Unconstitutional Aspects of the Bank Secrecy Act
A recent report from Coincenter argues that the Bank Secrecy Act (BSA) is unconstitutionally broad, ambiguous, and improperly delegates legislative authority. The BSA’s definition of “financial institution” could apply to anyone transmitting money as a business, including paying employees or freelancers.
This broad scope has been narrowed through regulatory exemptions, raising concerns about giving unelected officials total discretion over who must comply with surveillance.
Violation of Constitutional Principles
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The report suggests that virtually unlimited authority delegated from Congress to the Treasury Department violates the nondelegation doctrine, which says Congress cannot hand its legislative powers to the executive branch. The BSA’s broad language criminalizing everyday financial activities also raises questions around due process and fair notice of illegal conduct.
While Treasury has exercised its powers judiciously so far, the report worries these broad surveillance powers could be abused against new technologies like cryptocurrency. This highlights deeper issues around the BSA’s lack of precise statutory language and overreliance on executive agencies defining the scope of obligation.
Potential Supreme Court Challenge
Given recent Supreme Court interest in limiting agency authority and requiring explicit Congressional mandates, a constitutional challenge to the BSA may find a receptive audience. The Court could rule that Congress must clarify definitions and compliance obligations in the law, rather than delegating these decisions wholesale to the Treasury Department.
Ultimately, elected representatives may need to amend the BSA to ensure it passes constitutional muster. Drawing a more precise boundary between legal and illegal financial activity would bolster rule of law and preserve proper separation of powers between the legislative and executive branches.
Hot Take: Constitutional Concerns Over BSA
A recent report by Coincenter raises serious questions about whether aspects of the Bank Secrecy Act are unconstitutional. It argues that due process, separation of powers, and nondelegation doctrine concerns are raised due to the lack of precise statutory language and overreliance on executive agencies defining obligations. The report suggests that a constitutional challenge to the BSA may find support in recent Supreme Court rulings limiting agency power. Ultimately, amending the BSA may be necessary to address these constitutional concerns.
