[Federal Register Volume 65, Number 225 (Tuesday, November 21, 2000)]
[Rules and Regulations]
[Pages 69865-69875]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29673]


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DEPARTMENT OF THE TREASURY

31 CFR Part 1


Departmental Offices; Privacy Act of 1974; Implementation

AGENCY: Department of the Treasury.

ACTION: Final Rule.

-----------------------------------------------------------------------

SUMMARY: The Department of the Treasury is amending its Privacy Act 
exemption rules that were first published on October 2, 1975, to 
consolidate the regulations issued pursuant to 5 U.S.C. 552a(j) and (k) 
which exempt one or more systems of records established on behalf of 
each bureau by the Department.

EFFECTIVE DATE: November 21, 2000.

ADDRESSES: Inquiries may be addressed to Department of the Treasury, 
Disclosure Services, Washington, DC 22020.

FOR FURTHER INFORMATION CONTACT: Dale Underwood, Deputy Assistant 
Director, Disclosure Services, (202) 622-0930.

SUPPLEMENTARY INFORMATION: The Privacy Act of 1974, as amended, 5 
U.S.C. 552a, authorizes the head of the agency to promulgate rules in 
accordance with the Administrative Procedure Act to exempt Privacy Act 
systems of records from certain provisions of the Privacy Act, if the 
system of records contains records which fall within 5 U.S.C. 552a(j) 
and/or (k).
    The Department is amending this part to consolidate the regulations 
issued

[[Page 69866]]

pursuant to 5 U.S.C. 552a(j)and (k) which exempt one or more systems of 
records established on behalf of each bureau by the Department. The 
amendment will revise the format of the regulations; more clearly 
reflect the organization of the Department; remove redundant language; 
reduce the length of the regulations; permit readers to use the 
regulations in an easier manner; change the system number and or title 
to several systems of records, and references to systems of records 
which have been deleted are being removed.
    The regulations were first published at 40 FR 45692, October 2, 
1975, and amended at:

44 FR 7141, February 6, 1979;
44 FR 42189, July 19, 1979;
45 FR 13455, February 29, 1980;
48 FR 21945, May 16, 1983;
48 FR 48460, October 19, 1983;
52 FR 11990, April 14, 1987;
56 FR 12447, March 26, 1991;
59 FR 47538, September 16, 1994;
61 FR 387, January 5, 1996;
62 FR 19505, April 22, 1997;
62 FR 26939, May 16, 1997;
62 FR 58908, October 31, 1997;
62 FR 60782, November 13, 1997;
64 FR 62585, November 17,1999;
64 FR 62586, November 17,1999; and
65 FR 56791, September 20, 2000.

    No new systems of records are being exempted pursuant to this rule, 
nor is an exemption being added to any of the systems of records listed 
below.
    The rule will update the regulations by removing references to the 
following systems of records which have been deleted from the 
Department's inventory of systems of records:
    (1) Comptroller of the Currency: CC .010--Federal Bureau of 
Investigation Report Card Index (published March 1, 1988, at 53 FR 
6252);
    (2) U.S. Customs Service: CS .037--Cargo Security File (published 
April 17, 1992, at 57 FR 13900);
    (3) U.S. Customs Service: CS .287--Customs Automated Licensing 
Information System (CALIS) (published April 17, 1992, at 57 FR 13900);
    (4) Internal Revenue Service: IRS 90.014--Management Files 
Maintained by Operations Division and the Deputy Chief Counsel Other 
than the Office of Personnel Management's Official Personnel Files 
(published April 17, 1992, at 57 FR 13900);
    (5) U.S. Mint: Mint .006--Examination Reports of Coins Forwarded to 
the Mint from the U.S. Secret Service, (published May 11, 1994, at 59 
FR 5206);
    (6) U.S. Customs Service: CS .182--Penalty Case File (published 
November 9, 1995, at 60 FR 56648);
    (7) U.S. Customs Service: CS .140--Lookout Notice (published March 
1, 1998, at 53 FR 6252);
    (8) U.S. Customs Service: CS .155--Narcotics Suspect File 
(Published March 1, 1998, at 53 FR 6252);
    (9) Internal Revenue Service: IRS 34.018--Integrated Data Retrieval 
System (IDRS) Security Files (Published November 17, 1998, at 63 FR 
64141);
    (10) U.S. Customs Service: CS .014--Advice Requests (Legal) 
(Pacific Region) (published December 17, 1998, at 63 FR 69716); and
    (11) U.S. Customs Service: CS .078--Disclosure of Information File 
(published December 3, 1999, at 64 FR 67966).
    The Department published final rules exempting Treasury/IRS 
34.037--IRS Audit Trail and Security Records System on September 20, 
2000, at 65 FR 56791, Treasury/IRS 34.020--IRS Audit Trail Lead 
Analysis System on November 17, 1999, at 64 FR 62586, and Treasury/
Customs .213--Seized Asset and Case Tracking System (SEACATS) on 
November 17, 1999, at 64 FR 62585. The amendments are included as part 
of the revision.
    This rule makes changes to the title of the following systems of 
records identified in the rule: (1) Departmental Offices--DO .144 from 
``Treasury Interagency Automated Litigation System (TRIALS)'' to 
``General Counsel Litigation Referral and Reporting System,'' (2) 
Bureau of Engraving and Printing--BEP .021 from ``Security 
Investigative Files'' to ``Investigative Files.''
    The rule moves the exemption regulation pertaining to ``Bank 
Secrecy Act Reports File--Treasury/Customs .067,'' from under the 
heading ``United States Customs Service'' and inserts it under the 
heading ``Departmental Offices.'' The system of records associated with 
this activity, ``Bank Secrecy Act Reports System--Treasury/DO .213,'' 
was transferred to the Financial Crimes Enforcement Network (FinCEN) on 
January 10, 1997 (62 FR 1489). The exemption regulations for the above 
system of records is being moved within this section to reflect that 
the responsibility for the system has been moved within the Department.
    The IRS Restructuring and Reform Act of 1998 included specific 
provisions impacting the Internal Revenue Service by transferring the 
responsibility to conduct personnel security investigations formerly 
performed by Office of the Chief Inspector to the Assistant 
Commissioner (Support Services). A notice was published on June 15, 
1999, at 64 FR 32096 to amend Treasury/IRS 60.008--Security, 
Background, and Character Investigation Files, Inspection, and 
Treasury/IRS 60.011--Internal Security Management Information System 
(ISMIS) by renumbering and renaming them to ``Treasury/IRS 34.021--
Personnel Security Investigations, National Background Investigations 
Center,'' and ``Treasury/IRS 34.022--National Background Investigations 
Center Management Information System (NBICMIS).'' Exemptions have been 
claimed under 5 U.S.C. 552a(k)(5), and 5 U.S.C. 552a(j)(2) 
respectively. This rule will make the above changes under the 
appropriate exemption.
    These regulations are being published as a final rule because the 
amendment does not impose any requirements on any member of the public. 
This amendment is the most efficient means for the Treasury Department 
to implement its internal requirements for complying with the Privacy 
Act.
    Accordingly, pursuant to the administrative procedure provisions in 
5 U.S.C. 553, the Department of the Treasury finds good cause that 
prior notice and other public procedure with respect to this rule are 
impracticable and unnecessary and finds good cause for making this rule 
effective on the date of publication in the Federal Register.
    In accordance with Executive Order 12866, it has been determined 
that this rule is not a ``significant regulatory action'' and, 
therefore, does not require a Regulatory Impact Analysis.
    The regulation will not have a substantial direct effect on the 
States, on the relationship between the national Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, it is determined that this 
final rule does not have federalism implications under Executive Order 
13132.
    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply.
    In accordance with the provisions of the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.), the Department of the Treasury has 
determined that this rule will not impose new record-keeping, 
application, reporting, or other types of information collection 
requirements.

