Obtain a Bank Account, Go To Jail???

On November 12, 1999 the Financial Services Modernization Act was signed into law by President Clinton. Using false pretenses to obtain bank account information from either banks or bank customers is now a federal crime.

The new law applies to banks and other financial institutions including stock brokerage firms, insurance companies, loan companies, credit card issuers and credit bureaus.

The Act applies not only to those persons who use false pretenses, but also to any third party requesting the information when it is known or should be known that false pretenses will be used.

Certain limited exemptions do apply. Exempted parties include law enforcement agencies, financial institutions, insurance companies conducting claims related investigations, and state-licensed private investigators who are attempting to collect delinquent child support. However, P.I.s must also have a court order in hand authorizing the bank investigation.

Here's relevant portions of the new law:

Financial Services Modernization Act of 1999

An Excerpt:

Subtitle B--Fraudulent Access to Financial Information

SEC. 521. PRIVACY PROTECTION FOR CUSTOMER INFORMATION OF
FINANCIAL INSTITUTIONS.

(a) PROHIBITION ON OBTAINING CUSTOMER INFORMATION BY FALSE
PRETENSES- It shall be a violation of this subtitle for any person to obtain or attempt to
obtain, or cause to be disclosed or attempt to cause to be disclosed to any person, customer
information of a financial institution relating to another person--

(1) by making a false, fictitious, or fraudulent statement or representation to an officer,
employee, or agent of a financial institution;

(2) by making a false, fictitious, or fraudulent statement or representation to a customer
of a financial institution; or

(3) by providing any document to an officer, employee, or agent of a financial institution,
knowing that the document is forged, counterfeit, lost, or stolen, was fraudulently
obtained, or contains a false, fictitious, or fraudulent statement or representation.

(b) PROHIBITION ON SOLICITATION OF A PERSON TO OBTAIN CUSTOMER
INFORMATION FROM FINANCIAL INSTITUTION UNDER FALSE PRETENSES- It
shall be a violation of this subtitle to request a person to obtain customer information of a
financial institution, knowing that the person will obtain, or attempt to obtain, the information
from the institution in any manner described in subsection (a).

(c) NONAPPLICABILITY TO LAW ENFORCEMENT AGENCIES- No provision of this
section shall be construed so as to prevent any action by a law enforcement agency, or any
officer, employee, or agent of such agency, to obtain customer information of a financial
institution in connection with the performance of the official duties of the agency.

(d) NONAPPLICABILITY TO FINANCIAL INSTITUTIONS IN CERTAIN CASES-
No provision of this section shall be construed so as to prevent any financial institution, or any
officer, employee, or agent of a financial institution, from obtaining customer information of
such financial institution in the course of--

(1) testing the security procedures or systems of such institution for maintaining the
confidentiality of customer information;

(2) investigating allegations of misconduct or negligence on the part of any officer,
employee, or agent of the financial institution; or

(3) recovering customer information of the financial institution which was obtained or
received by another person in any manner described in subsection (a) or (b).

(e) NONAPPLICABILITY TO INSURANCE INSTITUTIONS FOR INVESTIGATION
OF INSURANCE FRAUD- No provision of this section shall be construed so as to prevent
any insurance institution, or any officer, employee, or agency of an insurance institution, from
obtaining information as part of an insurance investigation into criminal activity, fraud, material
misrepresentation, or material nondisclosure that is authorized for such institution under State
law, regulation, interpretation, or order.

(f) NONAPPLICABILITY TO CERTAIN TYPES OF CUSTOMER INFORMATION
OF FINANCIAL INSTITUTIONS- No provision of this section shall be construed so as to
prevent any person from obtaining customer information of a financial institution that otherwise
is available as a public record filed pursuant to the securities laws (as defined in section
3(a)(47) of the Securities Exchange Act of 1934).

