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Criminal Resource Manual

Criminal Resource Manual
CRM 1-499

423. Grand Jury Subpoena Exception

The Act does not apply to subpoenas issued by federal grand juries (12 U.S.C. § 3413(i)), except for section 3420 which contains restrictions upon the handling and use of financial records subpoenaed by grand juries and section 3415 which allows financial institutions to be reimbursed for costs associated with providing the records.

Section 3420 requires that financial records obtained by grand jury subpoena must be actually "returned and presented to the grand jury and must be destroyed or returned to the financial institution if not used in connection with the return of an indictment, a criminal prosecution or a purpose permitted by Rule 6(e) of the Federal Rules of Criminal Procedure.

The broad wording of the grand jury exception is significant:

Nothing in this title (except §§ 3415 and 3420 of the Act) shall apply to any subpoena or court order issued in connection with proceedings before a grand jury except that a court shall have authority to order a financial institution on which a grand jury subpoena for customer records has been served not to notify the customer of the existence of the subpoena or information that has been furnished to the grand jury, under the circumstances and for the periods specified and pursuant to the procedures established at § 3409. 12 U.S.C. § 3413(i). [Emphasis added.]

By virtue of the wording of the exception, grand jury subpoenas are not subject to the certification of compliance, customer notice, or civil liability provisions of the Act. In fact, aside from the reimbursement and handling provisions, the Act leaves federal grand jury subpoenas precisely where they were before the Act.

The Supreme Court has held that customers of financial institutions have no standing to challenge a federal grand jury subpoena directed to the institution. United States v. Miller, 425 U.S. 435 (1976).

The legislative history of the Act points out that grand jury subpoenas were excepted from the Act because:

The grand jury is the single most important investigative tool of criminal law enforcement. In addition, grand jury procedures are already subject to judicial scrutiny. Furthermore, the Supreme Court decisions indicate that the constitutional status of the grand jury protects it from burdensome delays. Finally, grand juries are protected by rules keeping their proceedings secret. Expanded notice and challenge rights might diminish grand jury secrecy and threaten the privacy of individuals being investigated.

H.R. Rep. No. 95-1383 at 228, 7 U.S. Code Cong. & Ad. News, 95th Cong., 2nd Sess., at 9358. The five major purposes of the rule of grand jury secrecy are set out in United States v. Procter & Gamble Co., 356 U.S. 677, 681-82 n.6 (1958).

The records do not have to be returned or actually presented to the grand jury if the volume of such records makes it impractical. In such a case the grand jury shall be provided with a description of the records.

The "actually returned and presented" language of 12 U.S.C. §  3420(l) is not interpreted by the Department as requiring either return of the records by a representative of the subpoenaed financial institution or physical production of the records before the grand jury in every case. Rather, it is the view of the Department that Section 3420(l) should be interpreted in keeping with the realities of grand jury practice. For purposes of convenience and economy, therefore, the subpoenaed party may be permitted to surrender records to a federal agent so long as a report is made in due course to the grand jury. This view has been supported by two courts, United States v. Kington, 801 F.2d 733 (5th Cir. 1986) and United States v. Residence Located at 218 Third Street, New Clarus, Wis., 805 F.2d 256 (7th Cir. 1986). But also see In re Castiglione, 587 F. Supp. 1210 (C.D. Cal. 1984) (held that it was improper to allow financial institutions to deliver the records to an agent).

The question has arisen as to whether the "actually returned and presented" language of the Act prohibits agents of the grand jury from inspecting grand jury-subpoenaed records at the financial institution or from searching through records of financial institutions to locate items covered by the subpoena. The U.S. Court of Appeals for the Fifth Circuit affirmed a district court opinion stating that the Act does not prohibit agents of a grand jury from searching for and copying bank records sought pursuant to a grand jury subpoena, In re Grand Jury Proceedings, 636 F.2d 81, 84-85 (5th Cir. 1981).