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[Federal Register Volume 60, Number 58 (Monday, March 27, 1995)]
[Proposed Rules]
[Pages 15730-15734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7342]

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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

31 CFR Part 1

[No. 94-260]

Privacy Act of 1974; Implementation

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Proposed rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is proposing to exempt 
a system of records from certain provisions of the Privacy Act of 1974, 
5 U.S.C. 552a (Privacy Act), to the extent the system contains 
investigatory material pertaining to the enforcement of laws or 
compiled for law enforcement purposes. The OTS is also proposing to add 
a Privacy Act exemption to an existing exempt system.

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

ADDRESSES: Send comments to: Director, Information Services Division, 
Public Affairs, Office of Thrift Supervision, 1700 G Street, NW., 
Washington, DC 20552, Attention Docket No. 94-260. These submissions 
may be hand delivered to 1700 G Street, NW., from 9 a.m. to 5 p.m. on 
business days; they may be sent by facsimile transmission to FAX number 
(202) 906-7753 or (202) 906-7755. Submissions must be received by 5 
p.m. on the day that they are due in order to be considered by the OTS. 
Comments will be available for inspection at 1700 G Street, NW., from 1 
p.m. until 4 p.m. on business days. Visitors will be escorted to and 
from the Public Reading Room at established intervals.

FOR FURTHER INFORMATION CONTACT:
Mary Ann Reinhart, Chief, Disclosure Branch, (202) 906-5896, 1700 G 
Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION: The OTS is proposing to exempt the Criminal 
Referral Database system of records from specified provisions of the 
Privacy Act and to add an exemption to the Confidential Individual 
Information System. Subsection (j)(2) of the Privacy Act provides that 
an agency may promulgate rules to exempt any system of records within 
the agency from any section of part 552a except subsections (b), (c) 
(1) and (2), (e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11), 
and (i), provided that the system of records is maintained by ``the 
agency or component thereof which performs as its principal function 
any activity pertaining to enforcement of criminal laws'' and includes: 
``(A) Information compiled for the purpose of identifying individual 
criminal offenders and alleged offenders and consisting only of 
identifying data and notations of arrests, the nature and disposition 
of criminal charges, sentencing, confinement, release and parole and 
probation status; (B) information compiled for the purpose of a 
criminal investigation, including reports of informants and 
investigators and associated with an identifiable individual; or (C) 
reports identifiable to an individual compiled at any stage of the 
process of enforcement of the criminal laws from arrest or indictment 
through release from supervision.'' Section 552a(k) of the Privacy Act 
provides that an agency may promulgate rules to exempt any system of 
records within the agency from sections 552a (c)(3), (d), (e)(1), 
(e)(4) (G) through (I), and (f) of the Act, pursuant to 5 U.S.C. 
552a(k)(2), if the system of records is ``investigatory material 
compiled for the law enforcement purposes, other than material within 
the scope of subsection (j)(2) * * *.''
    If a system of records is not exempted from these sections, the 
Privacy Act generally requires the agency to: Make an accounting of 
disclosures to the individual named in the record of their request; 
permit individuals access to their records; permit individuals to 
request amendment to their records; maintain only relevant or necessary 
information in its system of records; publish certain information in 
the Federal Register; and promulgate rules that establish procedures 
for notice and disclosure of records. The exemptions that may be 
asserted with respect to investigatory systems of record permit an 
agency to protect information when disclosure would interfere with the 
conduct of the agency's investigations.
    Exemptions under subsections 552a(j)(2) and (k)(2) are necessary to 
maintain the integrity and confidentiality of these investigative 
files. These systems contain information on possible criminal 
investigations and may indicate current administrative investigations 
by OTS. The disclosure of this information would significantly impair 
the enforcement activities and coordinated proceedings of OTS, other 
financial institution regulatory agencies, and the Justice Department. 
Disclosure form these systems would give [[Page 15731]] individuals an 
opportunity to learn whether they have been identified as either 
suspects or subjects of criminal referrals. This knowledge would 
undermine the agency's mission of enforcing federal law, since 
individuals could take steps to avoid detection; inform associates that 
a referral had been made; begin, continue, or resume illegal conduct 
upon learning that they are not identified in the system of records; or 
destroy evidence needed to prove the violation. Individuals could alter 
future wrongful acts to avoid detection by discovering the collection 
of facts that would form the basis for a criminal referral, by enabling 
them to destroy or alter evidence of unlawful conduct, and by learning 
that investigators had reason to believe that there was a violation of 
laws or regulations. Disclosure could, moreover, disclose the identity 
of confidential sources and the nature of the information supplied and 
thereby endanger the physical safety of sources of information by 
exposing them to reprisals for having provided the information. 
Confidential sources might refuse to provide valuable referrals if they 
could not be secure in the knowledge that their identities would not be 
revealed through disclosure of either their names or the nature of the 
information they supplied. Loss of access to such sources would 
seriously impair the OTS's and the Justice Department's ability to 
carry out their mandates. Additionally, disclosure would reveal 
investigative techniques and procedures, the knowledge of which could 
enable individuals planning to engage in misconduct or crimes to 
structure their operations in such a way as to avoid detection or 
apprehension and thereby neutralize established investigative tools and 
procedures of both OTS and the Justice Department. The imposition of 
certain restrictions on the manner in which information is collected, 
verified or retained could significantly impede the effectiveness of 
investigation and could preclude the apprehension and successful 
prosecution of persons engaged in fraud or other unlawful activity.
    The OTS investigative files will contain information of the type 
described in the (j)(2) and (k)(2) exemptions of the Privacy Act. 
Authority for these systems are provided by 5 U.S.C. 301; 12 U.S.C. 
1464, 1818. OTS will maintain information in these systems of records, 
pursuant to its law enforcement and investigative functions, in order 
to carry out these functions and its mission.
    This rule is not a ``significant regulatory action'' under 
Executive Order 12866 and will not require the approval of the Office 
of Management and Budget; therefore, does not require a Regulatory 
Impact Analysis.
    Pursuant to the requirements of the Regulatory Flexibility Act, 5 
U.S.C. 601-612, it is hereby certified that this rule will not have 
significant economic impact on a substantial number of small entities.
    In accordance with the Paperwork Reduction Act of 1980, the 
Department of the Treasury has determined that this proposed rule would 
not impose new recordkeeping, application, reporting, or other types of 
information collection requirements.
List of Subjects in 31 CFR Part 1

