Posted on: Thursday, October 2, 2003

Financial institutions feel Patriot Act's effects

Associated Press

NEW YORK — Don't be surprised if it takes a bit longer to open a bank or brokerage account or to sign up for mutual funds.

As of Oct. 1, most of the nation's financial institutions — banks and credit unions, securities brokers, mutual funds and futures dealers — must comply with the consumer identification provisions of the USA Patriot Act of 2001.

The insurance industry is still awaiting final regulations from the Treasury under the act, but eventually will be adopting the changes, too, said Victoria Fimea, senior counsel for litigation at the American Council of Life Insurers.

The USA Patriot Act, enacted by Congress after the Sept. 11 attacks, was designed to give federal authorities broader powers to go after terrorists. The provisions affecting financial institutions are aimed at making it difficult for criminals and terrorists to launder money or finance illicit activities.

Consumers will be affected when they open new accounts.

In most cases, consumers will be asked to show a government-issued photo ID, such as a driver's license. They also may be asked for a utility bill or lease to prove where they live. In some cases, applicants' names will be run against computerized data bases to verify their identities.

If there are inconsistencies, there will be requests for additional information.

Under the rules, the financial institutions must maintain records on the accounts for five years and, if necessary, cross check them with U.S. government files of suspected terrorists.