Federal Deposit
Insurance Corporation

FDIC
Attention: Section 326 Bank Rule Comments

To Whom It May Concern:

Union Bank & Trust Company is a one billion dollar financial institution with 26 branches within the state of Nebraska. Below we list our comments for consideration regarding the US Patriot Act.

Currently on consumer accounts, (as well as business accounts) our current identification requirements consist of requiring a government issued photo ID on at least one of the signatories. We record the information from the ID, but do not retain a copy. In addition, it is the practices of the bank to conduct a chexsystems inquiry on every new account where the customer does not previously have a financial relationship with the bank. We also conduct these chexsystem inquiries when new owner/signer's are added to existing accounts. Our package with Chexsystems included new account, OFAC, and fraudfinder inquiries.

Union Bank does on occasion cash checks for non-customers. In these situations, a government issued photo ID as well as a thumbprint would be required.

TimeLine

The language of the USA Patriot Act indicates these regulations are to be effective October 25, 2002. However, this proposal was not published until July 23 and the comment period does not end until September 6. Even if the agencies spend very little time reviewing and discussing the comments received, the best case scenario is that final regulations will be issued very close to their effective date.

We Suggest:

Immediately after this comment period ends, announce that compliance with the final regulations will not be mandatory until 120 days after their publication in the Federal Register.

Language & Criteria:

The conclusion reached in the proposal, that the new requirements have a minimal effect on 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 write procedures; determine how the information can be stored, but still be available to all of our offices and draft amendments to our existing BSA policy for the board to approve at a regularly scheduled meeting. We cannot complete any of those tasks until we see the final regulation.

We Suggest:

That specific objective criteria be established in the final regulations for the content and timing of the required notice to customers, including model language deemed to be in compliance with the regulation. By having all financial institutions held to the same specific guidelines would help with customer acceptance.

That clarification be made for identification requirements when a customer is not present.

That the rule not require recordkeeping for situations where an individual does not actually receive bank services.

That the rules not include verification all new signatories on an account, as there will be cases where multiple signatories to an account could be number in the hundreds. Verification would be extremely costly- rather that verification of multiple party's would be risk-based, reasonable and practical.

That requirements of taking copies of Identification used at account opening is not required. Recording the ID information of Type, State of Issuance and Expiration Date should be sufficient. Rather that the application form, with a notation of information received, be considered compliant with the rule.

That a two-year record retention period after an account be acceptable as it would be consistent with other recordkeeping requirements.

A number of regulations require banks to post public notices on their premises. Generally, those requirements are very specific and compliance can be evaluated objectively. While the proposal's flexibility is intended benefit the banks, its lack of an objective standard introduces a probability that individual examiners would feel comfortable imposing their personal opinion as to a notice's adequacy. Oral disclosure would be the worst choice for the bank as it would be impossible to verify compliance, the wording of the "disclosure" would vary greatly between employees and it is the method most likely to generate a series of follow-up questions by the customer. A timing/placement requirement might be: "The notice is to be posted where it would be likely be seen by a customer prior to opening or requesting a change to an account."

There will 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.

Also, no purpose is served by leaving the specific wording of the notice to individual institutions, but it should be permissible for them to add additional information to any model language that might be provided.

A model notice might read: "In order to prevent the use of the U.S. banking system in terrorist and other illegal activity, federal regulations require all financial institutions to obtain, verify, and record identification from all persons opening new accounts or being added as signatories to existing accounts. This institution cannot waive these requirements. - U.S. Treasury"

We thank you for the opportunity to comment on the proposed US Patriot Act.

Respectfully Submitted,