A Sticky Subject

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This article is not about food, cotton candy, or household cleaners. Or anything tangible, anyway. It’s about obligations and how they are handled.

Let’s talk about recent history. September 11, 2001 changed the world. As you likely have heard, every person remembers exactly where they were when they first heard about the two airplanes crashing into the World Trade Center. I was at the member services counter at around 9:15 attending to the member who was then Chief of Security of the OAS. Someone walked in and said that a second plane had crashed into the other Twin Tower (that’s their name in Spanish). Everyone went quiet.

As I processed Chief of Security’s transaction I said quietly “You know, I grew up in a country always under terrorist threat. It’s not an accident.” and he simply answered “No, it isn’t”. He took his receipts and said, also very quietly “Let me look into it, bye”. About 45 minutes later he ordered all the OAS Buildings evacuated and sent everyone home.

Nothing was the same in the United States after that. We all know about the aftermath, the good stories and the bad stories, the sadness, the war in Afghanistan, al-Qaeda and Osama bin Laden. The repercussions of that attack are still felt today, worldwide.

On October 26 2001, George W. Bush signed the typically American significantly coined Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. The USA PATRIOT Act.

I bring all this up because the Patriot Act was the harbinger of a wave of changes in the way the United States and many other nations do things. It affected the government, institutions, business and people.

I am not going to explain the many ways in which the Patriot Act affects you, except for where it relates to the Credit Union.

Many changes have taken place in the way financial institutions do business after the Patriot Act went into place. Because the government realized a whole lot of the funding that had paid for the attacks of September 11 had originated in the United States or had been processed via U.S. banks and it had gone undetected… the practices of all financial institutions came under fire. The government made many, many changes.

To give you an idea of how specifically we must follow this law, there is a set of requirements comprised under the heading Know Your Customer (KYC) that forces all financial institutions to ascertain, using a set of rules known as Enhanced Due Diligence, the identity of any person transacting business with them. So, when you open an account, we need to take several steps to do that, beyond looking at your identity cards.

Know Your Customer also makes the Credit Union responsible for knowing what your standard business practices are. By this I mean, how you handle your money. Your income, average expenses, people you transact business with.

Why do they make the Credit Union do this? That’s the sticky part. Because the Credit Union is responsible for also noticing when you do something unusual, and they are also forced by law to ask you to explain it and decide whether it’s OK or not for them to let you do it.

I worked at OAS Staff FCU when this Know Your Customer system was put into place. As a matter of fact, I was the person who drafted what we should and could do and still continue doing business in a way that satisfied the United States government and did not disrupt the business of each of our members too much. It was a very delicate game of “this is OK” and “this is not OK” and “this we have to question” that was drafted to figure out what the government wanted. But we got the system going and by law it is still running today.

This may seem like a violation of your privacy. That is up to you to decide. Yet the Credit Union had and has no choice in the matter. Not only that, with the passing of time the specific requirements of the KYC and the Enhanced Due Diligence have become more specific and astringent. They want the Credit Union and financial institutions at large to know more and get better information.

This means that many of you are likely familiar with the various employees of the Credit Union who may have contacted you to ask you the reason of a loan, a transaction, a wire or a direct debit, with the small explanation that the US Patriot Act requires the Credit Union to do this. Many of you will find the questions nosy and even rude. From day one that was the concern of all the staff of the Credit Union, and I am sure that they still worry about it today. Because they have to ask you, and wish they didn’t have to.

Riggs Bank was forced shut down
 because of  huge violations of Anti-
Money Laundering procedures
regarding the Pinochet fortune,
among others.

Many financial institutions took the easy way out. After Riggs bank –a bank whose clients had included Abraham Lincoln himself- was found to have been hiding the entire Pinochet fortune, Bank of America closed the accounts of many Credit Union members who were foreign citizens and had banked there for years, rather than face the trouble of looking into their finances more closely. The Credit Union chose to continue serving the members, because that is the credit union culture. Even if it means getting into sticky situations now and then.

And you know what? A report published in Spain by its intelligence service just last week says that they have identified a network of 250 phone calling businesses, butchers, money wiring services and grocery stores that are currently financing Islamic Terrorism abroad.

In Spain they don’t have laws like the Patriot Act.

So, when I think about it, I become resigned to the fact that these procedures are indeed there to help all of us, by trying to put a stop to the funneling of money into the wrong hands. And I hope that you will agree, and cooperate with the Credit Union when they come asking.