ABA Banking Journal - August 2007 - (Page 16)

briefing ABA Chairman’s Position ABA Resources Continued from page 15 EARL D. McVICKER CEO, Central Bank & Trust Co. emcvicker@aba.com Check out ABA’s Grassroots Advocacy ABA’s Grassroots Advocacy Resource Center is your online place to stay up to date on key banking issues and to get involved. On this web page at www.aba.com/grassroots, ABA provides you with the means to easily send letters to your members of Congress on important industry issues, such as continued credit union expansions and the Farm Credit System’s Horizons Project initiatives. Bookmark ABA’s Grassroots Advocacy Resource Center today and get involved in shaping your industry’s future. Questions? E-mail James Ballentine, ABA director of grassroots and community outreach, at jballent@aba.com or call 1-800-BANKERS. Deconstructing banks’ regulatory burden ACTOR JOE MANTEGNA ONCE SAID, “You talk to the real cops and they say ninety percent of it is paperwork.” I think real bankers feel the same way about our own profession these days. Seems our core business—making loans to help start businesses, improve our communities and grow our bank—has given way to dotting i’s, crossing t’s, and filing the requisite reports. Paperwork—or the electronic equivalent— seems to be the name of the game; and the more the better. That’s especially true when it comes to policing financial crimes. Suspicious Activity Reports filings have increased nearly 600% in the past nine years, landing at 567,080 in 2006. In addition, the number of Currency Transaction Reports filed annually now tops 13 million, according to the Financial Crimes Enforcement Network. These filings cost banks time and money. FinCEN estimates each report takes about 25 minutes to file and record, which means financial institutions are spending 6.28 million staff hours handling CTRs each year. This has diverted resources, not only from other compliance issues, but also away from safety and soundness issues. While bankers and regulators are focusing on reporting on seasoned customers, we are less focused on the most critical aspect of bank risk—asset quality. These resources would be well spent if the transactions reported were truly suspicious and resulted in law enforcement action. Unfortunately, about three-quarters of the CTR filings were for routine transactions by legitimate business customers. Similarly, if we file too many CTRs on lawabiding businessmen and women—individuals whose identity we have already verified—our government risks overlooking the filings that are potentially most meaningful. A survey conducted by ABA’s Center for Regulatory Compliance this year found that 48% of mid-sized banks ($1-19 billion in assets) have three or more full time compliance employees dedicated to BSA/AML functions, and banks larger than $20 billion average 33 employees assigned to BSA/AML duties. The survey also found that 58% of compliance officers say regulatory emphasis on BSA/AML has diverted exam resources away from other compliance obligations. So what is your trade association doing to minimize your compliance burdens? We are sending suggestions to the House Financial Services Committee, which has signaled an interest in picking up where last year’s reg relief bill left off. We also continue to push an idea we came up with in May 2005 to exempt what we call “seasoned customers.” The approach has resonated with many in Congress. In fact, the House has passed a bill three times that would eliminate the need for a bank to file CTRs on transactions of more than $10,000 with customers that have been doing business with the institution for 12 months or more. At the agencies, we’re asking regulators to make many of their current proposals—including the draft model privacy notice and subprime mortgage disclosures—more flexible and less prescriptive. These efforts build on recently enacted relief measures that reduce CRA data reporting for banks between $250 million and $1 billion in assets, eliminate certain paperwork requirements under Regulation O, and extend the small bank exam cycle. Taken individually, these relief measures may not seem like much. But banks’ current compliance load built up, rule by rule, over time. Deconstructing it will also take time. BJ Focus on fraud and security Fraud and security threats pose a continuing challenge for banks. ABA’s website features a section designed to help bankers prepare for these and respond to threats. The section, at www.aba. com/Solutions/Fraud provides resources and solutions targeting the various types and aspects of fraud that banks encounter. There you will find tools for prevention, measurement, reporting and prosecution. The section also includes materials and surveys to help banks understand the deposit account fraud experiences of other banks. To learn more, e-mail Doug Johnson at djohnson@aba. com or call 1-800-BANKERS. www.ababj.com/subscribe.html 16 AUGUST 2007/ABA BANKING JOURNAL http://www.aba.com/grassroots http://www.aba.com/Solutions/Fraud http://www.aba.com/Solutions/Fraud http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - August 2007

Contents Editor's Column The Unbankers Snapshot: Do Share Repurchases Signal More M&A Activity Sleight of Mind Goals Behind Proposed ABA/ACB Merger ABA Resources ABA Chairman's Position Should You Sell Those Nonperformers Pass the Aspirin Branch Design - Evoking a Sense of Place Two Banks Take the LEED Move Over, Buddy Service Feature: Bankers' Banks Directory Websites: What's State of the Art for Banks? Citi Mobile to Go Strong with iPhone? Date First, Marry Later Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - August 2007

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