EDITORIAL: Suspecting the Unsuspecting

Banking has entered a new era in which we must be suspicious of unsuspicious-seeming people. We need to know who they are, where they do business (or other stuff) and where their money comes from. Financial institutions are called upon to do this because financial institutions function as a funnel through which money must - eventually - move. Sooner or later, criminals and terrorists, as well as the innocent majority, must use banks.

Suspecting our very own customers tends to go against the grain - just as not asking for a spouse's guarantee goes against the commercial lender's instincts. After all, we did a lot of work to get those customers in the door. We want them and we want their business. And when we succeed in getting their business, we are asked to be suspicious of the very people we have struggled to bring in.

It is also not in our nature to be suspicious of people "like us." We like to be comfortable and welcoming. We are in this business because we like this business and we like - usually - our customers. This makes us vulnerable to those who wish us harm.

A proven way to run a scam is to pass onself off as just what the target is looking for. In the case of banking, the target (the bank) is looking for a customer with money or a customer who needs and qualifies for a loan. And the bigger the deposit or loan, the better. It gets us that much closer to our goals.

The key to a successful customer identification/suspicious activity reporting program is knowing the difference between the customer whose business goals are legitimate and the customer who wants to do us harm. How do we tell the difference?

Clearly, suspecting anyone whose ancestors did not come from Europe, parts of Asia, or Central or Southern Africa is neither viable nor accurate. There are plenty of good people from those countries. (And despite the millions of scam letters, there are plenty of good, honest people from Nigeria.)Our challenge is to suspect the "wrong 'uns" without them knowing that we suspect them and without letting the legitimate and wanted customers knowing that we have tested them also. This is more than a compliance issue; this is a service issue.

In many ways, compliance is simply service - albeit mandated service. Sometimes the best way to comply is to stress service at least as much as compliance. They go hand in hand.

Excellent service to good customers is just plain common sense good business. It is how we get and keep customers. We smile, we offer products to meet their needs, we help. We get to know customers so we can give them excellent service and even anticipate their needs. Service is how we keep customers loyal to us.

When it comes to sniffing out suspicious activity, service also plays an important role. Individuals conducting criminal activities, whether involving drugs or terrorism, generally don't want you to know much about them. They certainly don't want you to know anything about what they are doing. They may be friendly on the surface, but any such response is going to be merely superficial.

One way to identify the suspicious customer is to give that customer excellent service - personal service with a smile. There is probably nothing more threatening to a person trying to hide what he is doing than a banker who is giving that person a lot of personal, friendly attention.

Here's where service becomes important for sniffing out the criminals. They want anonymity, not personal service. Seeing how a customer responds to friendly, personal service may tell you more than all the questions FinCEN can think of to ask them. Try it!

Copyright © 2003 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 4, 4/03