FDIC Federal Register Citations

Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429

RE: USA Patriot Act
Section 326 Bank Rule Comments

Peoples Bank is a $455 million bank with 17 offices in Whatcom, Skagit and King County in Washington State. Our customer database consists of over 47,000 individuals, which may have consumer and/or commercial accounts.

On consumer and business accounts, our current identification requirements consist of obtaining a government issued photo ID for all signers on the account. We record the information from the ID, but do not retain a copy.

I'm writing to comment on the proposed Section 326 of the USA Patriot Act because compliance will be difficult as proposed. In order to implement this regulation, we request the following issues be amended:

Final Regulation Effective Date

The proposed Section 326 indicates these regulations will be effective October 25, 2002. However, it was not published until July 23 and the comment period ends September 6. After the agencies review and discuss the comments, the best case scenario is that final regulations will be issued very close to their effective date. In order to implement the new requirements in the proposal we will have to:

· Review current customer identification procedures;
· Determine how to store and make available identification bankwide;
· Outline our Customer Identification Program (CIP);
· Edit Existing BSA Policy and Procedures;
· Obtain Board Approval;
· Develop a Notification/Disclosure for Customers;
· Train Staff on New Requirements.

We cannot complete these tasks until we see the final regulation. In order to implement this regulation well, we will need at least 180 days after publication in the Federal Register. Please consider extending the effective date.

Customer Notice Requirement

A number of regulations require banks to post public notices on their premises or in written format. Generally, those requirements are very specific and compliance can be evaluated objectively. Because a standard has not been established, examiners may impose their own opinions on the notice's content. These identification requirements will also be a change for customers and a uniform notice indicating law requires this information would help them accept these new procedures. The final regulation should contain specific language on the notice content.

Identification Recordkeeping

The proposed rules require the bank maintain a copy of the document relied on to verify identity, such as a driver's license. However, they do not address the possibility of increased Equal Credit Opportunity Act/Regulation B attention at examinations. Banks will have to be careful to keep the required document records for CIP purposes, while ensuring the information is not used in violation of fair lending laws.

In addition, storage of this information is an issue for our bank. If an existing customer should open another account at a different office, this information should be available bankwide so the identification is only requested once. Implementing such a system will be complex and expensive.

Thank you for considering my comments as you draft the final regulation.

Sincerely,

Melinda Kaemingk
Compliance Officer
Peoples Bank (certificate #6158)