Privacy Act of 1974; Implementation

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

31 CFR Part 1

[No. 94-260]

Privacy Act of 1974; Implementation

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Proposed rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is proposing to exempt

a system of records from certain provisions of the Privacy Act of 1974,

5 U.S.C. 552a (Privacy Act), to the extent the system contains

investigatory material pertaining to the enforcement of laws or

compiled for law enforcement purposes. The OTS is also proposing to add

a Privacy Act exemption to an existing exempt system.

DATES: Comments must be received no later than April 26, 1995.

ADDRESSES: Send comments to: Director, Information Services Division,

Public Affairs, Office of Thrift Supervision, 1700 G Street, NW.,

Washington, DC 20552, Attention Docket No. 94-260. These submissions

may be hand delivered to 1700 G Street, NW., from 9 a.m. to 5 p.m. on

business days; they may be sent by facsimile transmission to FAX number

(202) 906-7753 or (202) 906-7755. Submissions must be received by 5

p.m. on the day that they are due in order to be considered by the OTS.

Comments will be available for inspection at 1700 G Street, NW., from 1

p.m. until 4 p.m. on business days. Visitors will be escorted to and

from the Public Reading Room at established intervals.

FOR FURTHER INFORMATION CONTACT:

Mary Ann Reinhart, Chief, Disclosure Branch, (202) 906-5896, 1700 G

Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION: The OTS is proposing to exempt the Criminal

Referral Database system of records from specified provisions of the

Privacy Act and to add an exemption to the Confidential Individual

Information System. Subsection (j)(2) of the Privacy Act provides that

an agency may promulgate rules to exempt any system of records within

the agency from any section of part 552a except subsections (b), (c)

ION: The OTS is proposing to exempt the Criminal

Referral Database system of records from specified provisions of the

Privacy Act and to add an exemption to the Confidential Individual

Information System. Subsection (j)(2) of the Privacy Act provides that

an agency may promulgate rules to exempt any system of records within

the agency from any section of part 552a except subsections (b), (c)

(1) and (2), (e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11),

and (i), provided that the system of records is maintained by ``the

agency or component thereof which performs as its principal function

any activity pertaining to enforcement of criminal laws'' and includes:

``(A) Information compiled for the purpose of identifying individual

criminal offenders and alleged offenders and consisting only of

identifying data and notations of arrests, the nature and disposition

of criminal charges, sentencing, confinement, release and parole and

probation status; (B) information compiled for the purpose of a

criminal investigation, including reports of informants and

investigators and associated with an identifiable individual; or (C)

reports identifiable to an individual compiled at any stage of the

process of enforcement of the criminal laws from arrest or indictment

through release from supervision.'' Section 552a(k) of the Privacy Act

provides that an agency may promulgate rules to exempt any system of

records within the agency from sections 552a (c)(3), (d), (e)(1),

associated with an identifiable individual; or (C)

reports identifiable to an individual compiled at any stage of the

process of enforcement of the criminal laws from arrest or indictment

through release from supervision.'' Section 552a(k) of the Privacy Act

provides that an agency may promulgate rules to exempt any system of

records within the agency from sections 552a (c)(3), (d), (e)(1),

(e)(4) (G) through (I), and (f) of the Act, pursuant to 5 U.S.C.

552a(k)(2), if the system of records is ``investigatory material

compiled for the law enforcement purposes, other than material within

the scope of subsection (j)(2) * * *.''

If a system of records is not exempted from these sections, the

Privacy Act generally requires the agency to: Make an accounting of

disclosures to the individual named in the record of their request;

permit individuals access to their records; permit individuals to

request amendment to their records; maintain only relevant or necessary

information in its system of records; publish certain information in

the Federal Register; and promulgate rules that establish procedures

for notice and disclosure of records. The exemptions that may be

asserted with respect to investigatory systems of record permit an

agency to protect information when disclosure would interfere with the

conduct of the agency's investigations.

