[Congressional Record (Bound Edition), Volume 145 (1999), Part 2]
[Senate]
[Page 3076]
[From the U.S. Government Publishing Office, www.gpo.gov]




    PROHIBITION OF THE IMPLEMENTATION OF THE ``KNOW YOUR CUSTOMER'' 
                              REGULATIONS

 Mr. BROWNBACK. Mr. President, I wish to make a few remarks in 
support of Senator Allard's bill that would prohibit the implementation 
of the ``Know Your Customer'' (KYC) regulations by the four federal 
banking agencies (Office of Comptroller of the Currency, Office of 
Thrift Supervision, the Federal Reserve, and the Federal Deposit 
Insurance Corporation). As a cosponsor of this legislation, I am 
concerned that this proposal would bring a regulatory imbalance to 
banks and their competitors, increase regulatory burdens on the banking 
industry and potentially violate the privacy of consumers. Once again 
the federal government has prescribed regulations that are costly to 
businesses and intrusive to citizens.
  These regulations would put the banking industry at a disadvantage 
with their nonbank financial service competitors because many of them 
are not required to develop and maintain ``Know Your Customer'' 
programs under the proposal. Many bank customers would correctly view 
this as an intrusion of their privacy and might elect to conduct their 
banking business at other financial institutions.
  Current criminal reporting requirements already mandate that 
financial institutions report violations of federal law to the Treasury 
Department after uncovering potential money laundering, insider abuse, 
or any violation of federal law. Ironically, under the proposed 
regulations by the federal banking agencies, a financial institution 
would not be required to report a violation after it has occurred. The 
proposed regulations create more burdensome and invasive regulations by 
requiring banks to investigate all customers activity to see if any 
violation of federal law has taken place, not just those suspected of 
criminal activity. This could be time consuming and extremely costly 
for banks.
  The proposed regulations have generated many concerns from both 
consumers and the banking industry. A proposal that requires bankers to 
analyze all customer transactions would violate the public's trust and 
confidence in the banking industry. The financial service sector has 
been very effective in reporting possible violations of the law, while 
at the same time protecting customer information. The proposed 
regulations do little to increase the ability to curtail illegal 
activity and would severely harm America's financial institutions and 
the customers they serve. I encourage the four federal banking agencies 
to reconsider their proposed regulations and withdraw them.

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