A recent proposal by the Financial Crimes Enforcement Network to renew its customer identification program requirements dramatically underestimates the number of new bank accounts opened each year and, as a result, underestimates the compliance burden of the rule on banks, the American Bankers Association said today in a letter to the agency.
FinCEN in June proposed to renew without changes its Bank Secrecy Act information reporting requirements. As part of the renewal, the agency estimates that roughly four million new bank accounts are open each year. However, that estimate is based on low-cost Bank On deposit accounts for the unbanked and underbanked, as reported by just 35 financial institutions. FinCEN also estimates that CIP collection takes two minutes per new account.
ABA estimates that U.S. banks open on average 140 million to 160 million accounts every year, which include deposit accounts and other asset accounts such as credit cards, loans, safety deposit boxes and certificates of deposit, just to name a few. And while ABA believes the two-minute estimate for CIP collection is too low, using that figure still yields an annual estimated compliance burden of around five million hours for banks.
“It is wholly inconsistent with a risk-based approach to BSA compliance to require banks to repetitively collect and document redundant information on large numbers of low-risk accounts,” ABA said. “Sensible reforms to the CIP rule would eliminate duplicative and unnecessary paperwork while preserving banks’ ability to know their customers and free more compliance resources to monitor for high priority suspicious activity, as part of an overall risk-based approach.”