Exemptions under subsections 552a(j)(2) and (k)(2) are necessary to

maintain the integrity and confidentiality of these investigative

files. These systems contain information on possible criminal

investigations and may indicate current administrative investigations

by OTS. The disclosure of this information would significantly impair

the enforcement activities and coordinated proceedings of OTS, other

financial institution regulatory agencies, and the Justice Department.

Disclosure form these systems would give individuals an

opportunity to learn whether they have been identified as either

suspects or subjects of criminal referrals

ative investigations

by OTS. The disclosure of this information would significantly impair

the enforcement activities and coordinated proceedings of OTS, other

financial institution regulatory agencies, and the Justice Department.

Disclosure form these systems would give individuals an

opportunity to learn whether they have been identified as either

suspects or subjects of criminal referrals. This knowledge would

undermine the agency's mission of enforcing federal law, since

individuals could take steps to avoid detection; inform associates that

a referral had been made; begin, continue, or resume illegal conduct

upon learning that they are not identified in the system of records; or

destroy evidence needed to prove the violation. Individuals could alter

future wrongful acts to avoid detection by discovering the collection

of facts that would form the basis for a criminal referral, by enabling

them to destroy or alter evidence of unlawful conduct, and by learning

that investigators had reason to believe that there was a violation of

laws or regulations. Disclosure could, moreover, disclose the identity

of confidential sources and the nature of the information supplied and

thereby endanger the physical safety of sources of information by

exposing them to reprisals for having provided the information.

Confidential sources might refuse to provide valuable referrals if they

could not be secure in the knowledge that their identities would not be

revealed through disclosure of either their names or the nature of the

information they supplied. Loss of access to such sources would

seriously impair the OTS's and the Justice Department's ability to

carry out their mandates

ovided the information.

Confidential sources might refuse to provide valuable referrals if they

could not be secure in the knowledge that their identities would not be

revealed through disclosure of either their names or the nature of the

information they supplied. Loss of access to such sources would

seriously impair the OTS's and the Justice Department's ability to

carry out their mandates. Additionally, disclosure would reveal

investigative techniques and procedures, the knowledge of which could

enable individuals planning to engage in misconduct or crimes to

structure their operations in such a way as to avoid detection or

apprehension and thereby neutralize established investigative tools and

procedures of both OTS and the Justice Department. The imposition of

certain restrictions on the manner in which information is collected,

verified or retained could significantly impede the effectiveness of

investigation and could preclude the apprehension and successful

prosecution of persons engaged in fraud or other unlawful activity.

The OTS investigative files will contain information of the type

described in the (j)(2) and (k)(2) exemptions of the Privacy Act.

Authority for these systems are provided by 5 U.S.C. 301; 12 U.S.C.

1464, 1818. OTS will maintain information in these systems of records,

pursuant to its law enforcement and investigative functions, in order

to carry out these functions and its mission.

This rule is not a ``significant regulatory action'' under

Executive Order 12866 and will not require the approval of the Office

of Management and Budget; therefore, does not require a Regulatory

Impact Analysis.

Pursuant to the requirements of the Regulatory Flexibility Act, 5

U.S.C. 601-612, it is hereby certified that this rule will not have

significant economic impact on a substantial number of small entities

ignificant regulatory action'' under

Executive Order 12866 and will not require the approval of the Office

of Management and Budget; therefore, does not require a Regulatory

Impact Analysis.

Pursuant to the requirements of the Regulatory Flexibility Act, 5

U.S.C. 601-612, it is hereby certified that this rule will not have

significant economic impact on a substantial number of small entities.

In accordance with the Paperwork Reduction Act of 1980, the

Department of the Treasury has determined that this proposed rule would

not impose new recordkeeping, application, reporting, or other types of

information collection requirements.

List of Subjects in 31 CFR Part 1

Privacy.

Part 1 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.

