Federal Deposit
Insurance Corporation

We are a 37 million dollar bank with 2 rural office locations.

Is the proposed definition of "account" appropriate or should other examples
of accounts be added. As written, it's unclear in the proposal that a
banking service, such as safekeeping or safe deposit boxes, would fall under
the definition of account. Describe how practical (or impractical) is it to
ask for identification or authorized signers on individual and/or commercial
accounts and the difficulty the bank faces in obtaining and documenting
identification before accounts are opened or signers added (particularly if
the bank offers alternative delivery systems, such as account opening via
mail, telephone or Internet applications). Also, if a new signatory is added
to a commercial account, and identification verification is required for the
new signatory, will trigger a requirement that all other existing
signatories must be identified?

It is also unclear as to what obligation a financial institution has in
obtaining and verifying identification on dealer paper transactions. While
there is an express exemption for accounts that are transferred from one
bank to another, as in the case of a merger, acquisition or purchase of
assets, there is no clear exemption for brokered or dealer transactions. It
is also unclear in the regulation whether or not a financial institution can
contract with a third party (e.g. the dealer) to obtain and verify the
identification required under the regulation. More clarification or
commentary in the Regulation is needed on this issue.

Flexibility should be allowed for individual customers who have no permanent
residence, that mailing address and emergency contract information (e.g. a
family member or other trusted person) should be sufficient to satisfy this
identification requirement.

Flexibility should be allowed for existing customers who are well known by
the bank. For many community banks, bankers live and work side-by-side with
their customers. They attend church together; they send their children to
the same schools; they participate in community activities together; they
shop at the same grocery stores and other retail outlets and service
providers. An acceptable procedure should include the ability of the bank
to use an "affidavit of identity" as verification of identity for existing
customers whom the bankers have known both personally and professionally for
many years.

It is very difficult for banks to obtain and verify such documentation as
articles of incorporation, partnership agreements, government business
licenses, or trust instruments from foreign entities it is nearly impossible
to verify the validity of such documents presented from foreign entities.

With the regulation in proposed format, the comment period ending September
6, 2002, and the final rule to be issued at some date subsequent to
September 6, it may be impractical for some institutions to have reduced
their internal procedures to writing and have board approval for "Customer
Identification Program" to be in place functionally compliant by October 25,
2002, regulatory agencies should consider a delayed mandatory compliance
date of at lease six months, to April 25, 2003.

The estimated annual burden for record keeping and disclosure does not
consider the additional compliance burden for creating and verifying the
record, which may add as much as 15-30 minutes additional time for each
account established by the customer, depending on what verification
procedures are used for either documentary or non-documentary
identification. Explain how much additional time will be required, based on
the number of new customers establishing accounts with the bank annually.
In addition the regulation doesn't provide any estimate of time for training
and other compliance related functions. Explain how much additional time
will be required for training, board reports and ongoing monitoring under
the bank's BSA antimony laundering program. Finally, due to the expanded
requirements, will your institution need to purchase new equipment (such as
a scanner, microfilmer, or additional storage facilities) or subscribe to
new services (for example OFAC software or credit reporting agencies ID
verification programs) in order to meet verification and/or record keeping
requirements? These items should be considered in your discussion regarding
the cost to your bank. It is critical for the regulatory agencies to
understand the total cost of compliance for implementation and adequate to
comply with the requirement for customer notification and continued
monitoring of CIP. In addition, it should be argued that the lobby notice
should be adequate to comply with the requirement for customer notification
that identification and verification procedures have been implemented to
comply with federal law. To do otherwise, e.g. require written or oral
notice prior to account opening would just add to the time and expense (let
alone customer confusion and frustration) or establishing new accounts.