FDIC Federal Register Citations

Attention: Section 326 of USA PATRIOT Act Comments

We are a 150 million dollar bank with 5 offices in three counties, in a mostly rural area. We estimate that our approximately 14,300 accounts reflect relationships with 8,000 individuals. We have less than 20 customers who are not U.S. Persons as currently defined by the Internal Revenue Service.

We currently require a government issued photo ID for at least one of the signatories for all consumer accounts. We document the ID on the signature card but do not retain a copy of the ID. We require the social security number for one of the owners but do not require it for all owners or signatory. For business or other entities, we require a copy of Letters of Corporation, trust papers, etc. to be obtained and a copy retained. We do not obtain identification for signatories on entity accounts.

The requirement to obtain all the identification and verification on all owners and signatories prior to renewing a CD or loan will have such an overwhelming "sudden impact" on some existing customers as to rock core relationships and result in bank-to-bank migrations, disrupting the banking system-all at a time when customers are already nervous from recent happenings. Renewals and some other new account-openings should be permitted without the "prior-to" requirement with a reasonable time permitted to obtain the information. Some co-tenants or signatories may reside distantly, be in nursing homes or actually lack necessary documentation due to age. Should commerce be hamstrung by inability to renew CDs and loans based on these situations resulting both in expirations of grace periods and higher past-due loans in the banking system? Banks will already be bracing for the gigantic costs associated with obtaining, storing and securing the voluminous documentation and should not be forced to lose business, also. Any existing customer should be exempted from re-identification requirements for any new account within the same institution.

The value of photo IDs will be in question without a massive beefing-up of the nation's control and detection of false IDs. Also, there are no nation-wide standards or procedures for drivers licensing or issuance of state IDs. Each state has its own requirements for issuance. If the federal government is spending money to make sure that government issued photo ID's cannot be copied, then why should we be forced to make copies?

As the proposal is written we have no clear guidelines to follow in creating a Customer Identification Program. We need better guidance on what is reasonable and practicable. What is a reasonable period of time after the account is opened to get the verification? What is reasonable for one bank may not be for another but more to the point what will the examiners feel is reasonable.

We also need more guidance on what measures can be taken if the customer does not open the account in person.

This proposal was not published until July 23, 2002 and the comment period does not end until September 6, 2002. Even if the agencies spend very little time reviewing and discussing the comments received, the best-case scenario is that the final regulations will be issued very close to it's effective date of October 25, 2002. To get a CIP written, approved by the board of directors and all employees trained, will be a difficult if not impossible task by October 25, 2002.

The conclusion reached in the proposal, that the new requirements have a minimal effect on small institutions, is obviously not true in our case. The regulations will greatly increase the amount of identification we must obtain. It will be necessary for us to also purchase software, increasing our costs, to check all customers, against all government lists. It will be necessary for us to write procedures; determine how the information will be stored (securely), make computer software upgrades to our data processing system so all of our offices will be able to tell if a customer has been properly identified under this new regulation, and have the board of directors approve the new program. We are now working on a draft CIP based on the proposal but will need time to finalize it, after seeing the final regulation.

The content and timing of the required notice to customers should be set forth in the regulation that give us model wording for the public notice and where the notice has to be displayed. Thus the information all customers receive will be the same. There will be customer resistance to the identification requirements. The more consistently they are communicated to the public and the more obvious identification is required by law, the more readily they will be accepted as a routine part of opening a bank account. Consistent information will also help to assure the customer that all banks have to get the same information. The notice should tell them why the bank is requiring it, what they are required to have and state that the bank cannot for any reason waive these requirements.

We feel that the regulation will be a burden on our customers. It is our understanding that if a customer who has been with our bank ten, twenty or even fifty years will have to provide proof of who they are if they open a new account. In addition, children and the elderly who may not have driver's license will be forced to obtain a picture ID simply to open an account, which will be a financial and time burden for both our bank and our customers as well as put a strain on our relationship with our customers. We pride ourselves in working with our customers to establish a long-term relationship and now they may feel we are requiring items they shouldn't have to provide.

Sincerely,

The Bank of Tescott
Compliance Officer 
Nancy Cone