Sec. 1.36 [Amended]

2. Section 1.36 of subpart C is amended by adding the following

text at the end of the section as follows:

OFFICE OF THRIFT SUPERVISION

NOTICE OF EXEMPT SYSTEMS

In accordance with 5 U.S.C. 552a (j) and (k), general notice is

hereby given of rulemaking pursuant to the Privacy Act of 1974 by

the Acting Director, Office of Thrift Supervision, under authority

delegated to him by the Secretary of the Treasury. The Acting

Director, Office of Thrift Supervision, exempts the systems of

records identified in the paragraphs below from certain provisions

of the Privacy Act of 1974 as set forth in such paragraphs.

a. General exemptions under 5 U.S.C. 552a(j)(2). Pursuant to the

provisions of 5 U.S.C. 552a(j)(2), the Acting Director, Office of

Thrift Supervision, hereby exempts certain systems of records,

maintained by the Office of Thrift Supervision, from the provisions

of 5 U.S.C. 552a (c) (3) and (4)(D) (1), (2), (3) and (4), (e) (1),

ons

of the Privacy Act of 1974 as set forth in such paragraphs.

a. General exemptions under 5 U.S.C. 552a(j)(2). Pursuant to the

provisions of 5 U.S.C. 552a(j)(2), the Acting Director, Office of

Thrift Supervision, hereby exempts certain systems of records,

maintained by the Office of Thrift Supervision, from the provisions

of 5 U.S.C. 552a (c) (3) and (4)(D) (1), (2), (3) and (4), (e) (1),

(2), (3), (4) (G), (H) and (I), (5) and (8), (f) and (g).

1. Exempt systems. The following systems of records, which

contain information of the type described in 5 U.S.C. 552a(j)(2),

shall be exempt from the provisions of 5 U.S.C. 552a listed in

paragraph a. above except as otherwise indicated below and in the

general notice of the existence and character of systems of records

which appears elsewhere in the Federal Register

.001--Confidential Individual Information System

.004--Criminal Referral Database

2. Reasons for exemptions. (a) 5 U.S.C. 552a (e)(4)(G) and

(f)(1) enable individuals to be notified whether a system of records

contains records pertaining to them. The Office of Thrift

Supervision (OTS) believes that application of these provisions to

the above-listed systems of records would give individuals an

opportunity to learn whether they are on record either as suspects

or as suspects of an administrative investigation; this would

compromise the ability of the OTS to complete investigations and to

detect and apprehend violators of applicable laws in that

individuals would thus be able (1) to take steps to avoid detection,

ions to

the above-listed systems of records would give individuals an

opportunity to learn whether they are on record either as suspects

or as suspects of an administrative investigation; this would

compromise the ability of the OTS to complete investigations and to

detect and apprehend violators of applicable laws in that

individuals would thus be able (1) to take steps to avoid detection,

(2) to inform co-conspirators of the fact that an investigation is

being conducted, (3) to learn the nature of the investigation to

which they are being subjected, (4) to learn the type of

surveillance being utilized, (5) to learn whether they are suspects

or identified law violators, (6) to continue or resume their illegal

conduct without fear of detection upon learning that they are not in

a particular system of records, and (7) to destroy evidence needed

to prove a violation.

(b) 5 U.S.C. 552a (d)(1), (e)(4)(H) and (f) (2), (3) and (5)

enable individuals to gain access to records pertaining to them. The

OTS believes that application of these provisions to the above-

listed systems of records would compromise its ability to complete

or continue administrative investigations and to detect and

apprehend violators of applicable laws. Permitting access to records

contained in the above-listed systems of records would provide

individuals with significant information concerning the nature of

the investigation, and this could enable them to avoid detection or

apprehension in the following ways: (1) By discovering the

collection of facts which would form the basis of an enforcement

action, and (2) by enabling them to destroy evidence of wrongful

conduct which would form the basis of an enforcement action

uld provide

individuals with significant information concerning the nature of

the investigation, and this could enable them to avoid detection or

apprehension in the following ways: (1) By discovering the

collection of facts which would form the basis of an enforcement

action, and (2) by enabling them to destroy evidence of wrongful

conduct which would form the basis of an enforcement action.