    Dated: October 17, 2000.
W. Earl Wright, Jr.,
Chief Management and Administrative Programs Officer.

List of Subjects in 31 CFR Part 1

    Privacy.

[[Page 69867]]


    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.

    2. Section 1.36 of subpart C is revised to read as follows:


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

    (a) In General. In accordance with 5 U.S.C. 552a(j) and (k) and 
Sec. 1.23(c), the Department of the Treasury hereby exempts the systems 
of records identified below from the following provisions of the 
Privacy Act for the reasons indicated.
    (b) Authority. These rules are promulgated pursuant to the 
authority vested in the Secretary of the Treasury by 5 U.S.C. 552a(j) 
and (k) and pursuant to the authority of Sec. 123(c).
    (c) General exemptions under 5 U.S.C. 552a(j)(2). (1) Under 5 
U.S.C. 552a(j)(2), the head of any agency may promulgate rules to 
exempt any system of records within the agency from certain provisions 
of the Privacy Act of 1974 if the agency or component thereof that 
maintains the system performs as its principal function any activities 
pertaining to the enforcement of criminal laws. Certain components of 
the Department of the Treasury have as their principal function 
activities pertaining to the enforcement of criminal laws and 
protective service activities which are necessary to assure the safety 
of individuals protected by the Department pursuant to the provisions 
of 18 U.S.C. 3056. This paragraph applies to the following systems of 
records maintained by the Department of the Treasury:
    (i) Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .190...................................  General Allegations and
                                             Investigative Records.
DO .200...................................  FinCEN Database.
DO .212...................................  Bank Secrecy Act Reports
                                             System.
------------------------------------------------------------------------

    (ii) Bureau of Alcohol, Tobacco and Firearms:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
ATF .003..................................  Criminal Investigation
                                             Report System.
------------------------------------------------------------------------

    (iii) Comptroller of the Currency:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CC .013...................................  Enforcement and Compliance
                                             Information.
CC .500...................................  Chief Counsel's Management
                                             Information System.
------------------------------------------------------------------------

    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .053...................................  Confidential Source
                                             Identification File.
CS .127...................................  Internal Affairs Records
                                             System.
CS .129...................................  Investigations Record
                                             System.
CS .171...................................  Pacific Basin Reporting
                                             Network.
CS .244...................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
CS .270...................................  Background-Record File of
                                             Non-Customs Employees.
CS .285...................................  Automated Index to Central
                                             Enforcement Files.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing.
    (vi) Federal Law Enforcement Training Center.
    (vii) Financial Management Service.
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 34.022................................  National Background
                                             Investigations Center
                                             Management Information
                                             System (NBICMIS).
IRS 46.002................................  Case Management and Time
                                             Reporting System, Criminal
                                             Investigation Division.
IRS 46.003................................  Confidential Informants,
                                             Criminal Investigation
                                             Division.
IRS 46.005................................  Electronic Surveillance
                                             Files, Criminal
                                             Investigation Division.
IRS 46.009................................  Centralized Evaluation and
                                             Processing of Information
                                             Items (CEPIIs), Criminal
                                             Investigation Division.
IRS 46.015................................  Relocated Witnesses,
                                             Criminal Investigation
                                             Division.
IRS 46.016................................  Secret Service Details,
                                             Criminal Investigation
                                             Division.
IRS 46.022................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
IRS 46.050................................  Automated Information
                                             Analysis System.
IRS 60.001................................  Assault and Threat
                                             Investigation Files.
IRS 60.002................................  Bribery Investigation Files.
IRS 60.004................................  Disclosure Investigation
                                             Files.
IRS 90.001................................  Chief Counsel Criminal Tax
                                             Case Files.
------------------------------------------------------------------------

