- The Washington Times - Tuesday, July 30, 2002

The war against terrorism has a new battleground: the lobby of your neighborhood bank.

The Treasury Department proposed rules this month that would force banks and other financial institutions to spend more time checking the identification of new customers, part of an effort to combat the kind of money laundering that helped finance the September 11 attacks.

Banks also are asking customers to present IDs for simple transactions, such as making deposits and withdrawals.

Many banks say they have no problem subjecting customers to greater scrutiny, even though some customers particularly elderly people who have frequented the same branch for decades don't understand why tellers have started asking them to show identification.

"My impression is that most people don't think of this as applying to them. We hear, 'I've lived here x number of years, I've been doing business with this branch x number of years; what does that have to do with stopping terrorists?'" said Hunter R. Hollar, president and chief executive of Sandy Spring National Bank, which has 30 branches in Maryland.

"It presents a challenge to us. We want to be that friendly, hometown bank, but we also have an obligation now to ask our customers for their identification," Mr. Hollar said.

Banks came under fire when investigators determined that some of the September 11 hijackers had used fake Social Security numbers to open accounts. The terrorists spent about $500,000 to carry out their plot, and rarely made deposits or withdrawals of more than $10,000, the amount that usually sets off warning bells in banks.

The Treasury's proposed rules aim to prevent terrorist-related money laundering. The rules ask financial institutions to verify the identities of their customers, maintain records of the information used to verify those identities and check to make sure customers' names are not on a government-compiled list of people known to be or suspected of being terrorists.

The rules target banks, trust companies, credit unions, savings associations, securities brokers and dealers, mutual funds and futures merchants and brokers.

The proposals give each institution flexibility to implement the rules. Banks would have to ask a new customer to provide his or her name, address, date of birth, Social Security number and a photo ID, such as a driver's license or passport.

Foreigners without a Social Security number would be asked to present a number from a government-related document.

"The goal is to ensure financial institutions absolutely believe the person they are doing business with is the person they represent themselves to be," said David Aufhauser, general counsel for the Treasury, which worked with the Federal Reserve and other agencies to develop the rules.

The Treasury issued the proposed rules July 17, giving financial institutions 45 days to recommend changes. The Treasury plans to adopt the rules by Oct. 25.

The rules stem from the USA Patriot Act, sweeping anti-terrorist legislation that President Bush signed last year.

A consumer-privacy advocacy group has criticized the proposals because they rely heavily on using Social Security numbers to verify customers' identities.

"The message that is being sent is, 'If you're a bad guy and you want to open a bank account, make sure you steal a Social Security number. Don't just make one up,'" said Jim Dempsey, deputy director of the Center for Democracy and Technology, a District-based privacy rights group.

Many banks say they have used Social Security numbers, driver's licenses and passports to verify the identities of their customers for several years. "We won't have trouble complying with the new rules because we already do," said Shirley Norton, spokeswoman for Bank of America Corp., the nation's third-largest bank.

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