BANKING: Fighting for Privacy

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Round 1 of what promises to be a long court battle between the Treasury Department and the banking industry ended last week with each side scoring a knockdown. The tussle began more than two months ago, when the totally misnamed Bank Secrecy Act was scheduled to take effect. The law is intended to help the Government check up on such malefactors as tax cheaters and Mafia dons by forcing banks to disclose much information about transactions by customers. All along, leaders of the banking establishment have voiced their loud disapproval. The act, they claim, would lead to a "total invasion of privacy" (TIME, July 17). Joined by lawyers from the American Civil Liberties Union, they have sought to quash the law in the courts.

Last week a panel of three federal judges in San Francisco held one provision of the law unconstitutional—the regulation that would require banks to report to the Treasury any deposit or withdrawal of more than $10,000, except for recurring transactions like those in corporate payroll accounts. But the judges left untouched requirements that banks must report any foreign transactions of more than $5,000, microfilm the front and back of virtually every check that any U.S. resident writes and store those records for five years against the possibility that a Government agent may want to take a look.

The bankers are not sure what to do next because of legal technicalities involved. A separate A.C.L.U. suit is pending in a Washington, D.C., federal court. One way or another, the argument seems likely to wind up in the Supreme Court.