FDIC Federal Register Citations

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Re: 12 CFR Part 326: Customer Identification Programs for Banks

Dear Sir or Madam:

I am writing on behalf of East Cambridge Savings Bank, a mutual savings bank located in Cambridge, Massachusetts. We would like to take this opportunity to comment on the proposed changes to 12 CFR 326, which are mandated by section 326 of the USA PATRIOT Act. We are fully aware of the challenge involved in trying to promulgate regulations that provide a balance between the important security measures required by the PATRIOT Act and the operational objectives of a financial institution, and appreciate the consideration given to maintaining this balance by the Agencies involved. However, we do have some comments regarding what we consider to be portions of the proposed regulation that may prove to be burdensome to an institution such as ours. These are outlined below.

First, we would like to comment on the current compliance effective date for the proposed changes, October 26, 2002. As of today, the changes are strictly in a proposed form and will not appear in final form for some weeks. This would provide very little time for review and implementation of the final rule prior to its effective date. At this point, any changes required to the Bank's operations to allow for compliance with the new rule are strictly provisional upon the publication of the final rule. We do not believe that the current effective date for the changes to Part 326 leaves us enough time to implement the operational adjustments that will be necessary, and thus believe that the effective date should be extended, preferably by a six-month period if possible. This would allow us plenty of time to be in full compliance with the final changes to the regulation by the effective date.

Current Internal Revenue Service guidelines allow for the use of "unofficial" forms of identification for certain groups of bank customers, such as senior citizens and the disabled, when opening deposit accounts. We are concerned as to how these guidelines, and consequently our Customer Identification Program, will be affected by the new requirements of Part 326. We would request that the Agencies provide specific guidance regarding acceptance of these types of identification in the final rule.

As an institution that allows for the opening of deposit accounts through the mail, and will potentially allow such account openings via the Internet in the future, we would also appreciate more specific guidance regarding identification requirements where there is no face-to-face meeting with the customer.

From the definition of "account" that appears in the proposed regulation it is unclear whether it would apply to certain periodic transactions, such as check-cashing for non-customers. We believe that additional guidance provided in this area by the Agencies would prove beneficial to all affected institutions.

We are also concerned with the proposal's requirement that copies of all identification documents used at account opening be maintained. It has not been a usual practice of the Bank to photocopy all documents used by a customer to identify him/herself; in many instances, notations of the documents' identifying information are instead made in the account file. In fact, some types of identification documents cannot be photocopied (e.g., certain driver's licenses). Additionally, copies of documents such as credit reports are not regularly maintained in deposit account records which are traditionally minimal in content. We believe that maintenance of such documents within a deposit account file would prove to be operationally burdensome for Bank personnel, as well as from a file storage standpoint. We would ask that the final rule allow for the notation of identification documents within the account file, rather than requiring that all such documents be photocopied and maintained separately by the Bank.

As currently written, the proposed rule would apply to any individual "seeking" to obtain certain bank services. This would include applicants for various loan products who are denied for credit, or who do not otherwise proceed with their credit applications for whatever reason. Currently, we are required by the Equal Credit Opportunity Act ("ECOA") to retain such files for 25 months. The proposed rule would require that we maintain such files for five years. We would ask that the final rule either mirror the record retention requirements of the ECOA for these types of files, or that they be excluded from coverage by the regulation. We do not believe that the additional maintenance time for these types of records would serve to benefit the intent of the regulation.

Thank you for the opportunity to present our opinions and concerns regarding this proposed regulatory change. Should you have any questions or concerns regarding our comments, please feel free to call me at 617-354-7700.

Sincerely,
Gilda M. Nogueira
Senior Vice President
East Cambridge Savings Bank
Cambridge, MA