Granting access to on-going or closed investigative files would also

reveal investigative techniques and procedures, the knowledge of

which could enable individuals planning illegal activity to

structure their future operations in such a way as to avoid

detection or apprehension, thereby neutralizing established

investigative techniques and procedures. Further, granting access to

investigative files and records could disclose the identities of

confidential sources and other informers and the nature of the

information which they supplied, thereby exposing them to possible

reprisals for having provided information related to the activities

of those individuals who are subjects of the investigative files and

records; confidential sources and other informers might refuse to

provide investigators with valuable information if they could not be

secure in the knowledge that their identities would not be revealed

through disclosure of either their names or the nature of the

information they supplied, and this would seriously impair the

ability of the OTS to carry out its mandate to

enforce the applicable laws. Additionally, providing access to

records contained in the above-listed systems of records could

reveal the identities of individuals who compiled information

regarding illegal activities, thereby exposing them to possible

reprisals.

or the nature of the

information they supplied, and this would seriously impair the

ability of the OTS to carry out its mandate to

enforce the applicable laws. Additionally, providing access to

records contained in the above-listed systems of records could

reveal the identities of individuals who compiled information

regarding illegal activities, thereby exposing them to possible

reprisals.

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

which are dependent upon access having been granted to records

pursuant to the provisions cited in paragraph (b) above, enable

individuals to contest (seek amendment to) the content of records

contained in a system of records and require an agency to note an

amended record and to provide a copy of an individual's statement

(of disagreement with the agency's refusal to amend a record) to

persons or other agencies to whom the record has been disclosed. The

OTS believes that the reasons set forth in paragraph (b) above are

equally applicable to this subparagraph and, accordingly, those

reasons are hereby incorporated herein by reference.

(d) 5 U.S.C. 552a(c)(3) requires that an agency make accountings

of disclosures of records available to individuals named in the

records at their request; such accountings must state the date,

nature and purpose of each disclosure of a record and the name and

address of the recipient. The OTS believes that application of this

provision to the above-listed systems of records would impair the

ability of other law enforcement agencies to make effective use of

information provided by the OTS in connection with the

investigation, detection and apprehension of violators of the laws

enforced by those other law enforcement agencies

ecord and the name and

address of the recipient. The OTS believes that application of this

provision to the above-listed systems of records would impair the

ability of other law enforcement agencies to make effective use of

information provided by the OTS in connection with the

investigation, detection and apprehension of violators of the laws

enforced by those other law enforcement agencies. Making accountings

of disclosure available to violators would alert those individuals

to the fact that another agency is conducting an investigation into

their activities, and this could reveal the nature and purpose of

that investigation, and the dates on which that investigation was

active. Violators possessing such knowledge would thereby be able to

take appropriate measures to avoid detection or other apprehension

by altering their operations, or by destroying or concealing

evidence which would form the basis of an enforcement action. In

addition, providing violators with accountings of disclosure would

inform those individuals of general information, and alert them that

the OTS has information regarding their activities; this, in turn,

would afford those individuals a better opportunity to take

appropriate steps to avoid detection or apprehension.

(e) 5 U.S.C. 552a(c)(4) requires that an agency inform any

person or other agency about any correction or notation of dispute

made by the agency in accordance with 5 U.S.C. 552(d) of any record

that has been disclosed to the person or agency if an accounting of

the record was made. Since this provision is dependent on an

individual's having been provided an opportunity to contest (seek

amendment to) records pertaining to him, and since the above-listed

systems of records are proposed to be exempted from those provisions

of 5 U.S.C. 552a relating to amendments of records as indicated in

paragraph (c) above, the OTS believes that this provision should not

be applicable to the above-listed systems of records.

to

be candid with investigators because of the knowledge that their

identities as sources might be disclosed.

