Federal Deposit
Insurance Corporation

Subject: FINAL PROPOSAL ON 12 Part 326

Thank you for the opportunity to comment on the proposed rule under the USA Patriot Act, Customer Identification Programs, Part 326. I am the Compliance Officer of a community bank with assets of $500 million serving the Des Moines, Iowa metro area. I have several suggestions to improve the final proposal under Part 326, before it goes into final regulation. I am a person who is very concerned about the growing federal mandates to the banking industry and therefore, an ever growing cost burden to the general public. I believe there are additional clarifications that need to be made to make this proposal meaningful to all concerned.

First of all, the definition of an account is too limited and not all inclusive. Should the safety deposit box area of the bank be included? Approximately 95% of our safety deposit customers also have deposit and/or loans with the bank and we already know who we are dealing with. Why should we spend the time and inconvenience the customer on ascertaining "proper" identification? We will already have it, it may be documented in another file, why raise the cost of doing business? We have a growing number of consumers who prefer to do business on our internet site or by mail and telephone. How should we be able to certify their true identification? We have numerous commercial deposit accounts, how should we verify a new signatory? Many times we add a new signer via fax, give us guidance on how this identification gathering should be handled. Will this proposal be in direct conflict to the letter and the spirit of the E-Sign Act? Can we use faxed signatures and IDs as authentic? If not, we will no longer be able to serve our customer base with on-line banking, mail or telephone service. The USA Patriot Act has then effectively moved banking back into the last century. If this is the case, I would concluded that the proposed Part 326, is in direct conflict with the E-Sign Act. This issue must be broached by the federal agencies before we can move into the implementation stage. If every federally regulated financial institution is to be held responsible for accurate customer identification, we must be given more clarification from Washington than has been presented to date. It is also unclear as to what obligation a bank has in obtaining and verifying identification on dealer paper. Are we to be held responsible for the dealers and various third parties' actions as to "knowing your customer"? Should a dealer or third party be held to the same standards as the banking industry? And who should monitor and regulate that mandate? And, therefore, where does this all stop, or does it? None of this is clear in the proposal.

Another big issue for our bank is the requirement of verifying identification of presently know customers. Where is the flexibility for existing customers in this proposal? Anywhere between 60% and 80% of our ongoing loan and deposit business comes from current or previously know customer base. Why should the bank or our clients be required to go through a thorough identification program when the individual is already well known to our personnel? This would be a gross waste of time and money. The federal agencies should indicate where some badly needed flexibility exist or should exist. If this matter is not addressed by the bank regulators, this will be a huge inconvenience and cost to both the customer and financial institution. The need for a Customer Identification Program (CIP), should only involve individuals and organizations unknown to the bank and its employees. Anything more would be documentation overload, customer inconvenience overload, cost overload and regulation overload.

With the regulation in proposed format, the comment period ending September 6, 2002, and the final rule to be issued at some date subsequent to this date, it will be impractical for our community bank to have our internal procedures and Board approval for the CIP to be in place and functionally compliant by October 25, 2002. I would urge a delay until at least June 30, 2003, to give the agencies adequate time to address concerns and the industry time to react to and act in behalf of a "good" proposal.

Some of the ultimate questions, as I see it are, should the banking industry and each financial institution be part of law enforcement in this country? Would the government have the constitutional authority to enforce this mandate? Who should pay the cost of such an endeavor? Will this proposal stop terrorism? Is this an over reaction to 9/11? Is this truly in the best interest of the American people or is this simply to enhance government power? When will this mind set stop? Or will it? And finally, is this the very best we can do? To the last question I say, I think not, better yet, I hope not.