Title: License to Fool? as U.S. Banks Scramble to Meet the Oct. 1 CIP Deadline, Congress Quibbles over the Mexican Matricula Card, and Treasury Ponders Photocopying Driver's Licenses Again, More Question Marks Than Ever Dog the Leaky State Driver Identification System
Abstract: The next time you check into a hotel room and realize that the federalized air safety inspectors who made you remove your shoes and loosen your pants didn't catch that sharp instrument in your carry-on bag, remember the biblical line about throwing the first stone, before you take umbrage. Once customer verification becomes routine, as the Patriot Act calls for on Oct. 1, your bank may have a track record of its own to defend--even though it may be perfectly blameless and have done everything the law requires. What leads to such a cautionary statement? At this writing it is mid-September, and there are paradoxical things going on. Indeed, paradoxical isn't quite the right word. In some ways, what's going on is almost something of a contradiction. Item: Across the country, thousands of bank compliance officers in institutions large and small were racing to have their recently approved Customer Identification Policies (CIPs) drummed into frontline employees' heads. When they weren't getting their customer verification software programs into action--at least in those institutions that chose to go that far--they were fending off last-minute sales calls. Bankers were laboring to not only bring deposit operations into line, as is the traditional turf for anti-money-laundering efforts, but, per Patriot 326's mandate, the credit side as well. In spite of all the preparation, there were some who were all too willing to minimize banks' efforts. Testifying at a recent congressional hearing in September, Robert Douglas, a security consultant who has worked with the banking industry, stated that, my experience in training and auditing bank employees and evaluating identification authentication systems teaches me that far too many financial services companies ... are woefully inadequate in their ability to provide that defense. Item: Meanwhile, the Treasury Department had still not dropped the other shoe concerning the unprecedented change in status of the implementing regulations for Patriot Act Section 326--the very regulations that the compliance officers were racing to conform to. Pressures from Congress had caused Treasury to ask for comments on what had a been a final regulation. Specifically, this deals with the requirement (rejected by the rulewriters originally) to retain photocopies of identification documents used to verify customer identification. In addition, Treasury had to ask whether certain foreign identification documents should be considered appropriate for identification verification. At press time, just when Treasury would finish reviewing all the additional comments submitted and issue the last word on these matters was unknown. Bankers said they were proceeding on the assumption that the rules were as issued, and said they'd deal with any changes when they came along. What else, they asked, could they do when the government itself seemed unclear on what it was doing? We have to roll out our program and our training, explained David McCrea, senior vice-president for compliance and fraud-loss control, at $2 billion-assets Frontier Bank, Everett, Wash. McCrea was juggling multiple factors, with the training being put in place even while a week remained before the bank's board was to vote on the recommended CIP. Such has been the rush on development of plans in response to Patriot requirements. At Commerce Bank & Trust, a $1 billion-assets institution in Topeka, Kan., Linda Woodland said it was important to coordinate the new CIP policies and procedures with the installation of the bank's choice of anti-fraud software. I want this to be part of our new account platform so they won't have to re-key the information, explained Woodland, senior vice-president and BSA/AML officer. She sees value in the effort already, noting that several accounts were closed down during the summer when it was found that they were opened with bad Social Security numbers. …
Publication Year: 2003
Publication Date: 2003-10-01
Language: en
Type: article
Access and Citation
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot