Financial privacy rights have their roots in common law and have its first precedent in the ‘Tournier case’ which was centred around the banker-customer relationship. The facts were as follows: the plaintiff in the said case was the customer of the defendant bank. A cheque was drawn by someone else who was also a customer of the defendant bank in favour of the plaintiff customer. The plaintiff customer instead of paying it into his account endorsed it to a third party who in turn, had an account in another bank. The defendant bank’s manager enquired about the last-named bank who had to pay the person to be paid and it was found that he was a bookmaker. This information was disclosed to the third party. It was held in the case that this disclosure of the particular piece of information was a breach of the defendant bank’s duty towards the plaintiff, as the said information was acquired not through the plaintiff’s account. Certain conditions were set up in the said case which should be pre-requisites to the disclosure of confidential information. There could be a breach of confidentiality if it was under the compulsion of law, if it was a duty to the public or if there was express or implied consent of the customer.

The United States of America has witnessed several public discourses related to financial secrecy with regards to bank record and their inspection. In an important case called ‘United States v. Miller’ it was held by the majority of the Court that the protection of privacy ceases to exist when the person passes on cheques or other documents to the bank which are indeed in possession of a third party. This landmark was responded to by the Congress strongly as it introduced the Financial Privacy Act, 1978. The Act had numerous safeguards which were intended to secure privacy. Some of them were: requiring a reasonable cause for such an act along with the clause which would allow customers to challenge such warrants in the appropriate judicial body. It sounds pretty obvious now but it wasn’t the same since day one. It is now universally agreed that financial institutions have to keep information received about their clients confidential in the course of business. The United States America recognizes this in its legal system through various legal doctrines, tort theories etc. A lot of these rights are codified in pieces of law which protect individuals’ financial privacy.

In 1999, the ‘Financial Modernization Act’ was passed as law which became effective on 1st June 2001. It was also called the ‘Gramm-Leach Bliley Act’. This law amended previous federal laws and in turn, allowed the creation of financial holding companies. In other words, the Act enabled the banks to get involved in an entire line of financial activities. During the legislative process, it was found out that the law-makers were worried about the invasion of privacy that might be caused as a result of the consolidation of several units of the financial industry. As a result of this concern, Title V was added to the GLB Act which required the financial bodies to label an initial ‘clear and conspicuous’ notice of the prevailing privacy policies. This would give the consumers a chance to exercise their discretion when it came to choosing whether disclosure of financial information to third parties would be acceptable.