    Privacy.

    Part 1 of title 31 of the Code of Federal Regulations is amended as 
follows:

PART 1--[AMENDED]

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

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

Sec. 1.36  [Amended]

    2. Section 1.36 of subpart C is amended by adding the following 
text at the end of the section as follows:

OFFICE OF THRIFT SUPERVISION

NOTICE OF EXEMPT SYSTEMS

    In accordance with 5 U.S.C. 552a (j) and (k), general notice is 
hereby given of rulemaking pursuant to the Privacy Act of 1974 by 
the Acting Director, Office of Thrift Supervision, under authority 
delegated to him by the Secretary of the Treasury. The Acting 
Director, Office of Thrift Supervision, exempts the systems of 
records identified in the paragraphs below from certain provisions 
of the Privacy Act of 1974 as set forth in such paragraphs.
    a. General exemptions under 5 U.S.C. 552a(j)(2). Pursuant to the 
provisions of 5 U.S.C. 552a(j)(2), the Acting Director, Office of 
Thrift Supervision, hereby exempts certain systems of records, 
maintained by the Office of Thrift Supervision, from the provisions 
of 5 U.S.C. 552a (c) (3) and (4)(D) (1), (2), (3) and (4), (e) (1), 
(2), (3), (4) (G), (H) and (I), (5) and (8), (f) and (g).
    1. Exempt systems. The following systems of records, which 
contain information of the type described in 5 U.S.C. 552a(j)(2), 
shall be exempt from the provisions of 5 U.S.C. 552a listed in 
paragraph a. above except as otherwise indicated below and in the 
general notice of the existence and character of systems of records 
which appears elsewhere in the Federal Register

.001--Confidential Individual Information System
.004--Criminal Referral Database

