[Federal Register Volume 66, Number 208 (Friday, October 26, 2001)]
[Proposed Rules]
[Pages 54175-54178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27003]


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DEPARTMENT OF THE TREASURY

31 CFR Part 1

[Docket No. 00-19]
RIN 1557-AB83


Office of the Comptroller of the Currency; Privacy Act of 1974; 
Proposed Implementation

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: With the concurrence of the Department of the Treasury 
(Department), the Office of the Comptroller of the Currency (OCC) 
issues a proposed rulemaking to amend this part to exempt five Privacy 
Act systems of records from certain provisions of the Privacy Act of 
1974 pursuant to 5 U.S.C. 552a(j)(2) and/or 5 U.S.C. 552a(k)(2).

DATES: Comments will be accepted until November 26, 2001.

ADDRESSES: You should direct comments to the Office of the Comptroller 
of the Currency, Public Information Room, Docket No. 01-19, 250 E 
Street, SW., Mailstop 1-5, Washington, DC 20219. You may inspect 
comments received at the same location. You may send your comments by 
facsimile transmission to FAX number 202-874-4448 or by electronic mail 
to [email protected].

FOR FURTHER INFORMATION CONTACT: Harold J. Hansen, Assistant Director, 
Administrative and Internal Law Division, (202) 874-4460 or Ellen S. 
Warwick, Special Counsel, Administrative and Internal Law Division, 
(202) 874-4460.

SUPPLEMENTARY INFORMATION: Under the Privacy Act of 1974, 5 U.S.C. 
552a, as amended, a Federal agency is required, among other things, to: 
(1) Maintain only information about an individual that is relevant and 
necessary to accomplish an authorized purpose; (2) Notify an individual 
whether information about him or her is maintained in a system of 
records; (3) Provide an individual with access to the records 
containing information about him or her, including an accounting of 
disclosures made of that information; (4) Permit an individual to 
request amendment of records about him or her; and (5) Describe in 
system notices the sources of information maintained about individuals 
and the procedures under which notice, access and amendment rights may 
be exercised. Under certain circumstances, however, the head of a 
Federal agency may issue rules to exempt a particular system of records 
from these requirements (5 U.S.C. 552a(j) and (k)). Two of the six 
systems that the OCC proposes to alter are currently exempt from 
certain of the Privacy Act's requirements pursuant to 5 U.S.C. 
552a(j)(2) and (k)(2). These systems, Treasury/Comptroller .013-
Enforcement and Compliance Information System (to be renamed ``Reports 
of Suspicious Activities'') and Treasury/Comptroller .500-Chief 
Counsel's Management Information System will remain exempt from certain 
of the Privacy Act's requirements.

Notices of Proposed New and Altered Systems of Records

    The Department and the OCC have published separately in the Federal 
Register a notice establishing five new systems of records, and a 
notice altering six existing systems of records.
    In further regard to the proposal to alter six existing systems, 
the OCC proposes by this rulemaking to exempt two of the remaining four 
systems from certain of the Privacy Act's requirements pursuant to 5 
U.S.C. 552a(j)(2) and/or (k)(2). These systems are: (1) Treasury/
Comptroller .510-Litigation Information System; and (2) Treasury/
Comptroller .600-Consumer Complaint and Inquiry Information System.
    Additionally, the OCC has proposed to establish five new systems of 
records, three of which are proposed by this rulemaking to be exempted 
from certain of the Privacy Act's requirements pursuant to 5 U.S.C. 
552a(j)(2) and/or (k)(2). The new systems of records that are proposed 
to be exempted by this rulemaking are: (1) Treasury/Comptroller .100--
Enforcement Action Report System; (2) Treasury/Comptroller .120--Bank 
Fraud Information System; and (3) Treasury/Comptroller .220--Section 
914 Tracking System.

Proposed Exemptions

    The systems of records that are proposed to be exempted under 5 
U.S.C. 552a(j)(2) are: (1) Treasury/Comptroller .510--Litigation 
Information System; and (2) Treasury/Comptroller .120--Bank Fraud 
Information System.
    The provisions of the Privacy Act of 1974 from which exemption is 
proposed pursuant to 5 U.S.C. 552a(j)(2) are:

5 U.S.C. 552a(c)(3) and (4);
5 U.S.C. 552a(d)(1), (2), (3), and (4);
5 U.S.C. 552a(e)(1), (2), and (3);
5 U.S.C. 552a(e)(4)(G), (H), and (I);
5 U.S.C. 552a(f); and
5 U.S.C. 552a(g).

