South Florida SUN Sentinel
Patriot Act Requiring People To Provide Detailed Personal Information To Banks
By Business Writer Purva Patel mailto
October 1 2003
If it's not doing so already, expect your bank to ask for loads more personal information when you
open any new account -- the deadline for complying with some major provisions of the USA Patriot
Act has arrived.
Passed two months after the Sept. 11 attacks, the law aims to stem money laundering and terrorist
financing. The new rules require banks and other financial institutions to gather more detailed
information on their clients to prove their identities and make sure they're not on any government
watch list, starting today.
Consumers and businesses can expect to dole out more private data, especially if they aren't citizens
or based in the United States.
While the Patriot Act may cause headaches for consumers, smaller community banks are having to
allocate more of their budgets than larger banks to comply. Banks such as Wachovia and Bank of
America already comply with many federally imposed anti-money-laundering requirements and have
had extensive identifying systems in place, spokeswomen said, so their customers may not see much
of a change aside from signs and notifications that the bank plans to comply.
The task is estimated to cost some small banks as much as 20 percent of profits and is
time-consuming, according to experts and local bankers who use documents from tax returns to
utility bills. Some bankers even travel across borders to confirm a client's business really exists.
First Southern Bank in Boca Raton asks customers for everything from voter registration cards to
"We're running into some resistance," said R. Moyle Fritz Jr., CFO. "Most of the customers have
heard of the Patriot Act, but they're not really aware of how it's going to impact them."
Fritz estimates the bank has spent $150,000 to $200,000 this year on software, new personnel and
training to comply with the new rules.
While the law requires banks to verify identities, keep records of their efforts and make sure
customers aren't on any watch list, how banks go about getting to know their customers ranges from
collecting an employer's address to the client's tax status. Other items may include investigating the
source of a customer's funds, other accounts linked to that person and what they intend to use the
Banks and financial institutions must confirm customer identities with identification that includes a
name, date of birth, address and identification number such as a taxpayer identification number for
citizens or a government-issued document for noncitizens. It sometimes takes several documents to
validate information where a driver's license once sufficed.
"It is both good and onerous," said Jack Trufelli, compliance director for BAC Florida Bank in
Coral Gables. "It's a burden, but it's something we obviously have to do."
BAC Florida Bank hired three more compliance officers, ramped up the list of papers it asks for
from clients and bought specialized software to monitor transactions, Trufelli said.
"Most of the customers understand why we're doing this -- that it's not prying for the sake of
prying," he said.
Many other banks have complained that the new rules have strained relationships with long-time
customers, according to initial results of a study by Florida Atlantic University professor David
Wernick on post-Sept. 11 security's effects on the South Florida economy.
"The due diligence is significantly greater, and a lot of the customers resent being put through the
third degree, especially if they've been with the bank for a while," Wernick said. Some customers,
especially those from abroad, may take their business to other countries.
Where banks can draw the line as financial police is unclear. Now that the U.S. Attorney's Office
has formed a task force to investigate allegations of foreign money laundering in six Latin American
countries, including Nicaragua and the Dominican Republic, many international bankers are
wondering where their duties end, said Bowman Brown, who serves as chairman of the Florida
International Bankers Association's regulatory affairs committee.
The Patriot Act requires financial companies to more closely scrutinize private banking accounts
requested by foreign political figures and their family members and associates.
"What's enough in terms of due diligence to determine whether your client is or isn't a close
associate?" Brown asked.
While it's critical to fight foreign corruption, Brown said the policing could also have negative
"It seems to me it could help eradicate political corruption in these foreign jurisdictions but also could
be seen as the U.S. exporting its morality again to other jurisdictions on an imperialistic and colonial
basis," he said. "It depends on your perspective."
Purva Patel can be reached at firstname.lastname@example.org
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