SEC puts its foot down in name of the Patriot Act

Filed under: Banking & Finance |

Because it was notably absent from news coverage, many people might not have heard that the Securities and Exchange Commission took its first enforcement action last month under the USA Patriot Act.

More than four years after passage of the Patriot Act and its anti-money laundering provisions, and after dozens of audits, the SEC made its first ruling — against the Los Angeles-based broker dealer Crowell, Weedon and Co.

Crowell, Weedon allegedly failed to document customer identity verification procedures between October 2003 and at least April 2004, when it opened about 2,900 accounts for customers.

The Patriot Act provisions call for broker dealers to keep certain reports and records to facilitate the prevention, detection and prosecution of international money laundering to finance terrorism.

Crowell, Weedon had created procedures for account verification, but employees apparently weren’t following them.

There has been no indication of actual money laundering in Crowell, Weedon accounts.

The firm was not fined, but was ordered to “cease committing violations.”

The SEC uncovered the violations during a random anti-money laundering audit, and SEC officials said there was no suspicion of money laundering before audits commenced.

FDIC pushing safety of e-commerce

Hey, it’s safe to bank and shop on the Internet if the FDIC says it is, right?

The Federal Deposit Insurance Corp. is holding three symposiums aimed at convincing consumers that e-commerce is safe.

The half-day meetings will bring together experts from the government and the private sector to discuss ways to maintain public confidence in e-commerce and combat on-line identity theft.

It’s not surprising that banking and consumer groups are trying to ramp up efforts to instill confidence about e-commerce because a significant number of people are leaving their Internet shopping and banking ways behind them.

Spooked by the prospect of hackers stealing sensitive information, nearly 14 percent of people have stopped paying bills online, and 53 percent have stopped giving out personal information online, according to the Gartner Group, an international Internet technology research and advisory firm.

Symposium speakers will discuss what financial institutions and businesses are doing to ensure the security of banking and online purchases, as well as what consumers can do to protect personal information.

BofA’s modern ATMs spreading

Self-serve banking just keeps getting easier and easier.

The latest news in the trend came last week when the Bank of America Corp. announced it will install about 1,500 ATMs nationwide that accept checks directly – no envelopes or deposit slips required.

No doubt the technology will be coming to a neighborhood bank near you shortly.

After a deposit, the ATM prints an image of the check on the receipt. By the end of the year, the bank also will credit customers’ accounts on the deposit day until 8 p.m.

Most ATM transactions are simple cash withdrawals, as many customers continue to prefer making deposits at the inside counter.

The bank hopes customers will be more comfortable depositing money in the new machines. The technology also is expected to save the bank money.

Bank of America said the number of deposits at the machines increased by an average of 50 percent last year, reducing customer demand for tellers.

Bank of America, the nation’s largest retail bank, operates about 16,700 ATMs nationwide, and about 12,000 accept deposits.

The company installed the first new ATMs in 2003 in Charlotte, its headquarters city. It operates about 60 such machines in the Carolinas.

FDIC Deposit Insurance Fund’s 1Q results

The Federal Deposit Insurance Corp. is reporting that its Deposit Insurance Fund ended the first quarter of 2006 with a fund balance of $49.2 billion.

The DIF was created March 31 when the FDIC merged the Bank Insurance Fund and the Savings Association Insurance Fund, pursuant to provisions of the Federal Deposit Insurance Reform Act of 2005.

The DIF balance of $49.2 billion compared to a combined Bank Insurance and Savings Association Insurance Fund balance of $48.6 billion at the end of last year, representnig an increase of about 1.2 percent.

The DIF reported comprehensive income of $596 million for the first quarter of 2006 compared to the former system’s $110 million for the same period in 2005.

The $486 million increase is primarily due to the recognition of earned exit fees of $346 million, a decrease in the unrealized loss on available-for-sale securities of $110 million and a decrease in the provision for insurance losses of $26 million.

The DIF reported an unrealized loss on its available-for-sale securities of $57 million for the first quarter of 2006 compared to $167 million for the same quarter last year.

Rob Larimer covers banking and finance for the Colorado Springs Business Journal.