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FDIC Federal Register Citations

September 4, 2002

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

Re:: USA PATRIOT Act - Federal Deposit Insurance Corporation, 12 CFR Part 326 Customer Identification Programs

Dear Sir or Madam:

Cambridge Trust Company is a nine branch, $600mm community bank with its main office located in Cambridge, Massachusetts. We appreciate this opportunity to offer comments on the above referenced notice of proposed rulemaking and the interim rule.

Section 326 of the USA PATRIOT Act (Cooperative Efforts to Deter Money Laundering) requires the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, and the federal regulatory agencies to issue regulations "setting forth minimum standards for financial institutions that relate to identification and verification of any person who applies to open an account." The rules would be codified with other Bank Secrecy Act regulations as part of Treasury's regulations in 31 CFR Part 103.

Please consider the following comments regarding the proposed rules:

§ Section 103.121(a)(6) definition of US person

As currently written, the proposed Section 103.121(a)(6) defines a US person as a US citizen. This definition conflicts with the definition of US person that appears on the IRS form W-9, which is signed by a customer at account opening to certify the customer's tax identification number. The W-9 form requires certification of "US citizens (including resident aliens)." Both definitions will have to be understood and applied by account opening personnel during the account opening process. We suggest that these definitions be made consistent with one another in order to avoid confusion the disparity will present at account opening.

Section 103.121 (b) (3)

As currently written section 103.121 (b) (3) requires a financial institution's Customer Information Program [CIP] to include procedures for maintaining a record of all information obtained under the procedures. The record must include "a copy of any document that was relied on …..that clearly evidences the type of document and any identification number it may contain." [103.121 (b) (3) (B)]

Cambridge Trust Company currently records on the account opening document [signature card] a description of identification documents relied on to establish identity, including the issuing government agency, type of document, document number and expiration date. This recordkeeping could be employed bank-wide when other banking relationships are established. The information would remain on record for five years after the relationship is terminated, pursuant to the current BSA record retention requirements in 31 CFR 103.33.

The advantage to retaining copies of identification documents in lieu of the above-described recordkeeping is not clear. Making copies of identification documents would incur customer delays during account-opening, and require additional resources to copy and store [in paper or image form] the identification documents. For example, Cambridge Trust Company opened approximately 7000 individual savings, checking and money market accounts in 2001. The Bank requires two forms of identification at account opening [standard practice]. It would have to install and maintain additional photocopy machines or scanners in its branch locations for copying the ID, ensuring usable copies are obtained, and storing an additional 14,000 documents in a secure environment in order to comply with [103.121 (b) (3) (B)]. This number would increase significantly when the recordkeeping requirement is also applied to joint accounts and other deposit, lending, trust, investment, insurance, etc. relationships. We urge you to reconsider this requirement and recommend it focus on maintaining a description of the identification documents presented in lieu of actual copies.

Cambridge Trust Company welcomes regulations intended to facilitate criminal, tax and regulatory investigations, the conduct of intelligence or counter intelligence activities, and which may protect consumers from identity theft and other types of fraud. Please consider our recommendations, which we believe will encourage and assist in effective customer identification programs for financial institutions.

Thank you for the opportunity to present our views.

Sincerely,

Ana M. Foster
Compliance Officer

Last Updated 09/05/2002 regs@fdic.gov

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