    2. Reasons for exemptions. (a) 5 U.S.C. 552a (e)(4)(G) and 
(f)(1) enable individuals to be notified whether a system of records 
contains records pertaining to them. The Office of Thrift 
Supervision (OTS) believes that application of these provisions to 
the above-listed systems of records would give individuals an 
opportunity to learn whether they are on record either as suspects 
or as suspects of an administrative investigation; this would 
compromise the ability of the OTS to complete investigations and to 
detect and apprehend violators of applicable laws in that 
individuals would thus be able (1) to take steps to avoid detection, 
(2) to inform co-conspirators of the fact that an investigation is 
being conducted, (3) to learn the nature of the investigation to 
which they are being subjected, (4) to learn the type of 
surveillance being utilized, (5) to learn whether they are suspects 
or identified law violators, (6) to continue or resume their illegal 
conduct without fear of detection upon learning that they are not in 
a particular system of records, and (7) to destroy evidence needed 
to prove a violation.
    (b) 5 U.S.C. 552a (d)(1), (e)(4)(H) and (f) (2), (3) and (5) 
enable individuals to gain access to records pertaining to them. The 
OTS believes that application of these provisions to the above-
listed systems of records would compromise its ability to complete 
or continue administrative investigations and to detect and 
apprehend violators of applicable laws. Permitting access to records 
contained in the above-listed systems of records would provide 
individuals with significant information concerning the nature of 
the investigation, and this could enable them to avoid detection or 
apprehension in the following ways: (1) By discovering the 
collection of facts which would form the basis of an enforcement 
action, and (2) by enabling them to destroy evidence of wrongful 
conduct which would form the basis of an enforcement action. 
Granting access to on-going or closed investigative files would also 
reveal investigative techniques and procedures, the knowledge of 
which could enable individuals planning illegal activity to 
structure their future operations in such a way as to avoid 
detection or apprehension, thereby neutralizing established 
investigative techniques and procedures. Further, granting access to 
investigative files and records could disclose the identities of 
confidential sources and other informers and the nature of the 
information which they supplied, thereby exposing them to possible 
reprisals for having provided information related to the activities 
of those individuals who are subjects of the investigative files and 
records; confidential sources and other informers might refuse to 
provide investigators with valuable information if they could not be 
secure in the knowledge that their identities would not be revealed 
through disclosure of either their names or the nature of the 
information they supplied, and this would seriously impair the 
ability of the OTS to [[Page 15732]] carry out its mandate to 
enforce the applicable laws. Additionally, providing access to 
records contained in the above-listed systems of records could 
reveal the identities of individuals who compiled information 
regarding illegal activities, thereby exposing them to possible 
reprisals.
    (c) 5 U.S.C. 552a(d) (2), (3) and (4), (e)(4)(H) and (f)(4), 
which are dependent upon access having been granted to records 
pursuant to the provisions cited in paragraph (b) above, enable 
individuals to contest (seek amendment to) the content of records 
contained in a system of records and require an agency to note an 
amended record and to provide a copy of an individual's statement 
(of disagreement with the agency's refusal to amend a record) to 
persons or other agencies to whom the record has been disclosed. The 
OTS believes that the reasons set forth in paragraph (b) above are 
equally applicable to this subparagraph and, accordingly, those 
reasons are hereby incorporated herein by reference.
    (d) 5 U.S.C. 552a(c)(3) requires that an agency make accountings 
of disclosures of records available to individuals named in the 
records at their request; such accountings must state the date, 
nature and purpose of each disclosure of a record and the name and 
address of the recipient. The OTS believes that application of this 
provision to the above-listed systems of records would impair the 
ability of other law enforcement agencies to make effective use of 
information provided by the OTS in connection with the 
investigation, detection and apprehension of violators of the laws 
enforced by those other law enforcement agencies. Making accountings 
of disclosure available to violators would alert those individuals 
to the fact that another agency is conducting an investigation into 
their activities, and this could reveal the nature and purpose of 
that investigation, and the dates on which that investigation was 
active. Violators possessing such knowledge would thereby be able to 
take appropriate measures to avoid detection or other apprehension 
by altering their operations, or by destroying or concealing 
evidence which would form the basis of an enforcement action. In 
addition, providing violators with accountings of disclosure would 
inform those individuals of general information, and alert them that 
the OTS has information regarding their activities; this, in turn, 
would afford those individuals a better opportunity to take 
