.

The Fourth Amendment does not expire with inflation. It does not pause at the border. And it does not bend to whichever crisis the government invokes this decade.

It’s time for Americans to know that the Bank Secrecy Act is really the Bank Surveillance Act—and it is time for Congress to fix it.

We’ve seen this playbook before. The war on drugs and the war on terror were used to create expansive surveillance regimes. Now it seems to be the war on immigration.

When the original executive order leaked, David Bier and I both warned that forcing banks to collect citizenship information would be a mistake. Despite claims from Treasury Secretary Scott Bessent that he doesn’t read our work, it seems our warning didn’t go unheard because the new executive order takes a slightly different path.

Rather than immediately deputize banks as immigration officers, President Trump ordered the Department of the Treasury to advise banks of the risks of serving undocumented immigrants. That would be small on its own, but then President Trump goes further, saying banks need to start reporting people they suspect of being in the country illegally or of engaging in other illegal activity. This reporting would be done through suspicious activity reports (SARs) under the Bank Secrecy Act.

Yet, as if this were not enough, President Trump also created another new avenue for debanking. The executive order instructs the Consumer Financial Protection Bureau (CFPB) to warn all banks that undocumented immigrants pose a credit risk because of their “potential deportation.” In other words, he is saying that anyone suspected of being undocumented should be debanked.

If the administration genuinely wants a freer, fairer financial system, the answer isn’t more surveillance dressed up as due diligence. It’s reforming the Bank Secrecy Act and getting regulators out of micromanaging banks.

The good news is that Congress can act. Representative Ritchie Torres (D‑NY) introduced the Financial Access Protection Act earlier this year to stop financial surveillance from expanding to citizenship checks. And Representative John Rose (R‑TN) has introduced the Bank Privacy Reform Act to rein in the Bank Secrecy Act.

As America celebrates its 250th anniversary, Congress should remember that one of its jobs is to be a check on the executive branch’s power.

Within 48 hours, both Senator Warren and I warned that the other person’s policies would result in worse customer service. I argued against government interventions. She argued for them. Now, two years later, with the news that Spirit Airlines is closing and taking thousands of jobs with it, it seems clear who was right.

At the time, I was testifying before Congress about President Joe Biden’s “war on junk fees”—or, more accurately, his war on prices. As part of this campaign, the Consumer Financial Protection Bureau (CFPB) proposed price controls on credit card late fees, overdraft fees, and nonsufficient fund (NSF) fees.

President Biden and fellow Democrats argued that prices needed to be capped by the government to give consumers relief. However, I warned that doing so would result in shortages and lower-quality services. Despite pointing to a long history of economic research on the dangers of price controls, Democrats were uninterested.

Representative Brad Sherman (D‑MA) even went so far as to make fun of me for quoting Paul A. Samuelson—the first American to win the Nobel Prize in Economics. Samuelson himself had warned Congress in 1969 that setting price controls on interest rates (e.g., interest rate caps) would “result in drying up legitimate funds to the poor who need it most and will send them into the hands of the illegal loan sharks.”

Looking back, it’s a relief that many of these proposals did not make it to the finish line. However, it’s disappointing that the relief is limited to financial services. The end of Spirit Airlines means thousands of workers will lose their jobs, and countless consumers will lose access to some of the most affordable airline tickets. Senator Warren may think that is a “Biden win,” but I struggle to see this result as a win for anyone.

Considering that the Trump administration has also been flirting with price controls and playing politics with several potential mergers, it would be wise to consider Spirit’s experience as a cautionary tale.

Cross-posted from Cato.org

Why Was the Bank Secrecy Act Created?

The Bank Secrecy Act was originally enacted in 1970 for two primary reasons. First, both Congress and the Department of the Treasury were concerned about tax evasion, especially through the use of foreign bank accounts. Second, law enforcement was frustrated by the requirements and the time needed to obtain a warrant.

In the decades since 1970, Congress has passed several expansions to the Bank Secrecy Act. In fact, while it’s common for people to refer to the “Bank Secrecy Act” or the “Bank Secrecy Act regime,” these terms are usually used to refer to a long list of legislation.

• Bank Secrecy Act (1970)

• Money Laundering Control Act (1986)

• Anti-Drug Abuse Act (1988)

• The Annunzio-Wylie Anti-Money Laundering Act (1992)

• Money Laundering Suppression Act (1994)

• Money Laundering and Financial Crimes Strategy Act (1998)

• USA PATRIOT Act (2001)

• Intelligence Reform and Terrorism Prevention Act (2004)

• Anti-Money Laundering Act (2021)

What Reports Does the Bank Secrecy Act Require Today?

