The Center for Investigative Reporting v. United States Department of the…

Background

In July 2019, Aaron Glantz and the Center for Investigative Reporting (collectively, “CIR”) asked the Financial Crimes Enforcement Network (FinCEN), an office of the Department of the Treasury, for records concerning the real human owners of all-cash residential real-estate purchases nationwide from 2016 onward. The request sought information including property addresses, purchase amounts, beneficial owners, representatives of purchasers, and related information that could be publicly disclosed.

FinCEN initially responded that it could neither confirm nor deny whether responsive materials existed. After the lawsuit was filed, FinCEN identified approximately 113,871 pages of responsive documents and stated that it would withhold them under several Freedom of Information Act (FOIA) exemptions. It later identified another 1,799 pages and produced eleven pages with redactions. CIR primarily challenged the withholding of a spreadsheet that summarized information from geographic targeting order reports and suspicious activity reports.

Legal issue and analysis

The main issue was whether FOIA’s Exemption 3 protected the spreadsheet because the Bank Secrecy Act (BSA) specifically exempts certain reports and “records of reports” from disclosure. The court explained that Exemption 3 covers material that another statute specifically requires or authorizes an agency to withhold. The BSA provides that reports and records of reports submitted under the statute are exempt from disclosure under FOIA.

The court held that the BSA’s language leaves FinCEN no discretion to disclose covered reports and records of reports. It also concluded that the BSA’s relevant confidentiality language was enacted before the 2009 law requiring newer withholding statutes to cite FOIA’s Exemption 3 expressly. Therefore, the BSA qualified as a statute supporting an Exemption 3 withholding.

The court further held that the spreadsheet was a “record of reports.” FinCEN described it as a spreadsheet prepared by its employees that compiled data from BSA reports, including geographic targeting order reports and suspicious activity reports, and cross-referenced information from those reports. The court rejected CIR’s argument that “records of reports” referred only to original records kept by private entities and submitted to FinCEN. It concluded that information gathered from BSA reports and incorporated into a new FinCEN document remained a protected record of the reports.

The court also ruled that FinCEN did not have to show foreseeable harm from disclosure. Under FOIA, that showing applies to discretionary exemptions, but the court found that withholding under Exemption 3 was required by law. The court did not reach the parties’ arguments concerning the other exemptions invoked by FinCEN.

Finally, the court rejected CIR’s public-domain argument. CIR cited laws in several jurisdictions that require beneficial-ownership disclosures in some situations, but the court found that CIR had not shown that those laws required disclosure of the specific information sought or that information actually collected by FinCEN overlapped with information placed in the public domain. CIR also had not shown how any public information could be separated from information protected by the BSA.

Disposition

The court granted FinCEN’s motion for summary judgment and denied CIR’s motion for summary judgment. It concluded that all information sought by CIR and withheld by FinCEN was exempt from disclosure under FOIA Exemption 3 and the BSA. The clerk was directed to enter judgment in favor of FinCEN and close the case. Judge Joseph C. Spero signed the order.