00:00Hi, everyone. I'm Maggie McGrath, senior editor at Forbes. There is one legal scholar who is
00:10saying the federal government has gone too far with snooping on new mortgage data gathering.
00:17Here to explain is that very person, Ethan Blevins. He is a legal fellow with the Pacific
00:22Legal Foundation, a national nonprofit that defends Americans who have been threatened
00:28or perceived they have been threatened by government overreach. Ethan, thank you so much
00:32for joining us. Thanks for having me. So we talk a lot about data security here in the United States
00:39in 2025. With Elon Musk's role with Doge, there's also been a lot of conversation about exactly what
00:46data the government has about every individual American. But you're looking specifically at
00:52mortgage data. Is that correct? Yes. Although the case here implicates the rights of all Americans
00:59to privacy under the US Constitution, this specific case is about whether or not the government can
01:06look into cash transactions for residential real estate. So the US government has authority under
01:13this law called the Bank Secrecy Act to basically poke around in Americans' pockets however much
01:19they like. Really, every wallet is a window under this Bank Secrecy Act that simply says
01:25if some kind of commercial transaction might potentially be relevant to a possible violation
01:33of law, then the Department of Treasury is free to look into that. And it has used that authority in
01:39many ways. In this particular case, it has said, well, we want all real estate agents and title
01:46companies and so forth to report to us about all residential cash transactions. This is not an
01:54uncommon thing. When people do cash transactions for real estate, often they're selling a home,
01:58they have a lot of equity, they use a new home. We represent Celia Flowers, who operates a title
02:05company in Texas, and she does a lot of these cash transactions. And she does not want to be
02:11deputized to be the government's snoop on her own customers. So she has to report on her customers
02:18whenever they engage in a cash transaction. She's required to report that to the government.
02:23She objects to that. We think that's a violation of Fourth Amendment rights that protect you against
02:28unreasonable searches and protect your privacy. And it's also a violation of the Constitution's
02:33separation of powers.
02:34So to be clear, the Bank Secrecy Act is not necessarily new in 2025. But what's new here
02:40is this case by your client.
02:43That's right. So the act was adopted in 1970. So it's been around for a long time. But what it
02:49authorizes Treasury to do is adopt whatever regulations it wants that the act authorizes.
02:56And so this particular rule was adopted very recently under the Trump administration,
03:01the rule requiring that cash transactions of real estate be reported to the federal government.
03:07The Trump administration has also adopted a rule that says counties along the U.S. border,
03:13if there are any $200 cash transactions or higher, those have to report to the government,
03:18which is a very low threshold. So the government uses this information to try to go on these fishing
03:23expeditions and look for criminal activity. But of course, there's a lot of law-abiding citizens who buy
03:29property with cash or who withdraw more than $200 from an ATM machine along the border.
03:36So the problem here is that this is sort of this dragnet approach that drags in a lot of
03:42innocent Americans who are not engaged in any kind of suspicious activity, but are nevertheless
03:46subject to surveillance.
03:48So the Trump administration's argument is that this surveillance is helping us crack down on
03:55illegal immigration and other types of crime. Is that correct?
03:59Right. In the case of the $200 transaction limit, it's definitely focused on border security. In the case
04:08of cash transactions, sometimes cartels and illegal organizations will launder money through real
04:16estate transactions. At least this is the claim. The problem is that, of course, a lot of innocent
04:21people also buy things with cash. It's like saying that because criminals use cars sometimes to engage
04:29in criminal activity, that the police can just stop anybody on the street, which of course is not the
04:33case. They have to have probable cause. They have to have a warrant to be able to look and do these
04:39things to protect Americans' privacy.
04:40It's interesting because the first time I read about this, I was thinking about the real estate
04:46market in New York where I live. And we do get a lot of foreign buyers who buy up apartments and then
04:53use it as a second, third, or fourth home, which creates a crunch. One of many things, I should be
04:59clear, creates a real estate crunch. But in any scenario here is keeping housing available for Americans
05:06or for people who will live in the property full time. Is that any part of this thesis? Or is that
05:13my bias as a New Yorker coming out? I think this specifically is more centered on the concern,
05:18money laundering concerns. The Trump administration has been fairly hostile to foreign investment in
05:25real estate. And so this may be part of that as well. Some of that is, I think, going to be a target of
05:32the Trump administration to the extent it hasn't already, the concern that this creates national
05:37security concerns or trade concerns. But right now, it's fairly focused on this concern about
05:42cartels laundering money through residential real estate.
05:46So where does the litigation stand right now? And what do you think will happen next?
05:51So the complaint's fairly new. It was filed less than a month ago. And right now, we are in the
05:59early stages of that process. It can take a long time. I anticipate that the parties will come to
06:07some kind of resolution probably later this year in some form or another. The $200 cash transaction
06:14limit that I mentioned earlier, that is also under litigation. And there is currently a preliminary
06:19injunction by two federal courts saying, we think this is illegal for the federal government to require
06:25any check cashing business or bank to report on you if you have a commercial transaction that's higher
06:33than $200. So we're hopeful based on that outcome there, that our case will also be subject to that
06:41higher level of scrutiny.
06:43In the reaction you've seen to these two cases, is there a partisan breakdown or is there fairly
06:49bipartisan consensus that this is government overreach?
06:55That's a great question. And I think it's sort of, in many ways, Trump coded, right? The president
07:02courts a lot of controversy. So because some of these rules are adopted by the president,
07:08some people are defending it, some people are against it. There are civil libertarians like myself
07:16who say, regardless of the administration, we don't want the government surveilling us. The Biden
07:22administration, for example, was looking at a rule that would have said any checking account that moves
07:30more than $600 a year, which of course is any active checking account, should be subject to financial
07:36surveillance. And that did result in a lot of bipartisan opposition. So I think Americans,
07:44they like their privacy, whoever, whatever administration is taking it away, I think
07:49most Americans say, it's a step too far for you to be looking into my pockets. Of course,
07:56our spending habits say so much about us, what we do, who we are, and we have a right for the
08:01government not to know that information.
08:04What happens if the government does start to know this information or starts to know more of it,
08:09if we factor in that they likely already know a good deal?
08:14They do already know a good deal. A lot of financial transactions are already being reported.
08:19Banks are required to report a lot of this. And one of the troubling parts is it's kind of invisible.
08:25So banks actually are forbidden from letting their customers know, hey, we had to report this
08:30transaction to the federal government. They cannot do that. So a lot of times, one of the problems here
08:36is that it's hard to build political opposition to something people don't know is happening.
08:41So this has been going on for some time. There is a financial privacy law, but it has so many
08:48exceptions that in practice, it really does not protect Americans. So we turn instead to the
08:55constitution's fundamental privacy protection. You have a right against unreasonable searches.
09:00The government needs to get a warrant. It needs to do its homework and show that there is
09:03some reasonable suspicion, you know, that you're engaged in illegal activity and the government
09:10can look into it. As you're talking, it strikes me that at the heart of this is consumer protection.
09:15And the Consumer Financial Protection Bureau is one of many government agencies that was subject to
09:22doge inquiry and cuts. Would this be an area for a more robust CFPB to step in and protect consumers?
09:30Oh, that's a great question. Currently, the rule that the law that we're talking about is administered
09:37by Treasury, and Treasury has this financial crimes enforcement network within it. And that's sort of
09:44the sub-agency that does a lot of this. And so there, I think, is room for interagency checks,
09:52right, that one agency can be playing a role in sort of checking the abuses of another.
09:57To my knowledge, that has not yet happened. That sort of oversight, unfortunately, is lacking.
10:07So I think we do need Congress to step in, strengthen financial privacy. Hopefully, courts, you know,
10:14they provide the check when the executive branch and Congress don't step in. But it's inappropriate
10:20for the government to be able to say, you know what, we think your Venmo payment to this Gardner
10:26might show that he's not reporting all his taxable income. So now Venmo has to report all your cash
10:31transactions. That's the kind of thing that the Bank Secrecy Act would allow if Treasury decided to do
10:37that. We think that that's the role of Congress to make those kinds of calls and the role of the
10:42courts to say when it's gone too far. What is the big takeaway for the Forbes audience
10:49right now? If they learn one thing from this interview, what do you want it to be?
10:54I hope that people will come to understand that their privacy is jeopardized by this financial
11:01surveillance. A lot, as I mentioned, a lot of people just don't know about it because the
11:07government has this system in place and it has for some time where banks are reporting on various
11:14transactions and they don't have to tell you. And in fact, they're often forbidden from telling you.
11:20So it's important, I think, for people to be aware that their right to privacy is being jeopardized,
11:25that their spending is something the government can look into, and that they should go out and
11:31try to get their representatives to strengthen financial privacy in Congress.
11:35And support lawsuits like ours that are trying to promote Fourth Amendment constitutional protections.
11:44And at the risk of overstating it, but because we started off talking about mortgages and not
11:49everyone has a mortgage and not everyone is withdrawing cash from an ATM on the border or near the border,
11:56can you just emphasize why this matters for folks who fall outside those two categories, i.e. all Americans?
12:03Sure. So there are a lot of rules in place that affect all Americans under the Bank Secrecy Act.
12:09For example, if you were to engage in a transaction of $10,000 or more, whoever you are,
12:15you know, it doesn't have to do with real estate or along the border, then that is automatically
12:20reported by banks. There's a number of other triggers, sort of, that if you spend a certain
12:26amount of money or purchasing something in particular, that that might trigger one of these
12:29reporting requirements. And so a lot of Americans are being watched and don't know it. But also,
12:37as I mentioned, the Biden administration tried to adopt, to pursue a law that would have said,
12:42look, any bank that moves money, any bank account that moves more than $600 a year,
12:46we want to know all about those transactions. Well, that's a remarkable and troubling idea. And
12:52thankfully, that was killed. But it goes to show you that our financial privacy is something
12:58that we shouldn't take for granted. Government is trying to look into all Americans' pockets,
13:03not just people on the border, people doing real estate. And people need to be aware of that and
13:08know their rights. Government is trying to look into all people's pockets, not necessarily those
13:15who are just on the border. That is a sobering warning to our Forbes audience. Ethan Blevins with
13:21the Pacific Legal Foundation, thank you so much for joining us today. We so appreciate your time,
13:26your insight, and you'll have to come back and update us as this case proceeds.
13:30Thanks so much, Maggie.
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