    (ix) U.S. Mint
    (x) Bureau of the Public Debt
    (xi) U.S. Secret Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .003.................................  Criminal Investigation
                                             Information System.
USSS .006.................................  Non-Criminal Investigation
                                             Information System.
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------

    (xii) Office of Thrift Supervision:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
OTS .001..................................  Confidential Individual
                                             Information System.
OTS .004..................................  Criminal Referral Database
------------------------------------------------------------------------

    (2) The Department hereby exempts the systems of records listed in 
paragraphs (c)(1)(i) through (xii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(j)(2): 5 U.S.C. 
552a(c)(3) and (4), 5 U.S.C. 552a(d)(1), (2), (3), (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(e)(5) and (8), 5 U.S.C. 552a(f), and 5 U.S.C. 552a(g).
    (d) Reasons for exemptions under 5 U.S.C. 552a(j)(2). (1) 5 U.S.C. 
552a(e)(4)(G) and (f)(l) enable individuals to inquire whether a system 
of records contains records pertaining to them. Application of these 
provisions to the systems of records would give individuals an 
opportunity to learn whether they have been identified as suspects or 
subjects of investigation. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (2) 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 
Department's ability to provide useful tactical and strategic 
information to law enforcement agencies.
    (i) Permitting access to records contained in the systems of 
records

[[Page 69868]]

would provide individuals with information concerning the nature of any 
current investigations and would enable them to avoid detection or 
apprehension by:
    (A) Discovering the facts that would form the basis for their 
arrest;
    (B) Enabling them to destroy or alter evidence of criminal conduct 
that would form the basis for their arrest; and
    (C) Using knowledge that criminal investigators had reason to 
believe that a crime was about to be committed, to delay the commission 
of the crime or commit it at a location that might not be under 
surveillance.
    (ii) 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 crimes to 
structure their operations so as to avoid detection or apprehension.
    (iii) 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 criminal 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 Department's ability to carry out its mandate.
    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers who compiled information regarding the 
individual's criminal activities and thereby endanger the physical 
safety of those undercover officers or their families by exposing them 
to possible reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (d)(2)(i) through (iv) 
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 Department and 
thus would restrict the Department's access to information necessary to 
accomplish its mission most effectively.
    (vi) Limitation on access to the material contained in the 
protective intelligence files is considered necessary to the 
preservation of the utility of intelligence files and in safeguarding 
those persons the Department is authorized to protect. Access to the 
protective intelligence files could adversely affect the quality of 
information available to the Department; compromise confidential 
sources, hinder the ability of the Department to keep track of persons 
of protective interest; and interfere with the Department's protective 
intelligence activities by individuals gaining access to protective 
intelligence files.
    (vii) Many of the persons on whom records are maintained in the 
protective intelligence suffer from mental aberrations. Knowledge of 
their condition and progress comes from authorities, family members and 
witnesses. Many times this information comes to the Department as a 
result of two party conversations where it would be impossible to hide 
the identity of informants. Sources of information must be developed, 
questions asked and answers recorded. Trust must be extended and 
guarantees of confidentiality and anonymity must be maintained. 
Allowing access to information of this kind to individuals who are the 
subjects of protective interest may well lead to violence directed 
against an informant by a mentally disturbed individual.
    (viii) Finally, the dissemination of certain information that the 
Department 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 paragraph (d)(2) of this 
section, these provisions should not apply to the systems of records.
    (4) 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.
    (i) The application of this provision would impair the ability of 
law enforcement agencies outside the Department of the Treasury to make 
effective use of information provided by the Department. Making 
accountings of disclosures available to the subjects of an 
investigation would alert them to the fact that another agency is 
conducting an investigation into their criminal activities and could 
reveal the geographic location of the other agency's 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 criminal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form the basis for arrest. In the case of a delinquent account, such 
release might enable the subject of the investigation to dissipate 
assets before levy.
    (ii) Moreover, providing accountings to the subjects of 
investigations would alert them to the fact that the Department has 
information regarding their criminal activities and could inform them 
of the general nature of that information. Access to such information 
could reveal the operation of the Department's information-gathering 
and analysis systems and permit violators to take steps to avoid 
detection or apprehension.
    (iii) The release of such information to the subject of a 
protective intelligence file would provide significant information 
concerning the nature of an investigation, and could result in impeding 
or compromising the efforts of Department personnel to detect persons 
suspected of criminal activities or to collect information necessary 
for the proper evaluation of persons considered to be of protective 
interest.
    (5) 5 U.S.C. 552(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, for the reasons set out in paragraph (f)(3) of 
this section, this provision should not apply to the systems of 
records.
    (6) 5 U.S.C. 552a(e)(4)(I) requires an agency to publish a general 
notice listing the categories of sources for