The systems of records that are proposed to be exempted under 5 U.S.C. 
552a(k)(2) are: (1) Treasury/Comptroller .100--Enforcement Action 
Report System; (2) Treasury/Comptroller .120--Bank Fraud System; (3) 
Treasury/Comptroller .220--Section 914 Tracking System; (4) Treasury/
Comptroller .510--Litigation Information System; and (5) Treasury/
Comptroller .600--Consumer Complaint and Inquiry Information System.
    The provisions of the Privacy Act of 1974 from which exemption is 
proposed pursuant to 5 U.S.C. 552a(k)(2) are:

5 U.S.C. 552a(c)(3);
5 U.S.C. 552a(d)(1), (2), (3), and (4);
5 U.S.C. 552a(e)(1); (e)(4)(G), (H), and (I); and
5 U.S.C. 552a(f).

Reasons for Exemptions Under 5 U.S.C. 552a(j)(2) and (k)(2)

    (1) 5 U.S.C. 552a(e)(4)(G) and (f)(1) enable individuals to inquire 
whether a system of records contains records pertaining to them. 
Application of these provisions to the systems of records would allow 
individuals to learn whether they have been identified as suspects or 
subjects of investigation. Access to such knowledge would impair the 
OCC's ability to carry out its mission, since individuals could:
    (a) Take steps to avoid detection;
    (b) Inform associates that an investigation is in process;
    (c) Learn the nature of the investigation;
    (d) Learn whether they are only suspects or identified as law 
violators;

[[Page 54176]]

