Liability shield

The federal statute that authorizes the Secretary of the Treasury to require reporting of suspicious transactions also says the following:

: Liability for disclosures—Any financial institution that makes a disclosure of any possible violation of law or regulation or a disclosure pursuant to this subsection or any other authority, and any director, officer, employee, or agent of such institution, shall not be liable to any person under any law or regulation of the United States or any constitution, law, or regulation of any state or political subdivision thereof, for such disclosure or for any failure to notify the person involved in the transaction or any other person of such disclosure. [31 USC 5318(g)(3)]

This provision provides three liability shields: one for an institution making a disclosure of any possible violation of law or regulation; one for an institution making a disclosure pursuant to Section 5318(g) (requiring disclosure of suspicious transactions); and one for an institution making a disclosure pursuant to any other authority.

Keep in mind, however, that the Financial Privacy Act restricts federal government access to certain customer information, and subjects both the federal government and financial institutions to liability for disclosures made without following the Act’s procedures. The liability shields described above are not complete protection against Financial Privacy Act violations. See Lopez v. First Union National Bank of Florida (1997.C11.463), http://www.versuslaw.com. Also see the chapter in this manual on the Federal Financial Privacy Laws.