As it stands today, the Bank Secrecy Act requires banks and other financial institutions to file currency transaction reports (CTRs), suspicious activity reports (SARs), reports on foreign bank and financial accounts (FBARs), reports of international transportation of currency or monetary instruments (CMIRs), and Form 8300 reports.

Although the names are long (and confusing), the basic idea is that your transactions must be reported to the government when you have a cash transaction over $10,000, when you do something with your money that a financial institution judges to be suspicious, when you have an account with a foreign bank, and when you take more than $10,000 across the border.

Who Is Required to Report Customers Under the Bank Secrecy Act?

Financial institutions are required to file reports under the Bank Secrecy Act. While the term “financial institution” might make you think of banks and credit unions, Congress has applied the term to many businesses. For instance, both pawnshops and the United States Postal Service are defined as financial institutions. The list is regularly expanded, but it currently includes:

• Insured banks;

• Commercial banks;

• Trust companies;

• Private bankers;

• Agencies or branches of a foreign bank in the United States;

• Credit unions;

• Thrift institutions;

• Brokers and dealers;

• Broker and Dealer in securities or commodities;

• Investment bankers;

• Investment companies;

• Currency exchanges;

• Issuers, Redeemers, and Cashiers of checks, money orders, or similar instruments;

• Operators of a credit card system;

• Insurance companies;

• Dealers in precious metals, stones, or jewels;

• Pawnbrokers;

• Loan or finance companies;

• Travel agencies;

• Senders of money;

• Any business that engages in the transmission of value;

• Telegraph companies;

• Car dealerships;

• Anyone involved in real estate closings and settlements;

• The United States Postal Service;

• Any domestic government agency; and

• Casinos with an annual revenue of more than $1,000,000;

While there are certainly a few designations that should raise eyebrows, Congress saved the best for last by effectively giving the Treasury the authority to name anyone as a financial institution:

• Any business or agency that engages in any activity that the Secretary of the Treasury determines to be an activity that is similar to any activity in which any business described above is authorized to engage; or

• Any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters.

Is the Bank Secrecy Act Effective?

While the government has long refused to provide comprehensive data, what little data we have suggests the Bank Secrecy Act is far from effective. More than 27.5 million reports were filed in 2024. That’s roughly 75 thousand reports a day. To comply with these requirements, financial institutions in the United States spent around $59 billion. Yet, despite these staggering numbers, the reports filed only initiated 370 criminal investigations at the Internal Revenue Service.

How Can the Bank Secrecy Act Be Reformed?

The Bank Secrecy Act poses many problems that are ripe for reform. Let’s consider just three options.

First, at a minimum, all of the thresholds for reports required under the Bank Secrecy Act should be adjusted for inflation. For example, the $10,000 threshold set in the 1970s should be adjusted to at least $80,000.

Second, going further, all of the reports should be abolished. Adjusting the thresholds is akin to treating the symptom instead of the cause. The Fourth Amendment does not say people have a right to be secure in their papers unless it involves a lot of money. So, Congress should go further and eliminate the reporting requirements entirely. Law enforcement could still go after criminals in this scenario. They would just need to obtain a warrant to demonstrate a legitimate need for someone’s records.

Third, in the most ideal case, Congress should abolish the Bank Secrecy Act as a whole. Even if the reports are taken off the table, issues like know-your-customer requirements, transnational repression, derisking, and debanking all tie back to this regime. Repealing this regime in its entirety would let banks decide what information they need, with whom they do business, and the risks they take on. It would still be illegal to knowingly assist criminal activity, and law enforcement would still be able to obtain a warrant if an investigation justifies it.

Conclusion

Financial privacy has largely disappeared under the Bank Secrecy Act. Worse yet, most Americans have no idea this system exists. Rather than continue the trend of expanding financial surveillance under the Bank Secrecy Act, Congress should seek to protect Americans’ rights and bring this regime to an end.

Put simply, you might think you have financial privacy, but what you really have is the illusion of financial privacy.

This illusion is maintained by a series of laws passed over the last 55 years, including the Bank Secrecy Act, the Money Laundering Control Act, the Annunzio–Wylie Anti–Money Laundering Act, the Money Laundering Suppression Act, the PATRIOT Act, and more. With each new law, Congress steadily expanded what types of transactions must be reported to the government, leading to the opaque financial surveillance web we have today.

If you are thinking this invasion of your privacy sounds unconstitutional, you’re not alone. When the Cato Institute surveyed the American public, 83 percent of respondents thought the government should need a warrant to access personal financial records. After all, isn’t that what the Fourth Amendment is supposed to require?