(g) 5 U.S.C. 552a(e)(1) requires that an agency 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.'' At the time that information is collected by the

OTS, there is often insufficient time to determine whether the

information is relevant and necessary to accomplish a purpose of the

OTS; in many cases information collected may not be immediately

susceptible to a determination whether the information is relevant

and necessary, particularly in the early stages of an investigation,

and in many cases information which initially appears to be

irrelevant and unnecessary may, upon further evaluation or upon

continuation of the investigation, prove to have particular

relevance to an enforcement program of OTS. Further, not all

violations of law discovered during an OTS administrative

investigation fall within the investigative jurisdiction of OTS; in

order to promote effective law enforcement, OTS is often required to

disseminate information pertaining to such violations to other law

enforcement agencies which have jurisdiction over the offense to

which the information relates. The OTS should not be placed in a

position of having to ignore information relating to violations of

law not within its jurisdiction where that information comes to the

attention of the OTS through the conduct of a lawful OTS

investigation. The OTS therefore believes that it is appropriate to

exempt the above-listed systems of records from the provisions of 5

U.S.C. 552a(e)(1).

tion relates. The OTS should not be placed in a

position of having to ignore information relating to violations of

law not within its jurisdiction where that information comes to the

attention of the OTS through the conduct of a lawful OTS

investigation. The OTS therefore believes that it is appropriate to

exempt the above-listed systems of records from the provisions of 5

U.S.C. 552a(e)(1).

(h) 5 U.S.C. 552a(e)(2) requires that an agency 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 OTS believes that application

of this provision to the above-listed systems of records would

impair the ability of OTS to conduct investigations and to identify,

detect and apprehend violators of applicable laws for the following

reasons: (1) Most information collected about an individual under

investigation is obtained from third parties such as witnesses and

informers, and it is usually not feasible to rely upon the target of

the investigation as a source for information regarding his

activities, (2) an attempt to obtain information from an individual

regarding an investigation will often alert the individual to the

existence of such an investigation, thereby affording him an

opportunity to conceal his activities so as to avoid apprehension,

(3) in certain instances individuals are not required to supply

information to investigators as a matter of legal duty, and (4)

during investigations it is often a matter of sound investigative

procedures to obtain information from a variety of sources in order

to verify information already obtained.

thereby affording him an

opportunity to conceal his activities so as to avoid apprehension,

(3) in certain instances individuals are not required to supply

information to investigators as a matter of legal duty, and (4)

during investigations it is often a matter of sound investigative

procedures to obtain information from a variety of sources in order

to verify information already obtained.

(i) 5 U.S.C. 552a(e)(3) requires that an agency inform each

individual whom it asks to supply information, on the form which it

uses to collect the information or on a separate form that can be

retained by the individual, of the authority which authorizes the

solicitation of the information and whether disclosure of such

information is mandatory or voluntary; the principal purposes for

which the information is intended to be used; the routine uses which

may be made of the information; and the effects on the individual of

not providing all or part of the requested information. The OTS

believes that the above-listed systems of records should be exempted

from this provision in order to avoid adverse effects on its ability

to identify, detect and apprehend violators of applicable laws. In

many cases, information is obtained from confidential sources and

other individuals under circumstances where it is necessary that the

true purpose of their actions be kept secret so as to not let it be

known by the target of the investigation or his associates that an

investigation is in progress. In many cases, individuals for

personal reasons would feel inhibited in talking to a person

representing a law enforcement agency but would be willing to talk

to a confidential source or to an individual whom them believed was

not involved in enforcement activity

ept secret so as to not let it be

known by the target of the investigation or his associates that an

investigation is in progress. In many cases, individuals for

personal reasons would feel inhibited in talking to a person

representing a law enforcement agency but would be willing to talk

to a confidential source or to an individual whom them believed was

not involved in enforcement activity. In addition, providing

information from this system, including written evidence of the

identity of the source, as required by this provision, could

increase the likelihood that the source of information would be the

subject of retaliatory action by the target of the investigation.

Further, application of this provision could result in an

unwarranted invasion of the personal privacy of the target of the

investigation, particularly where further investigation would result

in a finding that he was not involved in unlawful activity.

