News Release

Enzi asks FDIC to scrap new rule, cites privacy, regulatory concerns

Washington, D.C. --"Know Your Customer," sounds like a phrase business managers might hear at a seminar on how to improve their operations, but this is no better business tip. It's the name of a new rule being proposed by federal bank regulating agencies and U.S. Senator Mike Enzi of Wyoming is very concerned about the proposal's affect on personal privacy rights and over regulation of small community banks.

Enzi and two of his colleagues on the Senate Banking Committee, Sens. Wayne Allard of Colorado and Rick Santorum of Pennsylvania, recently wrote to the Federal Deposit Insurance Corporation (FDIC) asking the agency to withdraw its "Know Your Customer" proposal.

The rule is an attempt by the FDIC and similar proposals by the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency to find and report "suspicious" activity that may be connected to drug trafficking, money laundering or other criminal activities. The rule would generally require banks to know their customers' source of funds, determine "normal and expected" account activity, monitor the customers' account and then report it to law enforcement authorities if the customer behaves "abnormally" or unexpectedly concerning account transactions.

According to Enzi's letter a major problem is that "the proposal would require banks to gather information about a customer before there is even a suspicion of illegal activity."

"Most of us see the terrible things drugs and the crime associated with drugs are doing to our society and we are scrambling to find a way to put an end to our problems, but in our zealous search for a solution we have to be very careful not to punish law abiding citizens," said Enzi. "This proposed rule only adds fuel to the fire in a time when the concern for privacy and government intrusion in our lives is very real."

Enzi is also concerned about the rules potential financial impact on small Wyoming banks and thrifts. Compliance costs would be passed on to the customer.

The comment period on the proposed rule ends March 8, 1999. If you have comments you can mail them to the Federal Deposit Insurance Corporation, 550 17^th St. NW, Washington, DC 20429 or email to the FDIC at comments@fdic.gov.

For a copy of Senator Enzi's letter either call or e-mail Coy Knobel at the address above