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FDIC Federal Register Citations |
August 20, 2002 Executive Secretary Attention: Comments/OES Federal Deposit Insurance Corporation 550 17th Street, N. W. Washington, DC 20429 RE: Joint Notice of Proposed Rulemaking 12 CFR Part 326 Dear Sirs: I am writing to you on behalf of Florence Savings Bank, an FDIC-insured state nonmember bank located in Florence, Massachusetts, with assets of approximately $638 million as of July 31, 2002, for the purpose of commenting on the Joint Notice of Proposed Rulemaking, also referred to as 12 CFR Part 326, relating to Customer Identification Programs for Banks. In commenting on the proposed rule, we recognize that the USA Patriot Act mandates the primary elements of the rule. We also recognize and appreciate the efforts of the Agencies to propose rules that provide a degree of flexibility by permitting banks to establish "risk based" procedures in the design of their Customer Identification Programs. Banks have traditionally practiced much of what is contained in the proposed rule. However, the following elements of the proposal continue to be of concern to us. 1. Recordkeeping § 103.121(b)(3)(i)(B) of the proposed rule requires that the bank keep a copy of any document relied on when verifying identity through documents. Banks traditionally have not retained copies of documents identifying customers for a variety of reasons, including regulatory concerns that the practice may be considered a basis for discrimination. Traditionally banks have made notations in their records of the source, type and number of the identifying document. However, to require banks to establish new workflows and additional recordkeeping systems would be significantly burdensome and costly. Additionally, customers are accustomed to showing their identification when opening new accounts, but are likely to become concerned and untrusting when their identifying documents are copied and retained without their consent. In recent years, customers have grown particularly sensitive and protective of the use and treatment of their tax ID numbers, particularly in light of the increase in identity theft. In short, we believe this requirement goes a step too far, and that appropriate notations of the identifying document on the bank's primary account records adequately serves the purpose intended, without significantly increasing costs or paperwork. It also honors the concerns customers may have regarding a business retaining copies of their identifying records. 2. Minimum Identifying Information and Joint Accounts § 103.121(b)(2) of the proposed rule requires procedures for verifying the identity of each customer, to the extent reasonable and practicable, and further requires banks to obtain minimum specific identifying information for each customer prior to opening an account. Frequently, a customer will come to the bank alone to open a joint deposit account. Often times the customer who is present does not have the absent joint owner's tax ID number, and is simply adding the joint owner's name in the event of the primary owner's death. Experience has shown that full identification of the primary owner of the account mitigates risks relating to identifying and obtaining the tax ID number for the absent joint owner of the account. Would the Agencies consider "risk based" procedures relating to the minimum identifying information obtained prior to opening an account? 3. Existing Customers § 103.121(b)(2)(ii) states that "A bank need not verify the information about an existing customer seeking to open a new account or who becomes a signatory on an account, if the bank previously verified the customer's identity in accordance with procedures consistent with this section, and continues to have a reasonable belief that it knows the true identity of the customer". The Agencies indicate that "The proposal requires a bank to exercise reasonable efforts to ascertain the identity of each customer". Is it the Agencies' expectation that banks go back and review existing bank records to assure consistency, or do the Agencies expect banks to comply with the rule on a prospective basis? The term "procedures consistent with this section" may be subject to interpretation. For example, if the bank did not obtain a copy of a document used to identify a customer who has an existing account, but the bank did indicate the identifying document verified when opening the account, would this be considered "consistent" with the procedures required in this section? 4. Definition of "Account" 8. Customer Notice Thank you for the opportunity to comment on the proposed
rule pertaining to Customer Identification Programs for Banks.
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Last Updated 08/26/2002 | regs@fdic.gov |