In In re Grand Jury Investigation M.H. v. United States, 648 F.3d 1067 (9thCir.2011), the Ninth Circuit held that foreign bank account records required to be kept under the Bank Secrecy Act (“BSA”) fall within the Required Records Doctrine, thus rendering the Fifth Amendment privilege against self-incrimination inapplicable to a subpoena for these records.
M.H. was the target of a grand jury investigation seeking to determine whether he used secret Swiss bank accounts to evade federal taxes. The grand jury issued a subpoena to M.H. for the production of records relating to his offshore banking activity that were required to be kept under the BSA. M.H. refused to comply, arguing that if he provided the requested information, he risked incriminating himself in violation of his Fifth Amendment privilege. The district court granted the government’s motion to compel after concluding that the requested records fell within the Required Records Doctrine and, therefore, the Fifth Amendment was inapplicable. When M.H. again refused to comply, the court held him in contempt, but stayed the contempt order pending appeal.
The Ninth Circuit affirmed the district court’s contempt order. Relying on Shapiro v. United States, 335 U.S. 1 (1948), the court reasoned that, under the Required Records Doctrine, the Fifth Amendment privilege does not extend to records required to be kept as a result of an individual’s voluntary participation in a regulated activity. The court noted that the Required Records Doctrine applies if “(1) the purpose of the government’s inquiry is regulatory, not criminal; (2) the information requested is contained in documents of a kind the regulated party customarily keeps; and (3) the records have public aspects.” In re Grand Jury Investigation M.H., 648 F.3d at 1072 (citation omitted).
In this case, the court first determined that the purpose of the BSA record-keeping requirements is regulatory, not criminal, because having an offshore account is not inherently illegal. Second, the court noted that the records at issue consisted of basic account information that bank customers would customarily keep in order to access their foreign bank accounts and to report the information to the IRS. Third, the records had public aspects because they were required in furtherance of a valid regulatory scheme. Accordingly, the court concluded the Required Records Doctrine applied, and M.H. could not invoke the Fifth Amendment privilege to resist compliance with the subpoena.