Federal Deposit
Insurance Corporation

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

FAX: 202/898-3838 

Re: Customer Identification Program.

Messrs. & Mmes.:

This is a comment on the proposed "Customer Identification Program proposed in 56 Federal Register 141, dated July 23, 2002.

This writer is Chairman of the Board of The Citizens Bank of Clovis, NM, a well capitalized community bank with some $170 million of assets in a county with a population of 43,000 and a little city of 32,000 that has 4 other State banks, 2 National banks and a branch of another, 1 large Thrift, 2 Federal Credit Union home offices, and a Federal Land Bank office all in an agricultural economy. So thanks to the FDIC we are thoroughly over-banked. The population grows steadily 1-3% per year. Our bank has 80 employees and 4 branches, 2 full service, with its main-frame computer. The bank has been in business since 1916 during which it has acquired some 6,466 depositors and 2,924 loans. It is our belief that your "one shoe fits all feet" proposal is as over done as was your former "Know Your Customer" proposal.

Almost all of this bank's new accounts are opened by people long established in our county or neighboring counties. Bank's people know most of them personally, what they do for a living, who their boss is, their children, and other relatives, and where they live. Almost all new accounts are by customers just changing banks within our little city so that they can talk to a human being rather than to a telephone.

We do not believe that there is the slightest of evidence that these small community banks have any significant danger of being used in money laundering, terrorist financing or fraud and identity theft. Given the community banks size, location, and type of business, they should be exempted from this proposed regulation with one exception, to-wit: The comparison with government lists. We now do this comparison manually although we are trying to find a computer program compatible with our core system that will do it for us at a reasonable cost. However, at our daily officers' meeting we read out loud all checks and deposits over $5,000, so there is no chance at all that any money laundering or terrorist activity could go unnoticed.

The proposal implies that "New Account" means those originating on or after October 25, 2002 in each and every of banks deposit accounts including certificates of deposit and all transaction accounts such as loans and trust accounts, but excluding occasional purchase of a money order or a wire transfer. But there is nothing in the proposed §103.21 about the limitation date of October 25, 2002 as stated in the summary.

Loan relationships established prior to October 25, 2002 should not be defined as a "New Account" if the bank makes the borrower another loan. That is considered an unreasonable and unnecessary over-kill. Requiring this procedure on renewal of certificates of deposit would equally be over-kill. In fact, it likely would be disastrous to community banks almost all of which have core deposits in certificates of deposit.

The proposal states that a "Customer" includes a person applying to open an account regardless of whether that person already has an account, but not a person seeking information about an account such as rates or interest if the account is not opened. Customer includes individuals, corporations, partnerships, trusts, and any original or added signatory on an account of the above entities. Bank transfers not initiated by the customer, such as bank mergers or bank acquisitions or purchase of assets are not subject to this policy.

And on page 9 existing customers are treated the same as if they were new customers unless they were originally identified as prescribed in the regulation. This is againa repeat of the unanimously rejected "Know Your Customer" proposal. It is not believed that 9/11 requires changing that rejection to one of acceptance in the name of terrorism. To require this community bank to go back and identify 6,466 depositors and 2,924 borrowers that we have personally known for years is regulatory overkill. To require one of those: old customers to go through this procedure to open a new account for his son or daughter going to college, for example, is pure over-kill. When a small commercial corporation gets a new bookkeeper to become a signatory on the corporation's bank account, the requirement of this new procedure is insufferable.

The commercial effect of all of this is that people just will not change banks ever because it is too much trouble, changing banks is difficult enough as it is. It will definitely deter everyday business transactions.

This writer has some sympathy for the big banks who do not and cannot know their customers as community banks do. It should be obvious that what should be required of the big banks just does not fit community banks such as ours. But even the big banks need some consideration. After they have a relationship with a customer, whether by way of loan or deposit, for say one year, the big banks should not be required to identify them anymore than they already have. Such a person opening another account does not cause a risk of terrorism either.

Our thought is that by preventing terrorists from opening a bank account, you are lessening the chance to identify them or otherwise discover and apprehend them.It appears to us that driving terrorists underground aids them. The proposal is just aimed at the wrong target. It is the activity in the account that will identify the terrorist.