FDIC Federal Register Citations

Executive Secretary
Attention: Comments/OES
Federal Deposit Insurance Corporation
550 17th St., N.W.
Washington, DC 20429

RE: Section 326 of the USA Patriot Act

I am the Chief Operating Officer of a $500 million bank with 12 offices serving both rural and metropolitan communities. We have over 50,000 accounts that reflect relationships with approximately 25,000 households.

Our current identification requirements are consistent with industry standards. We require two pieces of identification, one of which must include a photo. We record the information from the ID, but do not retain a copy. For business accounts, we verify and record state registry. We obtain identification on account owners.

Information required
Recommendation: Banks should not be required to obtain date of birth, identification number, address (and mailing address if different) on individuals on business accounts that are signors only and do not have an ownership or management role in the business. Employers are required to obtain this information on employees and the additional requirement for the banks would significantly increase cost in time and resources for the bank to obtain and maintain the information. Also, information is already required to be obtained on individuals conducting cash transactions over $10,000.

Recommendation: Banks should not have to maintain a copy of an application for an employer identification number (EIN) before it opens or adds a signatory to an account for persons other than an individual such as corporation, partnership or trust that have applied for but not received their EIN. This requirement is paper and labor intensive. Currently most banks have implemented procedures to perform timely follow-up on accounts without EINs. A requirement to close any account that has not supplied an EIN within 90 days would require less paper documentation and would not additionally burden bank.

Record Retention
Recommendation: Where a bank relies upon a document to verify identity they should not be required to maintain a copy of the document. The issuer of the document and the document number should be maintained. The requirement to maintain a copy of a document for five years after an account closes would be extremely difficult to manage and costly. Maintaining a copy of a document whether in paper or electronic image would be labor intensive to photocopy/image, sort and file, resort when account closes and purge after five years. In addition to labor cost, there are costs to store the paper copies or images.

Implementation
Recommendation: Compliance with the final regulations should not be mandatory until 90 days after publication in the Federal Register.

The clear language of the USA Patriot Act indicates these regulations are to be effective October 25, 2002. However, this proposal was not published until July 23 and the comment period does not end until September 6. Even if the agencies spend very little time reviewing and discussing the comments received, the best case scenario is that final regulations will be issued very close to their effective date.

The regulations will greatly increase the amount of documentation we must maintain. It will be necessary to expand written procedures; determine how information can and will be stored, but still be available to all of our offices, and draft amendments to our existing BSA policy for the board to approve at a regularly scheduled meeting. Completion of those tasks can not be completed until the regulation has been finalized and issued.

Thank you for your consideration.

Sincerely,
Michael J. Delvin, E.V.P.
Chief Operating Officer
Bank of the Cascades