appropriate steps to avoid detection or apprehension.
    (e) 5 U.S.C. 552a(c)(4) requires that an agency inform any 
person or other agency about any correction or notation of dispute 
made by the agency in accordance with 5 U.S.C. 552(d) of any record 
that has been disclosed to the person or agency if an accounting of 
the record was made. Since this provision is dependent on an 
individual's having been provided an opportunity to contest (seek 
amendment to) records pertaining to him, and since the above-listed 
systems of records are proposed to be exempted from those provisions 
of 5 U.S.C. 552a relating to amendments of records as indicated in 
paragraph (c) above, the OTS believes that this provision should not 
be applicable to the above-listed systems of records.
    (f) 5 U.S.C. 552a(e)(4)(I) requires that an agency publish a 
public notice listing the categories of sources for information 
contained in a system of records. The OTS believes that application 
of this provision to the above-listed systems of records could 
compromise its ability to conduct investigations and to identify, 
detect and apprehend violators of the applicable laws for the 
reasons that revealing sources for information could (1) disclose 
investigative techniques and procedures, (2) result in possible 
reprisal directed to informers by the subject under investigation, 
and (3) result in the refusal of informers to give information or to 
be candid with investigators because of the knowledge that their 
identities as sources might be disclosed.
    (g) 5 U.S.C. 552a(e)(1) requires that an agency maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain'' as 
defined in 5 U.S.C. 552a(a)(3) includes ``collect'' and 
``disseminate.'' At the time that information is collected by the 
OTS, there is often insufficient time to determine whether the 
information is relevant and necessary to accomplish a purpose of the 
OTS; in many cases information collected may not be immediately 
susceptible to a determination whether the information is relevant 
and necessary, particularly in the early stages of an investigation, 
and in many cases information which initially appears to be 
irrelevant and unnecessary may, upon further evaluation or upon 
continuation of the investigation, prove to have particular 
relevance to an enforcement program of OTS. Further, not all 
violations of law discovered during an OTS administrative 
investigation fall within the investigative jurisdiction of OTS; in 
order to promote effective law enforcement, OTS is often required to 
disseminate information pertaining to such violations to other law 
enforcement agencies which have jurisdiction over the offense to 
which the information relates. The OTS should not be placed in a 
position of having to ignore information relating to violations of 
law not within its jurisdiction where that information comes to the 
attention of the OTS through the conduct of a lawful OTS 
investigation. The OTS therefore believes that it is appropriate to 
exempt the above-listed systems of records from the provisions of 5 
U.S.C. 552a(e)(1).
    (h) 5 U.S.C. 552a(e)(2) requires that an agency collect 
information to the greatest extent practicable directly from the 
subject individual when the information may result in adverse 
determinations about an individual's rights, benefits, and 
privileges under Federal programs. The OTS believes that application 
of this provision to the above-listed systems of records would 
impair the ability of OTS to conduct investigations and to identify, 
detect and apprehend violators of applicable laws for the following 
reasons: (1) Most information collected about an individual under 
investigation is obtained from third parties such as witnesses and 
informers, and it is usually not feasible to rely upon the target of 
the investigation as a source for information regarding his 
activities, (2) an attempt to obtain information from an individual 
regarding an investigation will often alert the individual to the 
existence of such an investigation, thereby affording him an 
opportunity to conceal his activities so as to avoid apprehension, 
(3) in certain instances individuals are not required to supply 
information to investigators as a matter of legal duty, and (4) 
during investigations it is often a matter of sound investigative 
procedures to obtain information from a variety of sources in order 
to verify information already obtained.
    (i) 5 U.S.C. 552a(e)(3) requires that an agency inform each 
individual whom it asks to supply information, on the form which it 
uses to collect the information or on a separate form that can be 
retained by the individual, of the authority which authorizes the 
solicitation of the information and whether disclosure of such 
information is mandatory or voluntary; the principal purposes for 
which the information is intended to be used; the routine uses which 
may be made of the information; and the effects on the individual of 
not providing all or part of the requested information. The OTS 
believes that the above-listed systems of records should be exempted 
from this provision in order to avoid adverse effects on its ability 
to identify, detect and apprehend violators of applicable laws. In 
many cases, information is obtained from confidential sources and 
other individuals under circumstances where it is necessary that the 
true purpose of their actions be kept secret so as to not let it be 