[[Page 69869]]

information contained in a system of records. The application of this 
provision to the systems of records could compromise the Department's 
ability to provide useful information to law enforcement agencies, 
since revealing sources for the information could:
    (i) Disclose investigative techniques and procedures;
    (ii) Result in threats or reprisals against informers by the 
subjects of investigations; and
    (iii) Cause informers to refuse to give full information to 
criminal investigators for fear of having their identities as sources 
disclosed.
    (7) 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 systems of 
records could impair the Department's ability to collect and 
disseminate valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Treasury Department purpose.
    (ii) In many cases, especially in the early stages of 
investigation, it may be impossible to immediately 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.
    (iii) Compliance with the records maintenance criteria listed in 
the foregoing provision would require the periodic up-dating of the 
Department's protective intelligence files to insure that the records 
maintained in the system remain timely and complete.
    (iv) Not all violations of law discovered by the Department fall 
within the investigative jurisdiction of the Department of the 
Treasury. To promote effective law enforcement, the Department 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 
Department might be placed in the position of having to ignore 
information relating to violations of law not within the jurisdiction 
of the Department of the Treasury when that information comes to the 
Department's attention during the collation and analysis of information 
in its records.
    (8) 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 Department's ability to collate, analyze, and disseminate 
investigative, intelligence, and enforcement information.
    (i) 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 criminal 
activities.
    (ii) 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.
    (iii) In certain instances, the subject of a criminal investigation 
is not required to supply information to criminal investigators as a 
matter of legal duty.
    (iv) 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.
    (9) 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 Department's ability to collect and collate 
investigative, intelligence, and enforcement data.
    (i) Confidential sources or undercover law enforcement officers 
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.
    (ii) If it became known that the undercover officer was assisting 
in a criminal investigation, that officer's physical safety could be 
endangered through reprisal, and that officer may not be able to 
continue working on the investigation.
    (iii) Individuals often feel inhibited in talking to a person 
representing a criminal law enforcement agency but are willing to talk 
to a confidential source or undercover officer whom they believe not to 
be involved in law enforcement activities.
    (iv) 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.
    (v) Individuals may be contacted during preliminary information 
gathering, surveys, or compliance projects concerning the 
administration of the internal revenue laws 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.
    (vi) 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.
    (10) 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.
    (i) 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 Department'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

[[Page 69870]]

enforcement and regulatory agencies, it is often impossible to 
determine accuracy, relevance, timeliness, or completeness prior to 
dissemination, because the Department may not have the expertise with 
which to make such determinations.
    (ii) 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 and intelligence analysts in the exercise 
of their judgment in reporting results obtained during criminal 
investigations.
    (iii) Compliance with the records maintenance criteria listed in 
the foregoing provision would require the periodic up-dating of the 
Department's protective intelligence files to insure that the records 
maintained in the system remain timely and complete.
    (11) 5 U.S.C. 552a(e)(8) requires an agency to 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.
    (12) 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 systems 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 Department is exempted. Exemption 
from this provision will also protect the Department from baseless 
civil court actions that might hamper its ability to collate, analyze, 
and disseminate investigative, intelligence, and law enforcement data.
    (e) Specific exemptions under 5 U.S.C. 552a(k)(1). (1) Under 5 
U.S.C. 552a(k)(1), the head of any agency may promulgate rules to 
exempt any system of records within the agency from certain provisions 
of the Privacy Act of 1974 to the extent that the system contains 
information subject to the provisions of 5 U.S.C. 552(b)(1). This 
paragraph applies to the following system of records maintained by the 
Department of the Treasury:
    Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .200...................................  FinCEN Database.
------------------------------------------------------------------------

    (2) The Department of the Treasury hereby exempts the system of 
records listed in paragraph (e)(1) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(1): 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), 
5 U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (f) Reasons for exemptions under 5 U.S.C. 552a(k)(1). The reason 
for invoking the exemption is to protect material required to be kept 
secret in the interest of national defense or foreign policy pursuant 
to Executive Order 12958 (or successor or prior Executive Order).
    (g) Specific exemptions under 5 U.S.C. 552a(k)(2). (1) Under 5 
U.S.C. 552a(k)(2), the head of any agency may promulgate rules to 
exempt any system of records within the agency from certain provisions 
of the Privacy Act of 1974 if the system is investigatory material 
compiled for law enforcement purposes and for the purposes of assuring 
the safety of individuals protected by the Department pursuant to the 
provisions of 18 U.S.C. 3056. This paragraph applies to the following 
systems of records maintained by the Department of the Treasury:
    (i) Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .114...................................  Foreign Assets Control
                                             Enforcement Records.
DO .144...................................  General Counsel Litigation
                                             Referral and Reporting
                                             System.
DO .190...................................  General Allegations and
                                             Investigative File.
DO .200...................................  FinCEN Database.
DO .213...................................  Bank Secrecy Act Reports
                                             System.
------------------------------------------------------------------------

    (ii) Bureau of Alcohol, Tobacco and Firearms:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
ATF .006..................................  Internal Security Record
                                             System.
ATF .008..................................  Regulatory Enforcement
                                             Record System.
ATF .009..................................  Technical and Scientific
                                             Services Record System.
------------------------------------------------------------------------

    (iii) Comptroller of the Currency

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CC .013...................................  Enforcement and Compliance
                                             Information.
CC .500...................................  Chief Counsel's Management
                                             Information System.
------------------------------------------------------------------------