(j) 5 U.S.C. 552a(e)(5) requires that an agency maintain all

records used by the agency 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. Since 5 U.S.C. 552a(a)(3) defines

``maintain'' to include ``collect'' and ``disseminate,'' application

of this provision to the above-listed systems of records would

hinder the initial collection of any information which 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 necessary flow of information

from the OTS to other law enforcement agencies where an OTS

investigation revealed information pertaining to a violation of law

which was under the investigative jurisdiction of another agency

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 necessary flow of information

from the OTS to other law enforcement agencies where an OTS

investigation revealed information pertaining to a violation of law

which was under the investigative jurisdiction of another agency. In

collecting information during the course of an administrative

investigation, it is not possible or feasible to determine accuracy,

relevance, timeliness or completeness prior to collection of the

information; in disseminating information to other law enforcement

agencies it is often not possible to determine accuracy, relevance,

timeliness or completeness prior to dissemination because the

disseminating agency may not have the expertise with which to make

such determinations. Further, information which may initially appear

inaccurate, irrelevant, untimely or incomplete may, when gathered,

grouped, and evaluated with other available information, become more

pertinent as an investigation progresses. The OTS therefore believes

that it is appropriate to exempt the above-listed systems of records

from the provisions of 5 U.S.C. 552a(e)(5).

(k) 5 U.S.C. 552a(e)(8) requires that an agency make reasonable

efforts to serve notice on an individual when any record on the

individual is made available to any person under compulsory legal

process when such process becomes a matter of public record. The OTS

believes that the above-listed systems of records should be exempt

from this provision in order to avoid revealing investigative

techniques and procedures outlined in those records and in order to

prevent revelation of the existence of an on-going investigation

where there is a need to keep the existence of the investigation

secret.

hen such process becomes a matter of public record. The OTS

believes that the above-listed systems of records should be exempt

from this provision in order to avoid revealing investigative

techniques and procedures outlined in those records and in order to

prevent revelation of the existence of an on-going investigation

where there is a need to keep the existence of the investigation

secret.

(1) 5 U.S.C. 552a(g) provides civil remedies to an individual

for an agency refusal to amend a record or to make a review of a

request for amendment, for an agency refusal to grant access to a

record, for an agency failure to maintain accurate, relevant, timely

and complete records which are used to make a determination which is

adverse to the individual, and for an agency failure to comply with

any other provision of 5 U.S.C. 552a in such a way as to have an

adverse effect on an individual. The OTS believes that the above-

listed systems of records should be exempted from this provision to

the extent that the civil remedies provided therein may be related

to provisions of 5 U.S.C. 552a from which the above-listed systems

of records are proposed to be exempt. Since the provisions of 5

U.S.C. 552a enumerated in paragraph (a) through (k) above proposed

to be inapplicable to the above-listed systems of records for the

reasons stated therein, there should be no corresponding civil

remedies for failure to comply with the requirements of those

provisions to which the exemption is proposed to apply. Further, the

OTS believes that the application of this provision to the above-

listed systems of records would adversely affect its ability to

conduct investigations by exposing to civil court actions every

stage of the investigative process in which information is compiled

or used in order to identify, detect, apprehend and otherwise

investigate persons suspected or known to be engaged in conduct in

violation of applicable laws.

b. Specific exemptions under 5 U.S.C. 552a(k)(2)

stems of records would adversely affect its ability to

conduct investigations by exposing to civil court actions every

stage of the investigative process in which information is compiled

or used in order to identify, detect, apprehend and otherwise

investigate persons suspected or known to be engaged in conduct in

violation of applicable laws.

b. Specific exemptions under 5 U.S.C. 552a(k)(2). Pursuant to

the provisions of 5 U.S.C. 552a(k)(2), the Office of Thrift

Supervision, hereby exempts certain systems of records, maintained

by the Office of Thrift Supervision, from the provisions of 5 U.S.C.

552a (c)(3), (d)(1), (2), (3) and (4), (e)(1) and (4)(G), (H), and

(I) and (f).

