Has anyone adopted a specific enhanced due diligence policy for charities, schools or other nonprofits? I have been at seminars where law enforcement has suggested that we apply increased scrutiny for Islamic charities, schools and mosques. This sounds racist to me but I was thinking that we need to establish extra KYC procedures for such entities and/or foreign charities in general. Our bank does alot of international business. Any thoughts or comments

I do extra diligence on charities...
I maintain a file on them, the registration, the signers and other docs.
Monthly I look at the activity in and checks out to see where the monies are going.
I don't think it is racist... it's 9/11 civic duty.

Do you require a list of donors? Do you also have foreign charities?

I do not require donors. I look at the checks in the deposits for the donors.
I don't have any foreign charities as customers, but I look at everything as it may appear to be local and then the activity suggests otherwise.

You can see if a charity is listed with www.guidestar.org. You can also order a copy of their tax return (Form 990) from Guidestar. I believe you can sign up for free to receive this information (.pdf file)

Additionally, here is some information from the IRS on non-profits: http://www.irs.gov/charities/index.html

I am an authorized signer on the account of a non-profit organization. The account is at one of the major banks in this country.

One Saturday, when I went to deposit some donation checks, the teller, in a very friendly manner, asked me about our organization, what did we do, who did we serve, how large was our group, and that kind of stuff.

Someone at this bank did a very good job of teaching tellers how to ask due dilligence questions without being offensive.

Okay, and picture the somewhat shocked look on the teller when I replied that we rescued ex-racehorses that would otherwise be sent to the slaughterhouse so their meat could be shipped overseas for human consumption.

But, he recovered and asked how many horses we had, where we had them, and so on. At the time, we had 18 horses, and we sponsored their care all over the country - some in Southern California, some in Kentucky, some in Virginia, some in New Jersey, and some in New Hampshire. We receive donations from people all across the country, and support horses all across the country.

(Now repeat after me....HORSES are NOT terrorists!)

If you notice, these same questions are also business development questions. They allow you to determine if there are other products or services you could sell to the client.

When the Fed began pushing "Know Your Customer" about 10 years ago at large banks, I was at a bank that had cross-selling down pat. We did not have to add one policy or procedure, other than an overall statement about Knowing Your Customer and linking all of the pertinent policies and procedures.