    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .021...................................  Arrest/Seizure/Search Report
                                             and Notice of Penalty File.
CS .022...................................  Attorney Case File.
CS .041...................................  Cartmen or Lightermen.
CS .043...................................  Case Files (Associate Chief
                                             Counsel--Gulf Custom
                                             Management Center).
CS .046...................................  Claims Case File.
CS .053...................................  Confidential Source
                                             Identification File.
CS .057...................................  Container Station Operator
                                             Files.
CS .058...................................  Cooperating Individual
                                             Files.
CS .061...................................  Court Case File.
CS .069...................................  Customhouse Brokers File
                                             (Chief Counsel).
CS .077...................................  Disciplinary Action,
                                             Grievances and Appeal Case
                                             Files.
CS .098...................................  Fines, Penalties, and
                                             Forfeitures Records.
CS .099...................................  Fines, Penalties, and
                                             Forfeiture Files
                                             (Supplemental Petitions).
CS .100...................................  Fines, Penalties, and
                                             Forfeiture Records
                                             (Headquarters).
CS .122...................................  Information Received File.
CS .125...................................  Intelligence Log.
CS .127...................................  Internal Affairs Records
                                             System.
CS .129...................................  Investigations Record
                                             System.
CS .133...................................  Justice Department Case
                                             File.
CS .138...................................  Litigation Issue Files.
CS .159...................................  Notification of Personnel
                                             Management Division when an
                                             employee is placed under
                                             investigation by the Office
                                             of Internal Affairs.
CS .171...................................  Pacific Basin Reporting
                                             Network.
CS .186...................................  Personnel Search.
CS .190...................................  Personnel Case File.
CS .197...................................  Private Aircraft/Vessel
                                             Inspection Reporting
                                             System.

[[Page 69871]]

 
CS .206...................................  Regulatory Audits of
                                             Customhouse Brokers.
CS .212...................................  Search/Arrest/Seizure
                                             Report.
CS .214...................................  Seizure File.
CS .224...................................  Suspect Persons Index.
CS .232...................................  Tort Claims Act File.
CS .244...................................  Treasury Enforcement
                                             Communications System
                                             (TECS).
CS .258...................................  Violator's Case Files.
CS .260...................................  Warehouse Proprietor Files.
CS .270...................................  Background-Record File of
                                             Non-Customs Employees.
CS .271...................................  Cargo Security Record
                                             System.
CS .285...................................  Automated Index to Central
                                             Investigative Files.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
BEP .021..................................  Investigative files.
------------------------------------------------------------------------

    (vi) Federal Law Enforcement Training Center
    (vii) Financial Management Service
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 00.002................................  Correspondence File-
                                             Inquiries about Enforcement
                                             Activities.
IRS 22.061................................  Wage and Information Returns
                                             Processing (IRP).
IRS 26.001................................  Acquired Property Records.
IRS 26.006................................  Form 2209, Courtesy
                                             Investigations.
IRS 26.008................................  IRS and Treasury Employee
                                             Delinquency.
IRS 26.011................................  Litigation Case Files.
IRS 26.012................................  Offer in Compromise (OIC)
                                             Files.
IRS 26.013................................  One-hundred Per Cent Penalty
                                             Cases.
IRS 26.016................................  Returns Compliance Programs
                                             (RCP).
IRS 26.019................................  TDA (Taxpayer Delinquent
                                             Accounts).
IRS 26.020................................  TDI (Taxpayer Delinquency
                                             Investigations) Files.
IRS 26.021................................  Transferee Files.
IRS 26.022................................  Delinquency Prevention
                                             Programs.
IRS 34.020................................  IRS Audit Trail Lead
                                             Analysis System.
IRS 34.037................................  IRS Audit Trail and Security
                                             Records System.
IRS 37.002................................  Applicant Appeal Files.
IRS 37.003................................  Closed Files Containing
                                             Derogatory Information
                                             about individuals' Practice
                                             before the IRS and Files of
                                             Attorneys and Certified
                                             Public Accountants Formerly
                                             Enrolled to Practice.
IRS 37.004................................  Derogatory Information (No
                                             Action).
IRS 37.005................................  Present Suspensions and
                                             Disbarments Resulting from
                                             Administrative Proceeding.
IRS 37.007................................  Inventory.
IRS 37.009................................  Resigned Enrolled Agents
                                             (action pursuant to 31 CFR
                                             Section 10.55(b)).
IRS 37.011................................  Present Suspensions from
                                             Practice Before the
                                             Internal Revenue Service.
IRS 42.001................................  Examination Administrative
                                             File.
IRS 42.008................................  Audit Information Management
                                             System (AIMS).
IRS 42.012................................  Combined Case Control Files.
IRS 42.016................................  Classification and
                                             Examination Selection
                                             Files.
IRS 42.017................................  International Enforcement
                                             Program Files.
IRS 42.021................................  Compliance Programs and
                                             Projects Files.
IRS 42.029................................  Audit Underreporter Case
                                             Files.
IRS 42.030................................  Discriminant Function File
                                             (DIF) Appeals Case Files.
IRS 44.001................................  Appeals Case Files.
IRS 46.050................................  Automated Information
                                             Analysis System.
IRS 48.001................................  Disclosure Records.
IRS 49.001................................  Collateral and Information
                                             Requests System.
IRS 49.002................................  Component Authority and
                                             Index Card Mircofilm
                                             Retrieval System.
IRS 49.007................................  Overseas Compliance Projects
                                             System.
IRS 60.003................................  Conduct Investigation Files.
IRS 60.006................................  Enrollee Charge
                                             Investigation Files.
IRS 60.007................................  Miscellaneous Information
                                             File.
IRS 60.009................................  Special Inquiry
                                             Investigation Files.
IRS 90.002................................  Chief Counsel Disclosure
                                             Litigation Division Case
                                             Files.
IRS 90.004................................  Chief Counsel General Legal
                                             Services Case Files.
IRS 90.005................................  Chief Counsel General
                                             Litigation Case Files.
IRS 90.009................................  Chief Counsel Field Case
                                             Service Files.
IRS 90.010................................  Digest Room Files Containing
                                             Briefs, Legal Opinions,
                                             Digests of Documents
                                             Generated Internally or by
                                             the Department of Justice
                                             Relating to the
                                             Administration of the
                                             Revenue Laws.
IRS 90.013................................  Legal case files of the
                                             Chief Counsel, Deputy Chief
                                             Counsel, Associate Chief
                                             Counsels (Enforcement
                                             Litigation) and
                                             (technical).
IRS 90.016................................  Counsel Automated Tracking
                                             System (CATS).
------------------------------------------------------------------------