    (e) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (f) Destroy evidence needed to prove the violation.
    (2)(a) 5 U.S.C. 552a(d)(1), (e)(4)(H) and (f)(2), (3) and (5) grant 
individuals access to records pertaining to them. The application of 
these provisions to the systems of records would compromise the OCC's 
ability to utilize and provide useful tactical and strategic 
information to law enforcement agencies.
    (b) Permitting access to records contained in the systems of 
records would provide individuals with information concerning the 
nature of any current investigations and would enable them to avoid 
detection or apprehension by:
    (i) Discovering the facts that would form the basis for their 
detection or apprehension;
    (ii) Enabling them to destroy or alter evidence of illegal conduct 
that would form the basis for their detection or apprehension;
    (iii) Using knowledge that investigators had reason to believe that 
a violation of law was about to be committed, to delay the commission 
of the violation or commit it at a location that might not be under 
surveillance;
    (c) Permitting access to either on-going or closed investigative 
files would also reveal investigative techniques and procedures, the 
knowledge of which could enable individuals planning illegal acts to 
structure their operations so as to avoid detection or apprehension;
    (d) Permitting access to investigative files and records could, 
moreover, disclose the identity of confidential sources and informers 
and the nature of the information supplied and thereby endanger the 
physical safety of those sources by exposing them to possible reprisals 
for having provided the information. Confidential sources and informers 
might refuse to provide investigators with valuable information unless 
they believed that their identities would not be revealed through 
disclosure of their names or the nature of the information they 
supplied. Loss of access to such sources would seriously impair the 
OCC's ability to carry out its mandate.
    (e) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers or other persons who compiled information 
regarding the individual's illegal activities and thereby endanger the 
physical safety of those officers, persons, or their families by 
exposing them to possible reprisals.
    (f) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (b) through (e) of this 
section, permitting access in keeping with these provisions would 
discourage other law enforcement and regulatory agencies, foreign and 
domestic, from freely sharing information with the OCC and thus would 
restrict the OCC's access to information necessary to accomplish its 
mission most effectively.
    (g) Finally, the dissemination of certain information that the OCC 
may maintain in the systems of records is restricted by law.
    (3) 5 U.S.C. 552a(d)(2), (3), and (4), (e)(4)(H), and (f)(4) permit 
an individual to request amendment of a record pertaining to him or her 
and require the agency either to amend the record, or to note the 
disputed portion of the record and to provide a copy of the 
individual's statement of disagreement with the agency's refusal to 
amend a record to persons or other agencies to whom the record is 
thereafter disclosed. Since these provisions depend on the individual's 
having access to his or her records, and since these rules exempt the 
systems of records from the provisions of 5 U.S.C. 552a relating to 
access to records, for the reasons set out in subparagraphs (b) through 
(g) of paragraph (2), above, these provisions should not apply to the 
systems of records.
    (4)(a) 5 U.S.C. 552a(c)(3) requires an agency to make accountings 
of disclosures of a record available to the individual named in the 
record upon his or her request. The accountings must state the date, 
nature, and purpose of each disclosure of the record and the name and 
address of the recipient.
    (b) The application of this provision would impair the ability of 
the OCC, the Department, and law enforcement agencies outside the 
Department of the Treasury to make effective use of information 
maintained by the OCC. Making accountings of disclosures available to 
the subjects of an investigation would alert them to the fact that an 
agency is conducting an investigation into their illegal activities and 
could reveal the geographic location of the investigation, the nature 
and purpose of that investigation, and the dates on which that 
investigation was active. Violators possessing such knowledge would be 
able to take measures to avoid detection or apprehension by altering 
their operations, by transferring their illegal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form the basis for detection or apprehension.
    (c) Providing accountings to the subjects of investigations would 
alert them to the fact that the OCC has information regarding their 
illegal activities and could inform them of the general nature of that 
information. Access to such information could reveal the operation of 
the OCC's information gathering and analysis systems and permit 
violators to take steps to avoid detection or apprehension.
    (5)(a) 5 U.S.C. 552a(e)(1) requires an agency to maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain'' as 
defined in 5 U.S.C. 552a(a)(3), includes ``collect'' and 
``disseminate.'' The application of this provision to the system of 
records could impair the OCC's ability to collect, utilize, and 
disseminate valuable law enforcement information.
    (b) At the time that the OCC collects information, it often lacks 
sufficient time to determine whether the information is relevant and 
necessary to accomplish an OCC purpose.
    (c) In many cases, especially in the early stages of investigation, 
it may be impossible immediately to determine whether information 
collected is relevant and necessary, and information that initially 
appears irrelevant and unnecessary often may, upon further evaluation 
or upon collation with information developed subsequently, prove 
particularly relevant to a law enforcement program.
    (d) Not all violations of law discovered by OCC analysts fall 
within the investigative jurisdiction of the OCC. To promote effective 
law enforcement, the OCC will have to disclose such violations to other 
law enforcement agencies, including State, local, and foreign agencies 
that have jurisdiction over the offenses to which the information 
relates. Otherwise, the OCC might be placed in the position of having 
to ignore information relating to violations of law not within its 
jurisdiction when that information comes to the OCC's attention during 
the collation and analysis of information in its records.
    (6) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for information contained in a 
system of records. The application of this provision to the systems of 
records could compromise the OCC's ability to complete or continue 
investigations or inquiries or to provide useful

[[Page 54177]]

information to law enforcement agencies, since revealing sources for 
the information could:
    (a) Disclose investigative techniques and procedures;
    (b) Result in threats or reprisals against informers by the 
subjects of an investigation; and
    (c) Cause informers to refuse to give full information to 
investigators for fear of having their identities as sources disclosed.

Reasons for Additional Exemptions Claimed Solely Under 5 U.S.C. 
552a(j)(2)

