Last Friday, the Fourth Circuit Court of Appeals affirmed a district court’s refusal to quash subpoenas related to foreign bank account records that were required to be maintained under the Bank Secrecy Act and Treasury Regulations.
The case involves an investigation by a grand jury to determine whether the targets, John and Jane Doe (the “Does”), used Swiss bank accounts to conceal assets and income from the IRS. The grand jury obtained evidence that John Doe had opened a Swiss bank account in 2008 which was then valued in excess of $2.3 million. This account was closed in the following year and a portion of the funds were transferred to a new Swiss account. The grand jury served subpoenas on the Does in 2012 requesting that they produce certain foreign bank account records that they were required to keep under the Bank Secrecy Act and Treasury Regulations governing offshore banking.
The Does moved to quash the subpoenas. The district court denied the motions to quash and ordered the Does to comply with the subpoenas. The Does refused, were held in contempt, and appealed.
On appeal, the Does argued that the Fifth Amendment privilege against self-incrimination should protect them from having to turn over the requested documents. The Fourth Circuit disagreed and invoked the required records doctrine as the basis for refusing to apply the Fifth Amendment privilege to shield the Does from having to comply with the subpoenas. The required records doctrine applies in cases where:
(1) the purposes of the United States’ inquiry must be essentially regulatory;
(2) information is to be obtained by requiring the preservation of records of a kind which the regulated party has customarily kept; and
(3) the records themselves must have assumed public aspects which render them at least analogous to a public document.
Grosso v. United States, 390 U.S. 62 (1968).
The Fourth Circuit had not previously considered to what extent the required records doctrine applied in the context of foreign bank records. The court went on to apply the three prong analysis from Grosso, finding that each prong had been satisfied, and holding that the Fifth Amendment privilege was therefore inapplicable.