known by the target of the investigation or his associates that an 
investigation is in progress. In many cases, individuals for 
personal reasons would feel inhibited in talking to a person 
representing a law enforcement agency but would be willing to talk 
to a confidential source or to an individual whom them believed was 
not involved in enforcement activity. In addition, providing 
information from this system, including written evidence of the 
identity of the source, as required by this provision, could 
increase the likelihood that the source of information would be the 
subject of retaliatory action by the target of the investigation. 
Further, application of this provision could result in an 
unwarranted invasion of the personal privacy of the target of the 
investigation, particularly where further investigation would result 
in a finding that he was not involved in unlawful activity.
    (j) 5 U.S.C. 552a(e)(5) requires that an agency maintain all 
records used by the agency in making any determination about any 
individual with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to assure fairness to the 
individual in the determination. Since 5 U.S.C. 552a(a)(3) defines 
``maintain'' to include ``collect'' and ``disseminate,'' application 
of this provision to the above-listed systems of records would 
hinder the initial collection of any information which could not, at 
the moment of collection, be determined to be accurate, relevant, 
timely and complete. Similarly, application of this provision would 
seriously restrict the [[Page 15733]] necessary flow of information 
from the OTS to other law enforcement agencies where an OTS 
investigation revealed information pertaining to a violation of law 
which was under the investigative jurisdiction of another agency. In 
collecting information during the course of an administrative 
investigation, it is not possible or feasible to determine accuracy, 
relevance, timeliness or completeness prior to collection of the 
information; in disseminating information to other law enforcement 
agencies it is often not possible to determine accuracy, relevance, 
timeliness or completeness prior to dissemination because the 
disseminating agency may not have the expertise with which to make 
such determinations. Further, information which may initially appear 
inaccurate, irrelevant, untimely or incomplete may, when gathered, 
grouped, and evaluated with other available information, become more 
pertinent as an investigation progresses. The OTS therefore believes 
that it is appropriate to exempt the above-listed systems of records 
from the provisions of 5 U.S.C. 552a(e)(5).
    (k) 5 U.S.C. 552a(e)(8) requires that an agency make reasonable 
efforts to serve notice on an individual when any record on the 
individual is made available to any person under compulsory legal 
process when such process becomes a matter of public record. The OTS 
believes that the above-listed systems of records should be exempt 
from this provision in order to avoid revealing investigative 
techniques and procedures outlined in those records and in order to 
prevent revelation of the existence of an on-going investigation 
where there is a need to keep the existence of the investigation 
secret.
    (1) 5 U.S.C. 552a(g) provides civil remedies to an individual 
for an agency refusal to amend a record or to make a review of a 
request for amendment, for an agency refusal to grant access to a 
record, for an agency failure to maintain accurate, relevant, timely 
and complete records which are used to make a determination which is 
adverse to the individual, and for an agency failure to comply with 
any other provision of 5 U.S.C. 552a in such a way as to have an 
adverse effect on an individual. The OTS believes that the above-
listed systems of records should be exempted from this provision to 
the extent that the civil remedies provided therein may be related 
to provisions of 5 U.S.C. 552a from which the above-listed systems 
of records are proposed to be exempt. Since the provisions of 5 
U.S.C. 552a enumerated in paragraph (a) through (k) above proposed 
to be inapplicable to the above-listed systems of records for the 
reasons stated therein, there should be no corresponding civil 
remedies for failure to comply with the requirements of those 
provisions to which the exemption is proposed to apply. Further, the 
OTS believes that the application of this provision to the above-
listed systems of records would adversely affect its ability to 
conduct investigations by exposing to civil court actions every 
stage of the investigative process in which information is compiled 
or used in order to identify, detect, apprehend and otherwise 
investigate persons suspected or known to be engaged in conduct in 
violation of applicable laws.
    b. Specific exemptions under 5 U.S.C. 552a(k)(2). Pursuant to 
the provisions of 5 U.S.C. 552a(k)(2), the Office of Thrift 
Supervision, hereby exempts certain systems of records, maintained 
by the Office of Thrift Supervision, from the provisions of 5 U.S.C. 
552a (c)(3), (d)(1), (2), (3) and (4), (e)(1) and (4)(G), (H), and 
(I) and (f).
    1. Exempt systems. The following systems of records, which 
contain information of the type described in 5 U.S.C. 552a(k)(2), 
shall be exempt from the provisions of 5 U.S.C. 552a listed in 
paragraph b. above except as otherwise indicated below and in the 
general notice of the existence and character of systems of records 
which appears elsewhere in the Federal Register:

.001--Confidential Individual Information System
.004--Criminal Referral Database

    2. Reasons for exemptions. (a) 5 U.S.C. 552a (e)(4)(G) and 
(f)(1) enable individuals to be notified whether a system of records 
contains records pertaining to them. The OTS believes that 
application of these provisions (to those of the above-listed 
systems of records for which no notification procedures have been 
provided in the general notice of the existence and character of 
systems of records which appears elsewhere in the Federal Register) 
would impair the ability of the OTS to successfully complete 
investigations and inquiries of suspected violators of laws and 
regulations under its jurisdiction. In many cases investigations and 
inquiries into violations of laws and regulations involve complex 
and continuing patterns of behavior. Individuals, if informed that 
they have been identified as suspected violators of laws and 
regulations, would have an opportunity to take measures to prevent 
detection of illegal action so as to avoid prosecution or the 
imposition of civil sanctions. They would also be able to learn the 
nature and location of the investigation and the type of inquiry 
being made, and they would be able to transmit this knowledge to co-
conspirators. Finally, violators might be given the opportunity to 
destroy evidence needed to prove the violation under investigation 
or inquiry.
    (b) 5 U.S.C. 552a (d)(1), (e)(4)(H) and (f)(2), (3) and (5) 
enable individuals to gain access to records pertaining to them. The 
OTS believes that application of these provisions to the above-
listed systems of records would impair its ability to complete or 
continue investigations and inquiries and to detect and apprehend 
violators of the applicable laws. Permitting access to records 
contained in the above-listed systems of records would provide 
violators with significant information concerning the nature of the 
investigation or inquiry. Knowledge of the facts developed during an 
investigation or inquiry would enable violators of laws and 
regulations to learn the extent to which the investigation or 
inquiry has progressed, and this could provide them with an 
opportunity to destroy evidence that would form the basis for the 
imposition of civil sanctions. In addition, knowledge gained through 
access to investigatory material could alert a violator to the need 
to temporarily postpone commission of the violation or to change the 
intended point where the violation is to be committed so as to avoid 
detection or apprehension. Further, access to investigatory material 
would disclose investigative techniques and procedures which, if 
known, could enable violators to structure their future operations 
in such a way as to avoid detection or apprehension, thereby 
neutralizing investigators' established and effective investigative 
tools and procedures. In addition, investigatory material may 
contain the identity of confidential sources who would not want 
their identities to be disclosed for reasons of personal privacy or 
for fear of reprisal at the hands of the individual about whom they 
supplied information. In some cases mere disclosure of the 
information provided by a source would reveal the identity of the 
source either through the process of elimination or by virtue of the 
nature of the information supplied. If sources could not be assured 
that their identities (as sources for information) would remain 
confidential, they would be very reluctant in the future to provide 
information pertaining to violations of laws and regulations, and 
this would seriously compromise the ability of the OTS to carry out 
its mission. Further, application of 5 U.S.C. 552a (d)(1), (e)(4)(H) 
and (f)(2), (3) and (5) to the above-listed systems of records would 
make available attorney's work product and other documents which 
contain evaluations, recommendations, and discussions of ongoing 
legal proceedings; the availability of such documents could have a 
chilling effect on the free flow of information and ideas within the 
OTS which is vital to the agency's predecisional deliberative 
process, could seriously prejudice the agency's or the Government's 
position in litigation, and could result in the disclosure of 
investigatory material which should not be disclosed for the reasons 
