Ron Paul Dear Colleague Should Re-assess Bank Secrecy Act
Ron Paul Dear Colleague Should Re-assess Bank Secrecy Act
March 12, 1999
(J. Bradley Jansen was Ron Paul’s legislative staffer for these issues at the time)
“the underlying current regulations of the Bank Secrecy Act need review as well”
Consumer Federation of America, Consumers Union & U.S. Public Interest Research Group
Dear Customer,
In a joint letter to the regulators, the above mentioned groups all urged “in the strongest possible terms, the immediate withdraw” of the KYC rule and said that “the Bank Secrecy Act should itself be re-assessed.” Should the regulators withdraw the proposed formal rule, we return to the status quo ante with an informal Know Your Customer requirement. More than a quarter of a million constituents took the time to tell regulators “NO!” to the KYC rule and do not want an informal requirement either.
The American Bankers Association, privacy groups and others want to end the existing monitoring regulations. The Federal Reserve’s Bank Secrecy Act exam “spy manual” (http://www.bog.frb.fed.us/boarddocs/SupManual/) four page Section 601 reads:
“Even though not presently required by regulation or statute it is imperative that financial institutions adopt ‘know your customer’ guidelines or procedures to ensure the immediate detection and identification of suspicious activity…
“An integral part of an effective ‘know your customer’ policy is a comprehensive knowledge of the transactions carried out by the customers of the financial institution. Therefore, it is necessary that the ‘know your customer’ procedures established by the institution allow for the collection of sufficient information to develop a ‘customer profile…’
“The customer profile should allow the financial institution to understand all facets of the customer’s intended relationship with the institution, and, realistically, determine when transactions are suspicious or potentially illegal. Internal systems should then be developed for monitoring transactions to determine if transactions occur which are inconsistent with the ‘customer profile.’”