    (1) 5 U.S.C. 552a(c)(4) requires an agency to inform any person or 
other agency about any correction or notation of dispute that the 
agency made in accordance with 5 U.S.C. 552a(d) to any record that the 
agency disclosed to the person or agency if an accounting of the 
disclosure was made. Since this provision depends on an individual's 
having access to and an opportunity to request amendment of records 
pertaining to him or her, and since these rules exempt the systems of 
records from the provisions of 5 U.S.C. 552a relating to access to and 
amendment of records, this provision should not apply to the systems of 
records.
    (2)(a) 5 U.S.C. 552a(e)(2) requires an agency to collect 
information to the greatest extent practicable directly from the 
subject individual when the information may result in adverse 
determinations about an individual's rights, benefits, and privileges 
under Federal programs. The application of this provision to the 
systems of records would impair the OCC's ability to collate, analyze, 
utilize, and disseminate investigative, intelligence, and enforcement 
information.
    (b) Most information collected about an individual under criminal 
investigation is obtained from third parties, such as witnesses and 
informants. It is usually not feasible to rely upon the subject of the 
investigation as a source for information regarding his or her criminal 
activities.
    (c) An attempt to obtain information from the subject of a criminal 
investigation will often alert that individual to the existence of an 
investigation, thereby affording the individual an opportunity to 
attempt to conceal his criminal activities so as to avoid apprehension.
    (d) In certain instances, the subject of a criminal investigation 
is not required to supply information to investigators as a matter of 
legal duty.
    (e) During criminal investigations it is often a matter of sound 
investigative procedure to obtain information from a variety of sources 
to verify information already obtained.
    (3)(a) 5 U.S.C. 552a(e)(3) requires an agency to inform each 
individual whom it asks to supply information, on the form that it uses 
to collect the information or on a separate form that the individual 
can retain, of the agency's authority for soliciting the information; 
whether disclosure of information is voluntary or mandatory; the 
principal purposes for which the agency will use the information; the 
routine uses that may be made of the information; and the effects on 
the individual of not providing all or part of the information. The 
systems of records should be exempted from this provision to avoid 
impairing the OCC's ability to collect and collate investigative and 
enforcement information. Confidential sources or law enforcement 
officials often obtain information under circumstances in which it is 
necessary to keep the true purpose of their actions secret so as not to 
let the subject of the investigation or his or her associates know that 
a criminal investigation is in progress.
    (c) Providing a confidential source of information with written 
evidence that he or she was a source, as required by this provision, 
could increase the likelihood that the source of information would be 
subject to retaliation by the subject of the investigation.
    (d) Individuals may be contacted during preliminary information 
gathering before any individual is identified as the subject of an 
investigation. Informing the individual of the matters required by this 
provision would impede or compromise subsequent investigations.
    (e) Finally, application of this provision could result in an 
unwarranted invasion of the personal privacy of the subject of the 
criminal investigation, particularly where further investigation 
reveals that the subject was not involved in any criminal activity.
    (4)(a) 5 U.S.C. 552a(e)(5) requires an agency to maintain all 
records it uses in making any determination about any individual with 
such accuracy, relevance, timeliness, and completeness as is reasonably 
necessary to assure fairness to the individual in the determination.
    (b) Since 5 U.S.C. 552a(a)(3) defines ``maintain'' to include 
``collect'' and ``disseminate,'' application of this provision to the 
systems of records would hinder the initial collection of any 
information that could not, at the moment of collection, be determined 
to be accurate, relevant, timely, and complete. Similarly, application 
of this provision would seriously restrict the OCC's ability to 
disseminate information pertaining to a possible violation of law to 
law enforcement and regulatory agencies. In collecting information 
during a criminal investigation, it is often impossible or unfeasible 
to determine accuracy, relevance, timeliness, or completeness prior to 
collection of the information. In disseminating information to law 
enforcement and regulatory agencies, it is often impossible to 
determine accuracy, relevance, timeliness, or completeness prior to 
dissemination, because the OCC may not have the expertise with which to 
make such determinations.
    (c) Information that may initially appear inaccurate, irrelevant, 
untimely, or incomplete may, when collated and analyzed with other 
available information, become more pertinent as an investigation 
progresses. In addition, application of this provision could seriously 
impede criminal investigators in the exercise of their judgment in 
reporting results obtained during criminal investigations.
    (5) 5 U.S.C. 552a(e)(8) requires that an agency make reasonable 
efforts to serve notice on an individual when the agency makes any 
record on the individual available to any person under compulsory legal 
process, when such process becomes a matter of public record. The 
systems of records should be exempted from this provision to avoid 
revealing investigative techniques and procedures outlined in those 
records and to prevent revelation of the existence of an ongoing 
investigation where there is need to keep the existence of the 
investigation secret.
    (6) 5 U.S.C. 552a(g) provides for civil remedies to an individual 
when an agency wrongfully refuses to amend a record or to review a 
request for amendment, when an agency wrongfully refuses to grant 
access to a record, when an agency fails to maintain accurate, 
relevant, timely, and complete records which are used to make a 
determination adverse to the individual, and when an agency fails to 
comply with any other provision of 5 U.S.C. 552a so as to adversely 
affect the individual. The system of records should be exempted from 
this provision to the extent that the civil remedies may relate to 
provisions of 5 U.S.C. 552a from which these rules exempt the systems 
of records, since there should be no civil remedies for failure to 
comply with provisions from which the OCC is exempted. Exemption from 
this provision will also protect the OCC from baseless civil court 
actions that might hamper its ability to collate, analyze,