1. Exempt systems. The following systems of records, which

contain information of the type described in 5 U.S.C. 552a(k)(2),

shall be exempt from the provisions of 5 U.S.C. 552a listed in

paragraph b. above except as otherwise indicated below and in the

general notice of the existence and character of systems of records

which appears elsewhere in the Federal Register:

.001--Confidential Individual Information System

.004--Criminal Referral Database

2. Reasons for exemptions. (a) 5 U.S.C. 552a (e)(4)(G) and

(f)(1) enable individuals to be notified whether a system of records

contains records pertaining to them. The OTS believes that

application of these provisions (to those of the above-listed

systems of records for which no notification procedures have been

provided in the general notice of the existence and character of

systems of records which appears elsewhere in the Federal Register)

would impair the ability of the OTS to successfully complete

investigations and inquiries of suspected violators of laws and

regulations under its jurisdiction. In many cases investigations and

inquiries into violations of laws and regulations involve complex

and continuing patterns of behavior

the existence and character of

systems of records which appears elsewhere in the Federal Register)

would impair the ability of the OTS to successfully complete

investigations and inquiries of suspected violators of laws and

regulations under its jurisdiction. In many cases investigations and

inquiries into violations of laws and regulations involve complex

and continuing patterns of behavior. Individuals, if informed that

they have been identified as suspected violators of laws and

regulations, would have an opportunity to take measures to prevent

detection of illegal action so as to avoid prosecution or the

imposition of civil sanctions. They would also be able to learn the

nature and location of the investigation and the type of inquiry

being made, and they would be able to transmit this knowledge to co-

conspirators. Finally, violators might be given the opportunity to

destroy evidence needed to prove the violation under investigation

or inquiry.

(b) 5 U.S.C. 552a (d)(1), (e)(4)(H) and (f)(2), (3) and (5)

enable individuals to gain access to records pertaining to them. The

OTS believes that application of these provisions to the above-

listed systems of records would impair its ability to complete or

continue investigations and inquiries and to detect and apprehend

violators of the applicable laws. Permitting access to records

contained in the above-listed systems of records would provide

violators with significant information concerning the nature of the

investigation or inquiry. Knowledge of the facts developed during an

investigation or inquiry would enable violators of laws and

regulations to learn the extent to which the investigation or

inquiry has progressed, and this could provide them with an

opportunity to destroy evidence that would form the basis for the

imposition of civil sanctions

ficant information concerning the nature of the

investigation or inquiry. Knowledge of the facts developed during an

investigation or inquiry would enable violators of laws and

regulations to learn the extent to which the investigation or

inquiry has progressed, and this could provide them with an

opportunity to destroy evidence that would form the basis for the

imposition of civil sanctions. In addition, knowledge gained through

access to investigatory material could alert a violator to the need

to temporarily postpone commission of the violation or to change the

intended point where the violation is to be committed so as to avoid

detection or apprehension. Further, access to investigatory material

would disclose investigative techniques and procedures which, if

known, could enable violators to structure their future operations

in such a way as to avoid detection or apprehension, thereby

neutralizing investigators' established and effective investigative

tools and procedures. In addition, investigatory material may

contain the identity of confidential sources who would not want

their identities to be disclosed for reasons of personal privacy or

for fear of reprisal at the hands of the individual about whom they

supplied information. In some cases mere disclosure of the

information provided by a source would reveal the identity of the

source either through the process of elimination or by virtue of the

nature of the information supplied. If sources could not be assured

that their identities (as sources for information) would remain

confidential, they would be very reluctant in the future to provide

information pertaining to violations of laws and regulations, and

this would seriously compromise the ability of the OTS to carry out

its mission. Further, application of 5 U.S.C

y virtue of the

nature of the information supplied. If sources could not be assured

that their identities (as sources for information) would remain

confidential, they would be very reluctant in the future to provide

information pertaining to violations of laws and regulations, and

this would seriously compromise the ability of the OTS to carry out

its mission. Further, application of 5 U.S.C. 552a (d)(1), (e)(4)(H)

and (f)(2), (3) and (5) to the above-listed systems of records would

make available attorney's work product and other documents which

contain evaluations, recommendations, and discussions of ongoing

legal proceedings; the availability of such documents could have a

chilling effect on the free flow of information and ideas within the

OTS which is vital to the agency's predecisional deliberative

process, could seriously prejudice the agency's or the Government's

position in litigation, and could result in the disclosure of

investigatory material which should not be disclosed for the reasons

stated above. It is the belief of the OTS that due process will

assure that individuals have a reasonable opportunity to learn of

the existence of, and to challenge, investigatory records and

related materials which are to be used in legal proceedings.

