GRAND RAPIDS — Six weeks after the Sept. 11 terrorist attacks, Congress approved the Patriot Act to update the legal system to prevent further attacks.
One of these updates was an amendment to the Bank Secrecy Act, forcing financial institutions to create anti-money-laundering compliance programs. The programs are meant to prevent known or suspected terrorists from laundering money by checking the names of those involved in bank transactions against a list of suspected or known terrorists.
If the name has a match, the transaction is stopped immediately and an investigation is called.
The amendment is designed to stop individuals who “have committed, or pose a significant risk of committing, acts of terrorism,” according to White House Executive Order 13224.
The logic is that terrorists use property assets to launder money, so to clamp down on terrorist funding it is necessary to ensure that the people involved in the transaction are not terrorists and do not have terrorist ties.
Dan Heikkinen, senior vice president and staff counsel at the Michigan Bankers Association, said that bankers have always done background checks on their clients to know to whom they are lending money. The Patriot Act, he said, merely forces banks to formally report that information to the government.
He said the public reaction to the act has been one of compliance.
“The banks that I’ve had a chance to talk to say that hardly any customer has been adversely affected.”
Heikkinen also said that smaller banks would be affected more. “The burden is disproportionately large on small banks that have to implement the same system and procedures” because they have fewer resources to do so,” he said.
Russ Daniel, the senior vice president in charge of residential mortgages at Independent Bank-West Michigan, said that the main issue was not the monetary cost, but setting in place a process to make sure the bank was in compliance with the new regulations.
“Once the change (of the process) has been made, it hasn’t been a big problem,” he said.
He also said that people have been very accepting of the new regulation. “It has been pretty transparent to the customers. It is not anything that has really been an issue.”
Rita Vanderven, a resident of Grand Rapids who recently signed a mortgage, felt the same way. “It doesn’t threaten me because I’m not a terrorist and I don’t mind them asking other people.”
Not everyone is as accepting of the new regulation, however.
Noel Saleh, the Safe and Free Project staff lawyer for the Michigan Chapter of the ACLU, is one such individual, according to an article in The Times Herald.
In the article, Saleh is quoted as saying, “More and more of these records are available under the Patriot Act, but when they get them, there is a non-disclosure order. When the records are requested, there’s no requirement to let you know they’ve been obtained.”
Some officials of the American Bar Association report also being suspicious of the law, fearing it could undermine the lawyer-client relationship by forcing lawyers to disclose confidential client information.
Some also worry that companies will begin passing the costs of complying with the act along to their clients.
According to an article in Newsweek, California-based First American Corp. is already doing so, charging up to $30 for each person involved in the transaction. This could become an increasingly common trend, even though it is currently the exception rather than the norm.
Most individuals, however, seem undeterred by the procedure for the time being and accept it as a legitimate tool in the war on terror, according to Daniel.