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Tried To Open A Bank Account Lately?

Filed under: Imported

Nearly two years after passage of the USA Patriot Act, another piece of the law kicked in last week, as new regulations designed to combat the financing of terrorist activity and international money laundering began being enforced. However, the uncertain requirements of the rules increase the risk of overzealous efforts at compliance that can especially affect those with common names, particularly common Middle Eastern names.

The Department of the Treasury, the Financial Crimes Enforcement Network, and the seven federal financial regulators wrote rules that went into effect October 1, 2003, which were developed jointly by the Treasury Department, Treasury's Financial Crimes Enforcement Network, and the seven federal functional regulators, including the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.

The Administration says the regulations are necessary to implement the  Patriot Act and prevent money laundering, terrorist financing, identity theft, and other forms of fraud while also providing financial institutions the flexibility they need to effectively implement the rules.

These final regulations implement section 326 of the USA PATRIOT Act, which directs that regulations be issued requiring that financial institutions implement reasonable procedures to (1) verify the identity of any person opening an account; (2) maintain records of the information used to verify the person's identity; and (3) determine whether the person appears on any list of known or suspected terrorists or terrorist organizations. 

The regulations apply to banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers.

Institutions subject to the final rules will be required to establish a program for obtaining identifying information from customers opening new accounts.  The regulations will require that institutions implement procedures for collecting standard information such as a customer's name, address, date of birth and a taxpayer identification number (for U.S. persons, typically a social security number and for non-U.S. persons, a similar number from a government-issued document).

A financial institution's program is also required, among other things, to contain procedures to verify the identity of customers within a reasonable period of time.  Many financial institutions may rely on examining standard identification such as a driver's license or passport. However, the final rule gives financial institutions the flexibility to implement procedures to verify identity in other ways appropriate to their individual circumstances.

Early this week, a client in my office, a women member of an ethnic minority, was not allowed to deposit a large check into her account, the proceeds of a real estate settlement. Unaware of the new laws, I said offhandedly, must be the damn Patriot ACT. Upon questioning, the bank said it refused to take the deposit because her husband had not endorsed the check. Yet, she had a valid power of attorney that led to the real estate attorney issuing the check to her in the first place. No rationale existed for the refusal to accept the deposit. She was a current customer of the bank, and the bank's refusal fit none of the categories stated in the law. I figured the bank did it because they could, because she was a woman, because she was a woman of color, and because she had a "foreign" last name.

At my own bank, I had to show identification to deposit my business checks. I have been a customer of the bank for 30 years. What's up with that?

Nothing except exerting power and control for the sake of power and control. It is not enough to have cameras everywhere--now you get to be treated with suspicion and disdain.  Next thing you know they will be freezing our accounts--or those of us with "funny" sounding names.  As if Osama bin Laden is going to deposit a check in a local bank. 

Burying your money in a hole in the ground or putting it in the freezer sounds like a good idea to me.  I hate to refer to Nazi Arnold's theme song, but "we aren't gonna take it anymore" seems like a good rejoinder to the continued encroachments of liberty and the constant erosion of civility and common sense in every institution in American life--all in the name of " fighting terror."  To the point of absurdity.

Posted by Elaine Cassel at October 10, 2003 7:08 AM

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