U.S. Treasury investigates illegal surveillance allegations: watchdog

WASHINGTON (Reuters) - An internal watchdog at the U.S. Treasury said on Friday it is investigating allegations the department illegally looked at financial records of U.S. citizens.

The audit includes an examination of whether Treasury officials followed legal guidelines on intelligence gathering, Richard Delmar, counsel to the Treasury’s Inspector General, said.

Citing unnamed sources, U.S. news website Buzzfeed reported on Friday that Treasury employees have warned officials that U.S. citizens’ banking and financial data has been illegally searched and stored.

Delmar said the audit was looking into “many issues relating to these allegations,” including whether officials followed surveillance guidelines set out in an executive order that was signed by President Ronald Reagan in 1981 and later modified by President George W. Bush. Delmar said the audit has been underway for roughly a year.

The order -- known in the security community as “twelve triple-three” -- is largely intended to set down rules for foreign intelligence. But it allows for the intentional and incidental collection of data belonging to U.S. citizens and permanent residents in certain cases, including counterintelligence.

Auditors are checking whether officials “jumped through the right hoops,” Delmar said.

Reporting by Jason Lange