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

which are dependent upon access having been granted to records

pursuant to the provisions cited in subparagraph (b) above, enable

individuals to contest (seek amendment to) the content of records

contained in a system of records and require an agency to note an

amended record and to provide a copy of an individual's statement

(of disagreement with the agency's refusal to amend a record) to

persons or other agencies to whom the record has been disclosed. The

OTS believes that the reasons set forth in subparagraph (b) above

are equally applicable to this subparagraph, and, accordingly, those

reasons are hereby incorporated herein by reference.

ote an

amended record and to provide a copy of an individual's statement

(of disagreement with the agency's refusal to amend a record) to

persons or other agencies to whom the record has been disclosed. The

OTS believes that the reasons set forth in subparagraph (b) above

are equally applicable to this subparagraph, and, accordingly, those

reasons are hereby incorporated herein by reference.

(d) 5 U.S.C. 552a(c)(3) requires that an agency make accountings

of disclosures of records available to individuals named in the

records at their request; such accountings must state the date,

nature and purpose of each disclosure of a record and the name and

address of the recipient. The OTS believes that application of this

provision to the above-listed systems of records

would impair the ability of the OTS and other law enforcement

agencies to conduct investigations and inquiries into violations

under their respective jurisdictions. Making accountings available

to violators would alert those individuals to the fact that the OTS

or another law enforcement authority is conducting an investigation

or inquiry into their activities, and such accountings could reveal

the geographic location of the investigation or inquiry, the nature

and purpose of the investigation or inquiry and the nature of the

information disclosed, and dates on which that investigation or

inquiry was active. Violators possessing such knowledge would

thereby be able to take appropriate measures to avoid detection or

apprehension by altering their operations, transferring their

activities to other locations or destroying or concealing evidence

which would form the basis for prosecution or the imposition of

civil sanctions.

ion disclosed, and dates on which that investigation or

inquiry was active. Violators possessing such knowledge would

thereby be able to take appropriate measures to avoid detection or

apprehension by altering their operations, transferring their

activities to other locations or destroying or concealing evidence

which would form the basis for prosecution or the imposition of

civil sanctions.

(e) 5 U.S.C. 552a(e)(1) requires that an agency 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.'' At the time that information is collected by the

OTS there is often insufficient time to determine whether the

information is relevant and necessary to accomplish a purpose of the

OTS; in many cases information collection may not be immediately

susceptible to a determination of whether the information is

relevant and necessary, particularly in the early stages of

investigation or inquiry; and in many cases information which

initially appears to be irrelevant and unnecessary may, upon further

evaluation or upon continuation of the investigation or inquiry,

prove to have particular relevance to an enforcement program of the

OTS. Further, not all violations of law uncovered during an OTS

investigation or inquiry fall within the jurisdiction of the OTS; in

order to promote effective law enforcement it often becomes

necessary and desirable to disseminate information pertaining to

such violations to other law enforcement agencies which have

jurisdiction over the offense to which the information relates. The

OTS should not be placed in a position of having to ignore

information relating to violations of law not within its

jurisdiction where that information comes to the attention of the

OTS through the conduct of a lawful OTS investigation or inquiry

tion pertaining to

such violations to other law enforcement agencies which have

jurisdiction over the offense to which the information relates. The

OTS should not be placed in a position of having to ignore

information relating to violations of law not within its

jurisdiction where that information comes to the attention of the

OTS through the conduct of a lawful OTS investigation or inquiry.

The OTS therefore believes that it is appropriate to exempt the

above-listed systems of records from provisions of 5 U.S.C.

552a(e)(1).

Dated: December 15, 1994.

Jonathan L. Fiechter,

Acting Director.

Dated: March 6, 1995.

Alex Rodriguez,

Deputy Assistant Secretary (Administration).

[FR Doc. 95-7342 Filed 3-24-95; 8:45 am]

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