(g) NONAPPLICABILITY TO COLLECTION OF CHILD SUPPORT JUDGMENTS-
No provision of this section shall be construed to prevent any State-licensed private
investigator, or any officer, employee, or agent of such private investigator, from obtaining
customer information of a financial institution, to the extent reasonably necessary to collect
child support from a person adjudged to have been delinquent in his or her obligations by a
Federal or State court, and to the extent that such action by a State-licensed private
investigator is not unlawful under any other Federal or State law or regulation, and has been
authorized by an order or judgment of a court of competent jurisdiction.

SEC. 522. ADMINISTRATIVE ENFORCEMENT.

(a) ENFORCEMENT BY FEDERAL TRADE COMMISSION- Except as provided in
subsection (b), compliance with this subtitle shall be enforced by the Federal Trade
Commission in the same manner and with the same power and authority as the Commission
has under the Fair Debt Collection Practices Act to enforce compliance with such Act.

(b) ENFORCEMENT BY OTHER AGENCIES IN CERTAIN CASES-

(1) IN GENERAL- Compliance with this subtitle shall be enforced under--

(A) section 8 of the Federal Deposit Insurance Act, in the case of--

(i) national banks, and Federal branches and Federal agencies of foreign
banks, by the Office of the Comptroller of the Currency;

(ii) member banks of the Federal Reserve System (other than national
banks), branches and agencies of foreign banks (other than Federal
branches, Federal agencies, and insured State branches of foreign banks),
commercial lending companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25A of the Federal Reserve
Act, by the Board;

(iii) banks insured by the Federal Deposit Insurance Corporation (other
than members of the Federal Reserve System and national nonmember
banks) and insured State branches of foreign banks, by the Board of
Directors of the Federal Deposit Insurance Corporation; and

(iv) savings associations the deposits of which are insured by the Federal
Deposit Insurance Corporation, by the Director of the Office of Thrift
Supervision; and

(B) the Federal Credit Union Act, by the Administrator of the National Credit
Union Administration with respect to any Federal credit union.

(2) VIOLATIONS OF THIS SUBTITLE TREATED AS VIOLATIONS OF
OTHER LAWS- For the purpose of the exercise by any agency referred to in
paragraph (1) of its powers under any Act referred to in that paragraph, a violation of
this subtitle shall be deemed to be a violation of a requirement imposed under that Act.
In addition to its powers under any provision of law specifically referred to in paragraph
(1), each of the agencies referred to in that paragraph may exercise, for the purpose of
enforcing compliance with this subtitle, any other authority conferred on such agency by
law.

SEC. 523. CRIMINAL PENALTY.

(a) IN GENERAL- Whoever knowingly and intentionally violates, or knowingly and
intentionally attempts to violate, section 521 shall be fined in accordance with title 18, United
States Code, or imprisoned for not more than 5 years, or both.

(b) ENHANCED PENALTY FOR AGGRAVATED CASES- Whoever violates, or
attempts to violate, section 521 while violating another law of the United States or as part of a
pattern of any illegal activity involving more than $100,000 in a 12-month period shall be fined
twice the amount provided in subsection (b)(3) or (c)(3) (as the case may be) of section 3571
of title 18, United States Code, imprisoned for not more than 10 years, or both.

SEC. 524. RELATION TO STATE LAWS.

(a) IN GENERAL- This subtitle shall not be construed as superseding, altering, or affecting
the statutes, regulations, orders, or interpretations in effect in any State, except to the extent
that such statutes, regulations, orders, or interpretations are inconsistent with the provisions of
this subtitle, and then only to the extent of the inconsistency.

(b) GREATER PROTECTION UNDER STATE LAW- For purposes of this section, a State
statute, regulation, order, or interpretation is not inconsistent with the provisions of this subtitle
if the protection such statute, regulation, order, or interpretation affords any person is greater
than the protection provided under this subtitle as determined by the Federal Trade
Commission, after consultation with the agency or authority with jurisdiction under section 522
of either the person that initiated the complaint or that is the subject of the complaint, on its
own motion or upon the petition of any interested party.

