Lawyers and other professionals contact our office every day and ask whether it is permissible for an asset search company or private investigator to conduct bank, stock, bond or mutual fund account searches on a subject. The short answer is “no”.
Not only is conducting a bank, stock, bond, or mutual fund search considered to be an invasion of privacy, but it is also considered to be an unfair and deceptive business practice. More important, any company that claims to be capable of conducting bank account searches in this day and age, (and there are a number of them) is doing so by using false pretenses. If that was not enough, the Board of Bar Overseers has also come out and stated that an attorney, who has a bank account search conducted on their behalf, could be held vicariously liable. Finally, the Attorney General’s offices, in a large number of states, have aggressively sought and obtained injunctions and heavy fines against asset search companies who conduct bank account searches.
Therefore, when you have to satisfy your “due diligence” on behalf of your clients by conducting an asset search, contact a reputable company who knows what is permissible and what is not. At Asset Searches Plus, Inc., we only use trained asset recovery attorneys to conduct asset searches. We provide our clients with access to each and every asset and liability of a subject that is permissible to obtain, in all 50 states, so that our clients can receive the necessary data to fully satisfy their due diligence within (1) to (3) business days.
The long answer as to why you are no longer able to conduct a bank account search is that on November 12, 1999, President Clinton signed the Financial Services Modernization Act into law. Since then, using false pretenses to obtain bank account information, from either banks or bank customers, is considered a federal crime.
The law applies to all banks and financial institutions, including stock brokerage firms, insurance companies, loan companies, credit card issuers, and credit bureaus.
The Act applies to those persons who use false pretenses and 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. Exempt parties include law enforcement agencies, financial institutions, insurance companies conducting claims related investigations, and state-licensed private investigators that are attempting to collect delinquent child support. However, in this case, private investigators must have a court order in hand authorizing the bank investigation.
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. wealth management consulting