Unfortunately, that’s not how the system works today. The Supreme Court weighed in on this question in the 1970s, ultimately siding with Congress and creating what has come to be known as the third-party doctrine. In short, the idea is that you lose all protections because you shared information with someone else. Yet you can’t have an account with a bank (or any traditional financial service) without sharing your information. So, in effect, all those records held by your bank, financial planner, and similar entities are fair game for prying eyes—as long as those eyes belong to the government.

The groundwork for financial surveillance began five decades ago, but the government is still expanding those powers today. Under the Biden administration, a proposal to further surveil bank accounts with at least $600 in annual activity was stopped, but a similar proposal to surveil payment apps like PayPal and Cash App took effect. Now under the Trump administration, the government set up a new system for surveilling transactions of $200 or more sent through money service businesses like Western Union.

Congress has been busy, too. The recently enacted stablecoin legislation, which covers cryptocurrencies pegged to the dollar or another asset, put parts of this new ecosystem within the confines of the Bank Secrecy Act regime. And there has been a steady stream of attempts to apply these requirements to all cryptocurrency activity.

Now more than ever, it is time to reclaim financial privacy. It’s time to turn back the tide on ever-increasing financial surveillance. There are a few options on the table for getting this done.

Taking it to the courts is one route. The Supreme Court has slowly started to recognize that past laws were not crafted with a full appreciation of the digital age. Cases like United States v. Jones, Riley v. California, and Carpenter v. United States have steadily refined the limits on government access to our private lives. Much more is needed, but these have been positive developments.

Yet, even then, the judicial process can be uncertain. Will a case be heard? If it is, what if the Court rules in an unexpected direction? The Court might even weigh in your favor, but base its decision on a narrower or unrelated legal question.

That’s why Congress must act. Legislators got us into this web of financial surveillance and they now have three main options to help get us out.

At a minimum, all the thresholds for reports required under the Bank Secrecy Act should be adjusted for inflation. Congress could go further and eliminate the reporting requirements. Even better, Congress could also do away with the Bank Secrecy Act regime entirely. This last route would let banks decide what information they need, whom they do business with, and what risks they take on. It would still be illegal to knowingly assist criminal activity, and law enforcement would still be able to get a warrant should an investigation justify it. The only change would be the absence of this multibillion-dollar surveillance system.

Whichever path Congress chooses, reform is long overdue.

Cross-posted from Cato.org

The request quickly turned sour. After explaining that I was interested in how much had been spent on developing their CBDC (the digital euro), I was asked for my papers. No, not my research on CBDCs. The central bank wanted me to provide identification to prove whether I’m a European citizen to ensure my request was in compliance with Article 2(1) of Decision ECB/2004/3 of the European Central Bank.

While I don’t typically share my address with strangers, I let the central bank know that I am not a European citizen and that my request should be considered under Article 2(2). Although Article 2(1) states that the European Central Bank must respond to requests from European citizens, Article 2(2) states that noncitizens can use the same process to obtain information.

Unfortunately, I soon learned that Article 2(2) means little in practice. The European Central Bank responded, saying, “Having examined your request, we concluded that, regrettably, at this juncture, it is not possible for the ECB to process it.” It later added that it “exercised its discretion not to process” my request because I am not a European citizen.

With that said, it seems citizenship doesn’t actually matter. I’ve been lucky enough to meet many allies in Europe. And one such ally, Maya Thomas from Big Brother Watch, was happy to help by making the request as a European citizen. Unfortunately, this request was also denied.

After extending the timeline to process the request, the European Central Bank decided not to share how much money has been spent on researching and developing its CBDC. The central bank argued that this information cannot be shared because it would (1) reveal the commercial interests of contractors and the central bank; (2) reveal the internal finances of the central bank; (3) reveal confidential information; and (4) reveal personal data.

In other words, revealing this information would make the European Central Bank accountable to the public. And, well, they can’t have that.

This rationale is, to be blunt, wholly absurd. If for no other reason, it is absurd because there are central banks that already share this information. Although it should provide more details, the Central Bank of The Bahamas documents its own CBDC development as a line item in its annual reports. Sure, their CBDC has largely been a failure, but that failure is not because of transparency.

What makes the European Central Bank’s justification even more absurd, however, is that officials have already shared some of these numbers in press announcements. A rough calculation suggests that at least €1.12 billion ($1.32 billion) has been allocated to the digital euro and another €2.62 billion ($3.09 billion) would be spent in the launch year (Table 1). Yet, the true number is anyone’s guess. For example, one group estimated that costs could reach €18 billion ($21 billion).

Accountability is a fundamental piece of any functioning democracy. The public deserves to know how their money is being spent. That’s especially true given both the risks of CBDCs and the fact that the countries that are pushing the hardest for CBDCs are authoritarian. Alas, the European Central Bank appears to see the issue differently. They’d rather control the flow of information than let the public see what’s happening for themselves.