[[Page 54178]]

utilize, and disseminate investigative, intelligence, and law 
enforcement data.
    The Regulatory Flexibility Act (RFA) requires Federal agencies 
either to certify that a proposed rule would not, if adopted in final 
form, have a significant impact on a substantial number of small 
entities or to prepare an initial regulatory flexibility analysis of 
the proposal and publish the analysis for comment (5 U.S.C. 603, 605). 
This regulation will exempt five systems of records from the Privacy 
Act. Because this regulation affects only internal agency 
administration, these exemptions are not expected to generate any costs 
for banks of any size. Therefore, the OCC and the Department certify 
that the proposed rule, if adopted in final form, will not have a 
significant economic impact on a substantial number of small entities.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), the OCC and the Department have determined that this 
proposed rule would not impose new recordkeeping, application, 
reporting, or other types of information collection requirements.
    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (Unfunded Mandates Act), requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. The OCC and the Department 
have determined that the proposed rule will not result in expenditures 
by State, local, or tribal governments or by the private sector of $100 
million or more. Accordingly, the OCC and Department have not prepared 
a budgetary impact statement or specifically addressed the regulatory 
alternatives considered.
    The OCC and the Department have determined that this proposed rule, 
if adopted as a final rule, would not constitute a ``significant 
regulatory action'' under Executive Order 12866 and, therefore, does 
not require a Regulatory Impact Analysis.

List of Subjects in 31 CFR Part 1

    Privacy.

    Part 1, Subpart C of Title 31 of the Code of Federal Regulations is 
amended as follows:

PART 1--[AMENDED]

    1. The authority citation for part 1 continues to read as follows:

    Authority: 5 U.S.C. 301 and 31 U.S.C. 321. Subpart A also issued 
under 5 U.S.C. 552 as amended. Subpart C also issued under 5 U.S.C. 
552a.

    2. Section 1.36 of Subpart C is amended as follows:
    a. Paragraph (c)(1)(iii) is amended by adding ``CC .120 Bank Fraud 
Information System'' and ``CC .510 Litigation Information System'' to 
the table in numerical order.
    b. Paragraph (g)(1)(iii) is amended by adding ``CC .100 Enforcement 
Action Report System,'' ``CC .120 Bank Fraud Information System,'' ``CC 
.220 Section 914 Tracking System,'' ``CC .510 Litigation Information 
System,'' and ``CC .600 Consumer Complaint and Inquiry Information 
System'' to the table in numerical order.
    The additions to Sec. 1.36 read as follows:


Sec. 1.36  Systems exempt in whole or in part from provisions of 5 U. 
S. C. 552a and this part.

* * * * *
    (c) * * *
    (1) * * *
    (iii) * * *

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
 
                  *        *        *        *        *
CC .120...................................  Bank Fraud Information
                                             System.
CC .510...................................  Litigation Information
                                             System.
 
                  *        *        *        *        *
------------------------------------------------------------------------

    (g) * * *
    (1) * * *
    (iii) * * *

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
 
                  *        *        *        *        *
CC .100...................................  Enforcement Action Report
                                             System.
CC .120...................................  Bank Fraud Information
                                             System.
CC .220...................................  Section 914 Tracking System.
CC .510...................................  Litigation Information
                                             System.
CC .600...................................  Consumer Complaint and
                                             Inquiry Information System.
 
                  *        *        *        *        *
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    Dated: September 10, 2001.
W. Earl Wright, Jr.,
Chief Management and Administrative Programs Officer.
[FR Doc. 01-27003 Filed 10-25-01; 8:45 am]
BILLING CODE 4810-33-P