SEC. 525. AGENCY GUIDANCE.

In furtherance of the objectives of this subtitle, each Federal banking agency (as defined in
section 3(z) of the Federal Deposit Insurance Act), the National Credit Union Administration,
and the Securities and Exchange Commission or self-regulatory organizations, as appropriate,
shall review regulations and guidelines applicable to financial institutions under their respective
jurisdictions and shall prescribe such revisions to such regulations and guidelines as may be
necessary to ensure that such financial institutions have policies, procedures, and controls in
place to prevent the unauthorized disclosure of customer financial information and to deter and
detect activities proscribed under section 521.

SEC. 526. REPORTS.

(a) REPORT TO THE CONGRESS- Before the end of the 18-month period beginning on
the date of the enactment of this Act, the Comptroller General, in consultation with the Federal
Trade Commission, Federal banking agencies, the National Credit Union Administration, the
Securities and Exchange Commission, appropriate Federal law enforcement agencies, and
appropriate State insurance regulators, shall submit to the Congress a report on the following:

(1) The efficacy and adequacy of the remedies provided in this subtitle in addressing
attempts to obtain financial information by fraudulent means or by false pretenses.

(2) Any recommendations for additional legislative or regulatory action to address
threats to the privacy of financial information created by attempts to obtain information
by fraudulent means or false pretenses.

(b) ANNUAL REPORT BY ADMINISTERING AGENCIES- The Federal Trade
Commission and the Attorney General shall submit to Congress an annual report on number
and disposition of all enforcement actions taken pursuant to this subtitle.

SEC. 527. DEFINITIONS.

For purposes of this subtitle, the following definitions shall apply:

(1) CUSTOMER- The term `customer' means, with respect to a financial institution,
any person (or authorized representative of a person) to whom the financial institution
provides a product or service, including that of acting as a fiduciary.

(2) CUSTOMER INFORMATION OF A FINANCIAL INSTITUTION- The term
`customer information of a financial institution' means any information maintained by or
for a financial institution which is derived from the relationship between the financial
institution and a customer of the financial institution and is identified with the customer.

(3) DOCUMENT- The term `document' means any information in any form.

(4) FINANCIAL INSTITUTION-

(A) IN GENERAL- The term `financial institution' means any institution engaged
in the business of providing financial services to customers who maintain a credit,
deposit, trust, or other financial account or relationship with the institution.

(B) CERTAIN FINANCIAL INSTITUTIONS SPECIFICALLY
INCLUDED- The term `financial institution' includes any depository institution
(as defined in section 19(b)(1)(A) of the Federal Reserve Act), any broker or
dealer, any investment adviser or investment company, any insurance company,
any loan or finance company, any credit card issuer or operator of a credit card
system, and any consumer reporting agency that compiles and maintains files on
consumers on a nationwide basis (as defined in section 603(p) of the Consumer
Credit Protection Act).

(C) SECURITIES INSTITUTIONS- For purposes of subparagraph (B)--

(i) the terms `broker' and `dealer' have the same meanings as given in
section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c);

(ii) the term `investment adviser' has the same meaning as given in section
202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2(a)); and

(iii) the term `investment company' has the same meaning as given in
section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3).

(D) CERTAIN PERSONS AND ENTITIES SPECIFICALLY EXCLUDED-
The term `financial institution' does not include any person or entity with respect
to any financial activity that is subject to the jurisdiction of the Commodity
Futures Trading Commission under the Commodity Exchange Act and does not
include the Federal Agricultural Mortgage Corporation or any entity chartered
and operating under the Farm Credit Act of 1971.

(E) FURTHER DEFINITION BY REGULATION- The Federal Trade
Commission, after consultation with Federal banking agencies and the Securities
and Exchange Commission, may prescribe regulations clarifying or describing the
types of institutions which shall be treated as financial institutions for purposes of
this subtitle.

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