After September 11: Ways to Win With Banking

Our world has just been turned upside down. What we thought was safe was in fact tragically vulnerable. The admirable landmark World Trade Towers burned and fell like a campfire. What can we do now?

What we in compliance can do is to look at what financial institutions and their employees have to offer in this struggle. This is an ideal time to hold training sessions or meetings to discuss some important issues, including products, deposit insurance, services, and compliance.

We feel less vulnerable and helpless when we can do something. Financial institutions can play a key role in the coming war against terrorism. Right now, we have several important services and products to offer and several very important things to do. Use the list of ideas below to talk with staff. Add your own ideas. Give your institution's staff a sense of empowerment by relating their work to how we can stop terrorism. Give your institution's staff courage by showing them how to help others feel safer and more confident.

Unfortunate as the reason is, this is an opportunity to help everyone understand why there is such a thing as compliance.

OFAC
Explain to staff that the Office of Foreign Asset Control exists to manage the freezing and/or taking of assets owned by individuals, organizations or countries that practice or support terrorism. Terrorists need money for a wide variety of purposes, ranging from paying rent to purchasing airline tickets and paying for hotels. While the sources of their funds may be outside of the legal banking world, at some point the funds have to pass through the banking system. That is when we capture the funds.Now explain what the OFAC List is and give some examples of the names on it. Highlight some of the names alleged to be responsible for the destruction of the World Trade Center.

Now explain and review your institution's OFAC procedures. Tell everyone how important this is. One individual, sitting in the back office of a financial institution, may be responsible for saving lives.

Bank Secrecy Act
BSA is about much more than money laundering. BSA is also about tracking where and how money moves. A terrorist has to have access to money - lots of it - in order to pull off an act of destruction. The funds have to pass through legitimate financial systems or be accepted as a legal payment. CTR's, cash logs, and suspicious transactions play a vital role.

Know Your Customer, now known as due diligence, is now more important than ever. Train staff to match the customer and the fact situation presented with what is normal and legal. Does the situation make sense? Or does the customer have the ability to open a checking account, pay bills and go to flight school, but not have a job?

Suspicious Transactions are especially important to recognize, not only in your institution, but in the offices and dealings of your customers. Advise your small business customers on ways to identify customers who conduct their transactions in cash, without the typical tools of the legitimate banking system. Several companies took large cash payments from the terrorists when a typical customer would have used a credit card. If only they had realized the risk, those transactions might not have taken place.

Deposit Insurance
Many consumers are concerned about the safety of their hard-earned money. This is an ideal time to remind customers that their deposits in your institution are insured - no matter what. In fact, if you encounter consumers who want to cash a paycheck or purchase a teller's check or similar instrument, use the opportunity to explain the advantages of checking accounts and deposit insurance. Have a fact sheet ready for these customers comparing the costs of a checking account and purchasing money orders.

Privacy
There will be a great deal of public discussion about tracing money and reporting suspicious transactions. Your customers need to know that while you are working harder to support the effort to track and eradicate terrorism, you will continue to protect their privacy. Teach your customer contact staff ways to calm customers' concerns while explaining how due diligence can help to prevent another tragedy.

Discrimination
It is also very important that the employees of financial institutions not over-react and consider it acceptable to treat people of Middle East origins harshly. Most of the people in this country are here because they want to be Americans and because they want what America has to offer. Advise your staff to talk with customers. People who have jobs and businesses are here to stay, no matter where they came from.

Special Responses
The Soldiers and Sailors Civil Relief Act provides financial protection for soldiers and sailors called to active duty by limiting the amount on interest on their loans. All staff should be aware of the basic requirements of this act and your procedures to comply.

Forbearance. The Federal Reserve has encouraged holding companies and state member banks to exercise forbearance with customers who have been affected by the disasters. While this is always a general principle of banking, it is particularly important in the wake of the destruction of the World Trade Center. The FRB suggests using prudent methods to provide customers with some financial relief, including extending payment terms, restructuring debt, and waiving late fees or extending the trigger period for late fees.

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 11, 9/01