stated above. It is the belief of the OTS that due process will 
assure that individuals have a reasonable opportunity to learn of 
the existence of, and to challenge, investigatory records and 
related materials which are to be used in legal proceedings.
    (c) 5 U.S.C. 552a(d) (2), (3) and (4), (e)(4)(H) and (f)(4), 
which are dependent upon access having been granted to records 
pursuant to the provisions cited in subparagraph (b) above, enable 
individuals to contest (seek amendment to) the content of records 
contained in a system of records and require an agency to note an 
amended record and to provide a copy of an individual's statement 
(of disagreement with the agency's refusal to amend a record) to 
persons or other agencies to whom the record has been disclosed. The 
OTS believes that the reasons set forth in subparagraph (b) above 
are equally applicable to this subparagraph, and, accordingly, those 
reasons are hereby incorporated herein by reference.
    (d) 5 U.S.C. 552a(c)(3) requires that an agency make accountings 
of disclosures of records available to individuals named in the 
records at their request; such accountings must state the date, 
nature and purpose of each disclosure of a record and the name and 
address of the recipient. The OTS believes that application of this 
provision to the [[Page 15734]] above-listed systems of records 
would impair the ability of the OTS and other law enforcement 
agencies to conduct investigations and inquiries into violations 
under their respective jurisdictions. Making accountings available 
to violators would alert those individuals to the fact that the OTS 
or another law enforcement authority is conducting an investigation 
or inquiry into their activities, and such accountings could reveal 
the geographic location of the investigation or inquiry, the nature 
and purpose of the investigation or inquiry and the nature of the 
information disclosed, and dates on which that investigation or 
inquiry was active. Violators possessing such knowledge would 
thereby be able to take appropriate measures to avoid detection or 
apprehension by altering their operations, transferring their 
activities to other locations or destroying or concealing evidence 
which would form the basis for prosecution or the imposition of 
civil sanctions.
    (e) 5 U.S.C. 552a(e)(1) requires that an agency maintain in its 
records only such information about an individual as is relevant and 
necessary to accomplish a purpose of the agency required to be 
accomplished by statute or executive order. The term ``maintain'' as 
defined in 5 U.S.C. 552a(a)(3) includes ``collect'' and 
``disseminate.'' At the time that information is collected by the 
OTS there is often insufficient time to determine whether the 
information is relevant and necessary to accomplish a purpose of the 
OTS; in many cases information collection may not be immediately 
susceptible to a determination of whether the information is 
relevant and necessary, particularly in the early stages of 
investigation or inquiry; and in many cases information which 
initially appears to be irrelevant and unnecessary may, upon further 
evaluation or upon continuation of the investigation or inquiry, 
prove to have particular relevance to an enforcement program of the 
OTS. Further, not all violations of law uncovered during an OTS 
investigation or inquiry fall within the jurisdiction of the OTS; in 
order to promote effective law enforcement it often becomes 
necessary and desirable to disseminate information pertaining to 
such violations to other law enforcement agencies which have 
jurisdiction over the offense to which the information relates. The 
OTS should not be placed in a position of having to ignore 
information relating to violations of law not within its 
jurisdiction where that information comes to the attention of the 
OTS through the conduct of a lawful OTS investigation or inquiry. 
The OTS therefore believes that it is appropriate to exempt the 
above-listed systems of records from provisions of 5 U.S.C. 
552a(e)(1).

    Dated: December 15, 1994.
Jonathan L. Fiechter,
Acting Director.

    Dated: March 6, 1995.

Alex Rodriguez,
Deputy Assistant Secretary (Administration).
[FR Doc. 95-7342 Filed 3-24-95; 8:45 am]
BILLING CODE 6720-01-M
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