Question & Answer

Question: We have been trying to upgrade our methods of opening accounts. How much information can we require from a customer as to their business or the source of their deposits without invading financial privacy?

Answer: You are not "invading financial privacy" when you ask a customer questions about their business. Financial privacy has to do with giving information about customers to government agencies or agents, such as Internal Revenue Officers or Police Officers. What you may be concerned with is "invasion of privacy."

Asking questions of customers and learning about their business is about the most important thing your new accounts person does. Don't feel you are invading privacy. Under the "Know Your Customer" rules the financial industry is facing, those questions will be necessary. The Bank Secrecy Act and the subsequent Anti-Money Laundering Act put you in the position of being required to know the source of your customer's funds.

And you have read in the HOTLINE (Vol. II, No. 10) of the form 8300 that must be filed by our customers when they do retail business for over $10,000 in cash, or in combinations of cash and certain checks. The 8300 is similar to our Currency Transaction Report, Form 4789, but is filed directly by our customer (i.e. Auto Dealer, Antiques, etc.) By 1994, we may be required to identify which of our customers should be filing those 8300s.

Let your new accounts person ask all the questions they can. Make it as easy as possible by giving them a new accounts form to fill out that has questions on it-it may help. You need to "Know Your Customer."

Copyright © 1992 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 3, No. 7, 12/92