    (ix) U.S. Mint:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
Mint .008.................................  Criminal investigation files
                                             (formerly: Investigatory
                                             Files on Theft of Mint
                                             Property).
------------------------------------------------------------------------

    (x) Bureau of the Public Debt.
    (xi) U.S. Secret Service:.

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .003.................................  Criminal Investigation
                                             Information System.
USSS .006.................................  Non-Criminal Investigation
                                             Information System.
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------

    (xii) Office of Thrift Supervision:.

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
OTS .001..................................  Confidential Individual
                                             Information System.
OTS .004..................................  Criminal Referral Database.
------------------------------------------------------------------------

    (2) The Department hereby exempts the systems of records listed in 
paragraphs (g)(1)(i) through (xii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(2): 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), 5 U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (h) Reasons for exemptions under 5 U.S.C. 552a(k)(2). (1) 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.
    (i) The application of this provision would impair the ability of 
law enforcement agencies outside the Department of the Treasury to make 
effective use of information provided by the Department. Making 
accountings of disclosures available to the subjects of an 
investigation would alert them to the fact that another agency is 
conducting an investigation into their criminal activities and could 
reveal the geographic location of the other agency's 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 criminal activities to other 
geographical areas, or by destroying or concealing

[[Page 69872]]

evidence that would form the basis for arrest. In the case of a 
delinquent account, such release might enable the subject of the 
investigation to dissipate assets before levy.
    (ii) Providing accountings to the subjects of investigations would 
alert them to the fact that the Department has information regarding 
their criminal activities and could inform them of the general nature 
of that information. Access to such information could reveal the 
operation of the Department's information-gathering and analysis 
systems and permit violators to take steps to avoid detection or 
apprehension.
    (2) 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 
Department's ability to provide useful tactical and strategic 
information to law enforcement agencies.
    (i) 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:
    (A) Discovering the facts that would form the basis for their 
arrest;
    (B) Enabling them to destroy or alter evidence of criminal conduct 
that would form the basis for their arrest, and
    (C) Using knowledge that criminal investigators had reason to 
believe that a crime was about to be committed, to delay the commission 
of the crime or commit it at a location that might not be under 
surveillance.
    (ii) 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 crimes to 
structure their operations so as to avoid detection or apprehension.
    (iii) 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 criminal 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 Department's ability to carry out its mandate.
    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers who compiled information regarding the 
individual's criminal activities and thereby endanger the physical 
safety of those undercover officers or their families by exposing them 
to possible reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (h)(2)(i) through (iv) 
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 Department and 
thus would restrict the Department's access to information necessary to 
accomplish its mission most effectively.
    (vi) Finally, the dissemination of certain information that the 
Department 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 paragraph (h)(2) of this 
section, these provisions should not apply to the systems of records.
    (4) 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 Department's ability to collect and 
disseminate valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Department purpose.
    (ii) 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.
    (iii) Not all violations of law discovered by the Department 
analysts fall within the investigative jurisdiction of the Department 
of the Treasury. To promote effective law enforcement, the Department 
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 Department might be placed in the position of having to 
ignore information relating to violations of law not within the 
jurisdiction of the Department of the Treasury when that information 
comes to the Department's attention during the collation and analysis 
of information in its records.
    (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. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (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 Department's ability to provide useful 
information to law enforcement agencies, since revealing sources for 
the information could:
    (i) Disclose investigative techniques and procedures;

[[Page 69873]]

    (ii) Result in threats or reprisals against informers by the 
subjects of investigations; and
    (iii) Cause informers to refuse to give full information to 
criminal investigators for fear of having their identities as sources 
disclosed.
    (i) Specific exemptions under 5 U.S.C. 552a(k)(3). (1) The head of 
any agency may promulgate rules to exempt any system of records within 
the agency from certain provisions of the Privacy Act of 1974 if it is 
maintained in connection with providing protective intelligence to the 
President of the United States or other individuals pursuant to section 
3056 of Title 18. This paragraph applies to the following system of 
records maintained by the Department which contains material relating 
to criminal investigations concerned with the enforcement of criminal 
statutes involving the security of persons and property. Further, this 
system contains records described in 5 U.S.C. 552a(k) including, but 
not limited to, classified material and investigatory material compiled 
for law enforcement purposes, for which exemption is claimed under 5 
U.S.C. 552a(k)(3):
    U.S. Secret Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
USSS .007.................................  Protection Information
                                             System.
------------------------------------------------------------------------

