Know Your Customer Update #3


Date: Sun, 4 Apr 1999 05:03:20 -0400
From: "Dave" davehart@ioa.com

Dave Hartley
Asheville Computer Wholesale
Asheville, NC 28801
(828) 285-0240
http://www.ioa.com/~davehart



IN THIS UPDATE:


1) FDIC & other agencies withdraw Know Your Customer rule- but KYC lives on in the Bank Secrecy Act
2) Assistant Director of Federal Reserve Board says KYC is NOT dead
3) Flood of e-mail credited with stopping Know Your Customer
4) New online petition being launched to repeal existing Know Your Customer requirements
5) Quote of the week




Here's what's going on in the fight against "Know Your Customer" regulations:

1) FDIC & other agencies withdraw Know Your Customer rule-but KYC lives on in the Bank Secrecy Act

As anticipated, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency, Office of Thrift Supervision, and the Board of Governors of the Federal Reserve (the "Agencies") officially voted on March 23, 1999 to withdraw their proposed Know Your Customer rule. This means that, thanks to your help, we have won Round One of the fight. However, in a statement released after the meeting, the Agencies reaffirmed their "...long-standing support for the anti-money laundering provisions of the Bank Secrecy Act."

As it turns out, the Bank Secrecy Act compliance manual of the Federal Reserve still requires banks to implement a Know Your Customer program, even though the new KYC regulation has been withdrawn. (Check out the "spy manual" on their web site, http://www.bog.frb.fed.us/boarddocs/SupManual/ ) According to a recent survey by the American Bankers Association, over 88 percent of US banks already have Know Your Customer policies in place. In early March, the ABA called on regulators to not only withdraw the proposed Know Your Customer rule, but to dismantle the existing requirements of the Bank Secrecy Act as well.

Rep. Ron Paul (R-TX) has introduced HR 518, The Bank Secrecy Sunset Act, which would repeal the existing Bank Secrecy Act reporting requirements that led to Know Your Customer. (See #4 below.)

2) Assistant Director of Federal Reserve Board says Know Your Customer is NOT dead.

A banker who attended the Mid Atlantic Compliance Conference March 18-19 reported the following comments by Richard Small, Assistant Director of the Federal Reserve System, at a session on KYC:

"Is Know Your Customer dead? No, I don't think it is dead. Do I think there will be a regulation? No. I would like to develop some broad based guidance (but) no one is going to let me talk about it for six months."

Small went on to say that they would have to repackage it differently, such as "Enhanced guidance for reporting suspicious activity." He said they'll have to be careful how they re-package it, saying, "It's a marketing issue." He indicated that any future proposal would not be called "Know Your Customer" and would not use the phrase "customer profiling."

3) Flood of e-mail credited with stopping Know Your Customer

"The FDIC's chairman, Donna Tanoue, said the huge volume of e-mail drove the decision to withdraw the KYC proposal," reported Rebecca Fairley Raney of the New York Times in a March 24, 1999 story (please see http://DefendYourPrivacy.com/nyt_2.htm ). This suggests that the influence of e-mail on public policy decisions is growing. Some other quotes from the article:

"It's important to note that a number of these e-mails were customized." Tanoue said. "They came from the heart."

"Typically the comments we hear are packaged in Washington -and these (e-mail comments) came from all over America," said Steve Katsanos, a spokesman for the FDIC. "We think it's pretty neat," he said of the Internet-based interaction. "You might well count on this being a standard procedure."

"The e-mail and the traffic to the FDIC's Web site was driven through media reports on the issue in traditional media and through an online advocacy campaign ( http://www.DefendYourPrivacy.com ) sponsored by the Libertarian Party."

"Ultimately ... people used the party's advocacy site to send 171,000 comments to the FDIC -about 83% of the e-mail that was sent."

The success of this cyber-campaign has also been noted in articles and editorials in other major print publications such as The Washington Post, The Chicago Sun-Times, the Kansas City Star and The Arizona Republic as well as in leading online publications such as http://worldnetdaily.com, http://wired.com and http://cbs.marketwatch.com. Visit the Media Coverage page at http://www.DefendYourPrivacy.com for links to these and other articles about the campaign and Know Your Customer.

4) New online petition being launched to repeal existing Know Your Customer requirements

DefendYourPrivacy.com is preparing to launch a new online petition to repeal existing Know Your Customer requirements. The petition will be directed to individual members of Congress and will ask them to co-sponsor the Know Your Customer Sunset Act (HR 516) and the Bank Secrecy Sunset Act (HR 518). HR 516 already has over 50 co-sponsors.

Passage of these bills would repeal all existing Know Your Customer reporting requirements, and prevent similar regulations from being imposed in the future. For more information on both bills, check out our new "Legislation" page at http://www.DefendYourPrivacy.com.

An announcement and pass-along message for friends and family will be sent out as soon as the petition page is up and running, which will probably be in about a week.

5) Quote of the week - Editorial, Indianapolis Star

"That such a rule KYC would even have been proposed should be of great concern to every freedom-loving American. These are the tactics employed in socialist countries such as China and the old Soviet Union where the denial of personal privacy, individual property and freedom of speech are fundamental tools for the economic and political control of large captive populations.

"Fortunately, many Americans were outraged at this proposal. Much of the credit must go the the Libertarians. Of some 253,000 e-mail messages, letters, and faxes to the FDIC, more than 170,000 were ... generated by the party's DefendYourPrivacy.com Web site."




DefendYourPrivacy.com is provided as a public service by the Libertarian Party.

To request information about the Libertarian Party, please visit http://www.lp.org/lp-membership-iform.html?

To support the (source) website financially, please visit http://www.lp.org/lp-kyc-contrib.html

To join the Libertarian Party please visit http://www.lp.org/lp-membership.html
 

 


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