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FDIC Federal Register Citations


From: Susan Fleming 
Sent: Wednesday, August 21, 2002 2:48 PM
To: Comments
Subject: Section 326 Customer Identification Programs

Dear Madam/Sir,

We are a $290 million bank with eight offices predominantly located in a small community in the Florida panhandle. We estimate that our 18,000 accounts represent relationships with about 7,000 individuals. Of those, only about 70 are customers who are not U.S. Persons as currently defined by the Internal Revenue Service guidelines.

For consumer accounts, our current identification requirements consist of requiring a non-expired government issued photo I.D. on each of the signatories. If that is not possible, we require the government photo I.D. on at least one of the signers on the account and another form of positive I.D. for the other signer(s). We record the information from the identification, and, in some cases, retain a copy. On business or entity accounts we require a positive government issued photo I.D. of the signers in addition to a copy of their business license from the state or county. We obtain a copy of their corporate resolution, as applicable, and call the Secretary of State to verify the existence of the entity as appropriate.

Suggestion: Immediately after the comment period ends, announce that compliance with the final regulations will not be mandatory until 180 days after their publication in the Federal Register.

The clear language of the U.S. Patriot Act states these regulations are to be effective October 25, 2002. However, 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, at best the final regulations will be issued very close to their effective date.

The conclusion in the proposal, that the new requirements will have a minimal effect on small institutions, is certainly not true in our case. The regulations will greatly increase the amount of identification we must obtain, as well as our record keeping requirements and storage. It will be necessary for us to write procedures, train our staff, draft and prepare lobby notices (or a direct mail document), determine how the information can be stored while still making it available to all of our offices, and draft amendments to our BSA policy for the Board of Directors approval at a regularly scheduled meeting. We cannot complete any of those tasks until we see the final regulations. Having advanced knowledge of the exact amount of time we will have to complete these tasks will directly affect our ability to properly do so.

Another Suggestion: Please establish specific and objective criteria in the final regulations for the content, timing and placement of the required Notices to the customers, including model language deemed to be in compliance with the regulation.

Many regulations require banks to post public notices on their premises. Generally, these requirements are very specific and compliance can be evaluated objectively. The proposal's flexibility may be intended to benefit the banks, but the lack of an objective standard introduces a probability that individual examiners would feel comfortable imposing their personal opinion as to the adequacy of a Notice. "Oral" disclosure would be the worse choice for a bank as it would be impossible to verify compliance and the wording of the "disclosure" would vary greatly between employees.

There will definitely be customer resistance to the identification requirements. The more consistently they are communicated to the public and the more obvious it is that they are required by law, the more readily they will be accepted as a routine part of opening a bank account.

A Final Suggestion: While there is no purpose served by leaving the specific wording of the notice to individual institutions, it should be permissible for them to add additional information to any model language that may be provided.

Thank you for your time and consideration.

Sincerely,
sff
Susan F. Fleming
V.P./Auditor
Destin Bank
Destin, Florida

Last Updated 08/22/2002 regs@fdic.gov

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