In the days that followed the Sept. 11, 2001, attacks, President Bush signed a Congress-endorsed law that amped up America’s efforts to fight the war on terror.
The much-ballyhooed U.S.A. Patriot Act dramatically enhanced the ability of law enforcement agencies to investigate whether citizens were involved in terror.
While most of the attention was focused on airport security, wire taps and e-mail monitoring, the Patriot Act also greatly affected how banks did business.
That remains true 10 years later, said Neal Barclay, vice president and compliance officer for the Citizens Bank branch in Iola.
“I would say it probably doubled the amount of paperwork banks had to handle” as they became compliant to the tougher regulations, he said.
Foremost among the Patriot Act’s provisions was the Customer Identification Program (CIP), which stipulated that all financial institutions were required to verify the identity of individuals wishing to conduct financial transactions of any type.
That meant, essentially, that anybody opening a new account had to provide photo identification, Barclay explained, “to prove to us that the person doing business was, in fact, who they said they were.”
From there, the accounts of people doing business at Citizens — and all other banks and financial institutions around the country — were compared to a large database of suspected criminals listed in the Specially Designated Nationals (SDN) list. The list, overseen by the Federal Office of Foreign Assets Control, contains names of individuals or groups around the world in which Americans are prohibited from doing business.
The tougher controls were implemented after investigators realized that the 9/11 hijackers were able to send and receive money unnoticed by federal officials.
Once the Patriot Act was passed, thousands of names of suspected terror groups and individuals were added to the SDN list. It should be noted the SDN list also contained names of individuals or groups associated with drug cartels, organized crime and suspected embezzlers.
Under the new system, anybody opening an account or doing transactions overseas are compared to the SDN list, Barclay explained. A match would result in a notice to the bank, along with further instructions detailing the bank’s next move, such as freezing accounts or notifying authorities.
MAINTAINING compliance with the new rules comes with a cost, Barclay said.
“That list contains thousands of names,” he said. “There’s no way a single person could go through the list manually, so we have to use software.”
Costly software.
“It definitely made things more challenging,” agreed April Hawkinson, vice president at Community National Bank.
She is speaking both in financial and in customer-relation terms.
Long-time customers — even those on a first-name basis — are required to provide multiple forms of identification, for such things as taking out a loan or opening a new account.
“The days of doing a deal with a handshake were over,” Hawkinson said. “And we’re a small, home-town bank. We know all of our customers, who we’d done business with for years, but we still had to ask.”
FOR MOST bank customers, adhering to the tighter bank controls became a way of life, “much like people going to the airport understood they had to go through extra security,” Barclay said.
“We would get a few questions from people wondering why we needed their driver’s licenses,” Hawkinson said. “When we pointed out that it was related to 9/11, they usually understood.”
There is some flexibility, Barclay said, for long-time customers, and banks are allowed to accept alternate forms of identification. Thus, an elderly customer who no longer drives may use a Social Security card, or utility bill stub or other form of I.D.
Signs pointing out the new banking rules are posted in Citizens and other banks reminding customers of their added responsibilities in opening an account.
Hawkinson said CNB recently installed automated driver’s license scanners, a quicker alternative than having photocopies made to be kept on file.
“And we leave coffee and cookies for the customers” to snack on while they fill out the added paperwork, Hawkinson said. “We understand the extra obligations they have to meet. We want to make this fun for them.”