    (2) The Department hereby exempts the system of records listed in 
(i)(1) of this section from the following provisions of 5 U.S.C. 552a, 
pursuant to 5 U.S.C. 552a(k)(3): 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), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (j) Reasons for exemptions under 5 U.S.C. 552a(k)(3). (1) 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.
    (i) The application of this provision would impair the ability of 
law enforcement agencies outside the Department of the Treasury to make 
effective use of information provided by the Department. Making 
accountings of disclosures available to the subjects of an 
investigation would alert them to the fact that another agency is 
conducting an investigation into their criminal activities and could 
reveal the geographic location of the other agency's investigation, the 
nature and purpose of that investigation, and the dates on which the 
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 criminal activities to other 
geographical areas, or by destroying or concealing evidence that would 
form the basis for arrest.
    (ii) Providing accountings to the subjects of investigations would 
alert them to the fact that the Department has information regarding 
their criminal activities and could inform them of the general nature 
of that information. Access to such information could reveal the 
operation of the Department's information-gathering and analysis 
systems and permit violators to take steps to avoid detection or 
apprehension.
    (iii) The release of such information to the subject of a 
protective intelligence file would provide significant information 
concerning the nature and scope of an investigation, and could result 
in impeding or compromising the efforts of Department personnel to 
detect persons suspected of criminal activities or to collect 
information necessary for the proper evaluation of persons considered 
to be of protective interest.
    (2) 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 
Department's ability to provide useful tactical and strategic 
information to law enforcement agencies.
    (i) 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:
    (A) Discovering the facts that would form the basis for their 
arrest;
    (B) Enabling them to destroy or alter evidence of criminal conduct 
that would form the basis for their arrest, and
    (C) Using knowledge that criminal investigators had reason to 
believe that a crime was about to be committed, to delay the commission 
of the crime or commit it at a location that might not be under 
surveillance.
    (ii) 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 crimes to 
structure their operations so as to avoid detection or apprehension.
    (iii) 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 criminal 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 Department's ability to carry out its mandate.
    (iv) Furthermore, providing access to records contained in the 
systems of records could reveal the identities of undercover law 
enforcement officers who compiled information regarding the 
individual's criminal activities and thereby endanger the physical 
safety of those undercover officers or their families by exposing them 
to possible reprisals.
    (v) By compromising the law enforcement value of the systems of 
records for the reasons outlined in paragraphs (j)(2)(i) through (iv) 
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 Department and 
thus would restrict the Department's access to information necessary to 
accomplish its mission most effectively.
    (vi) Limitation on access to the materials contained in the 
protective intelligence files is considered necessary to the 
preservation of the utility of intelligence files and in safeguarding 
those persons the Department is authorized to protect. Access to the 
protective intelligence files could adversely affect the quality of 
information available to the Department; compromise confidential 
sources; hinder the ability of the Department to keep track of persons 
of protective interest; and interfere with the Department's protective 
intelligence activities by individuals gaining access to protective 
intelligence files.
    (vii) Many of the persons on whom records are maintained in the 
protective intelligence files suffer from mental aberrations. Knowledge 
of their condition and progress comes from authorities, family members 
and witnesses. Many times this information comes to the Department as a 
result of two-party conversations where it would

[[Page 69874]]

be impossible to hide the identity of informants. Sources of 
information must be developed, questions asked and answers recorded. 
Trust must be extended and guarantees of confidentiality and anonymity 
must be maintained. Allowing access of information of this kind to 
individuals who are the subjects of protective interest may well lead 
to violence directed against an informant by a mentally disturbed 
individual.
    (viii) Finally, the dissemination of certain information that the 
Department 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 paragraph (j)(2) of this 
section, these provisions should not apply to the systems of records.
    (4) 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 systems of 
records could impair the Department's ability to collect and 
disseminate valuable law enforcement information.
    (i) At the time that the Department collects information, it often 
lacks sufficient time to determine whether the information is relevant 
and necessary to accomplish a Department purpose.
    (ii) 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.
    (iii) Not all violations of law discovered by the Department 
analysts fall within the scope of the protective intelligence 
jurisdiction of the Department of the Treasury. To promote effective 
law enforcement, the Department 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 Department might be placed in the 
position of having to ignore information relating to violations of law 
not within the jurisdiction of the Department of the Treasury when that 
information comes to the Department's attention during the collation 
and analysis of information in its records.
    (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. As further described in the following 
paragraph, access to such knowledge would impair the Department's 
ability to carry out its mission to safeguard those persons the 
Department is authorized to protect, since individuals could:
    (i) Take steps to avoid detection;
    (ii) Inform associates that an investigation is in progress;
    (iii) Learn the nature of the investigation;
    (iv) Learn whether they are only suspects or identified as law 
violators;
    (v) Begin, continue, or resume illegal conduct upon learning that 
they are not identified in the system of records; or
    (vi) Destroy evidence needed to prove the violation.
    (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 Department's ability to provide useful 
information to law enforcement agencies, since revealing sources for 
the information could:
    (i) Disclose investigative techniques and procedures;
    (ii) Result in threats or reprisals against informers by the 
subject(s) of a protective intelligence file; and
    (iii) Cause informers to refuse to give full information to 
criminal investigators for fear of having their identities as sources 
disclosed.
    (k) Specific exemptions under 5 U.S.C. 552a(k)(4). (1) Under 5 
U.S.C. 552a(k)(4), the head of any agency may promulgate rules to 
exempt any system of records within the agency from certain provisions 
of the Privacy Act of 1974 if the system is required by statute to be 
maintained and used solely as statistical records. This paragraph 
applies to the following system of records maintained by the 
Department, for which exemption is claimed under 5 U.S.C. 552a(k)(4):
    Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 70.001................................  Statistics of Income-
                                             Individual Tax Returns.
------------------------------------------------------------------------

    (2) The Department hereby exempts the system of records listed in 
paragraph (k)(1) of this section from the following provisions of 5 
U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(4): 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), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (3) The system of records is maintained under section 6108 of the 
Internal Revenue Code, which provides that ``the Secretary or his 
delegate shall prepare and publish annually statistics reasonably 
available with respect to the operation of the income tax laws, 
including classifications of taxpayers and of income, the amounts 
allowed as deductions, exemptions, and credits, and any other facts 
deemed pertinent and valuable.''
    (l) Reasons for exemptions under 5 U.S.C. 552a(k)(4). The reason 
for exempting the system of records is that disclosure of statistical 
records (including release of accounting for disclosures) would in most 
instances be of no benefit to a particular individual since the records 
do not have a direct effect on a given individual.
    (m) Specific exemptions under 5 U.S.C. 552a(k)(5). (1) Under 5 
U.S.C. 552a(k)(5), the head of any agency may promulgate rules to 
exempt any system of records within the agency from certain provisions 
of the Privacy Act of 1974 if the system is investigatory material 
compiled solely for the purpose of determining suitability, 
eligibility, and qualifications for Federal civilian employment or 
access to classified information, but only to the extent that the 
disclosure of such material would reveal the identity of a source who 
furnished information to the Government under an express promise that 
the identity of the source would be held in confidence, or, prior to 
September 27, 1975, under an implied promise that the identity of the 
source would be held in confidence. Thus to the extent that the records 
in this system can be disclosed without revealing the identity of a 
confidential source, they are not within the scope of this

[[Page 69875]]

exemption and are subject to all the requirements of the Privacy Act. 
This paragraph applies to the following systems of records maintained 
by the Department or one of its bureaus:
    (i) Departmental Offices:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
DO .004...................................  Personnel Security System.
------------------------------------------------------------------------

    (ii) Bureau of Alcohol, Tobacco and Firearms:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
ATF .006..................................  Internal Security Record
                                             System.
ATF .007..................................  Personnel Record System.
------------------------------------------------------------------------

    (iii) Comptroller of the Currency:
    (iv) U.S. Customs Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
CS .127...................................  Internal Affairs Records.
------------------------------------------------------------------------

    (v) Bureau of Engraving and Printing:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
BEP .004..................................  Personnel Security Files and
                                             Indices.
------------------------------------------------------------------------

    (vi) Federal Law Enforcement Training Center
    (vii) Financial Management Service
    (viii) Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 34.021................................  Personnel Security
                                             Investigations, National
                                             Background Investigations
                                             Center.
IRS 36.008................................  Recruiting, Examining and
                                             Placement Records.
IRS 90.003................................  Chief Counsel General
                                             Administrative Systems.
IRS 90.011................................  Attorney Recruiting Files.
------------------------------------------------------------------------

    (ix) U.S. Mint
    (x) Bureau of the Public Debt
    (xi) U.S. Secret Service
    (xii) Office of Thrift Supervision
    (2) The Department hereby exempts the systems of records listed in 
paragraphs (m)(1)(i) through (xii) of this section from the following 
provisions of 5 U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(5): 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), 5 U.S.C. 552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (n) Reasons for exemptions under 5 U.S.C. 552a(k)(5). (1) The 
sections of 5 U.S.C. 552a from which the systems of records are exempt 
include in general those providing for individuals' access to or 
amendment of records. When such access or amendment would cause the 
identity of a confidential source to be revealed, it would impair the 
future ability of the Department to compile investigatory material for 
the purpose of determining suitability, eligibility, or qualifications 
for Federal civilian employment, Federal contracts, or access to 
classified information. In addition, the systems shall be exempt from 5 
U.S.C. 552a(e)(1) which 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 Department believes that to fulfill the 
requirements of 5 U.S.C. 552a(e)(1) would unduly restrict the agency in 
its information gathering inasmuch as it is often not until well after 
the investigation that it is possible to determine the relevance and 
necessity of particular information.
    (2) If any investigatory material contained in the above-named 
systems becomes involved in criminal or civil matters, exemptions of 
such material under 5 U.S.C. 552a (j)(2) or (k)(2) is hereby claimed.
    (o) Exemption under 5 U.S.C. 552a(k)(6). (1) Under 5 U.S.C. 
552a(k)(6), the head of any agency may promulgate rules to exempt any 
system of records that is testing or examination material used solely 
to determine individual qualifications for appointment or promotion in 
the Federal service the disclosure of which would compromise the 
objectivity or fairness of the testing or examination process. This 
paragraph applies to the following system of records maintained by the 
Department, for which exemption is claimed under 5 U.S.C. 552a(k)(6):
    Internal Revenue Service:

------------------------------------------------------------------------
                  Number                             System name
------------------------------------------------------------------------
IRS 36.008................................  Recruiting, Examining and
                                             Placement Records.
------------------------------------------------------------------------

    (2) The Department hereby exempts the system of records listed in 
paragraph (o)(1) of this section from the following provisions of 5 
U.S.C. 552a, pursuant to 5 U.S.C. 552a(k)(6): 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), 5 U.S.C. 
552a(e)(4)(G), (H), and (I), and 5 U.S.C. 552a(f).
    (p) Reasons for exemptions under 5 U.S.C. 552a(k)(6). The reason 
for exempting the system of records is that disclosure of the material 
in the system would compromise the objectivity or fairness of the 
examination process.
    (q) Exempt information included in another system. Any information 
from a system of records for which an exemption is claimed under 5 
U.S.C. 552a(j) or (k) which is also included in another system of 
records retains the same exempt status such information has in the 
system for which such exemption is claimed.
[FR Doc. 00-29673 Filed 11-20-00; 8:45 am]
BILLING CODE 4810-25-P