|Banks get drafted into the war on
Proliferation of fake IDs
Banks of all size have long had ID and verification procedures in
place. The problem, according to Byrne, is that fake IDs are both
easier to obtain and much harder to detect today. He and many of
his colleagues say the identification onus shouldn't fall on banking.
"The governments need
to do a better job of ensuring that when they issue an identification
document, they've done their due diligence," he says. "It
shouldn't be up to the bank to make a determination of whether the
Florida license is stronger than the Georgia license. We should
be able to rely with some comfort on something issued by a governmental
entity. It shouldn't be our obligation."
But don't be surprised if
later this year your banker looks more closely at your state driver's
license, compares the information (address, telephone number, date
of birth, etc.) on two or more documents, or takes a thumbprint
in the course of opening an account.
Bankers are hoping you'll
see it as a good thing. After all, the No. 1 fraud-related complaint
to the Federal
Trade Commission's Bureau of Consumer Protection involves identity
theft for the purpose of opening new accounts. The forthcoming
USA Patriot ID and verification regs could make it harder for others
to swipe your financial life.
The high cost of compliance
The bigger question that has bankers holding their breath these
days is what it may cost them -- and eventually you -- to comply
with new reporting procedures and requests from law enforcement.
Banks are used to reporting
suspicious transactions to the government; it's part of their federal
charter and failure to do so can close their doors for good. But
detecting possible terrorist account activity is problematic at
best because of the low dollar amounts and the conventional accounts
"I don't think anyone
would say they were against it," says Rowe. "I think the
concern of our membership is, how do we do it? A lot of the things
that are getting under the radar screen are very small transactions
that are very hard to catch. It's not a matter of willingness to
support the government's efforts. It's more what do we do and how
do we do it?"
Rowe doesn't like the worst-case
scenario: "Just with the hundreds and hundreds of thousands
of checks going through the system, if the government requires banks
to start examining individual checks, the economy will come to a
grinding halt. It isn't doable."
Byrne says Treasury is carefully
weighing the need to track terrorist financing with the financial
burden it could place on banks due to increased software and manpower
needed to perform the records searches.
"The issue is really
going to be how aggressive will law enforcement be in taking advantage
of additional authority?" he says.
Will the money-laundering
provisions of the USA Patriot Act drive up banking costs?
"Oh, no question,"
says Rowe. "And that will come from the customers. What we've
tried to get through to the government agencies is, all of these
things are costs of doing business. It doesn't just happen. It does
cost money. And eventually that cost gets built back into individual
But Briggs isn't so sure.
"In terms of cost, it's
too premature because I think that is something that the banking
industry probably feels is its contribution to the fight."
is a contributing editor based in Florida.