QuoteIf you live in a decent country that respects basic human rights, you do not have to give any reason why you bought BTC! If the police come to you with questions, you shouldn't answer any of them. Also you don't need to prove it wasn't you, they need to proof it actually was you who owned all the addresses the BTC resided in.Firstly, that's a big IF!In the UK and indeed several European countries failure to mention facts during Police interview which you then rely on for your defence is a valid reason for Juries to infer guilt. Your silence is not an automatic defence - this is why I have so much fondness for the Americans Fifth Amendment!Also, it's not necessary to necessarily access an exchanges records to prove you have bought Bitcoins (notwithstanding the fact that MtGox have publicly stated they would support enquiries from the Police of this nature) - it would be sufficient for any fool with access to your bank records to see you'd bought them.This could prove VERY problematic if you're caught receiving contraband in the mail and then try to say you had no idea as to the contents of the package when you signed for it, if the Prosecution can then demonstrate you bought the No. 1 digital currency for trafficking in Narcotics.The risk may be low but it is real, not theoretical. I work in a bank myself and we are obliged to file SARs (Suspicious Activity Reports) for any transactions of a possibly fradulent or otherwise illegal nature. As far as I know we haven't started monitoring accounts owned by exchanges yet but we do in practice comply with reasonable requests from the local Financial Crimes Unit for information - in theory a court order is required but in practice we cover our backs by supplying such information. At my bank we refer to the Police euphemistically as our "friends from down the road." as technically we're not allowed to share Customers' data in this way. In practice the old boy "scratch my back" network is still running along merrily and we much prefer to quietly supply such information than face public scrutiny of the kind to which HSBC has recently been subjected for example.Of course you'll say I'm biased as I sell Bitcoins for cash but as I said yesterday I am supplying a demand for obtaining BTC safely - I didn't create it!TLDR : Police can and do view your financial information without a warrant, use cash to buy your Bitcoins!V.