Tips to Simplify the Compliance Process
for International Payments

As a user of international payment services, over the past year you may have noticed a slight increase in the amount of client and payment beneficiary information Commercial Bank of America has requested when processing your transactions. These requests are mandated by longstanding federal regulations–and bolstered by a law passed after the 9-11 terrorist attacks.

The good news is that by providing Commercial Bank of America with clear, complete and accurate information about your organization and trading partners, you can contribute to faster and smoother global payment transactions.

"We have had some clients ask why we now occasionally request additional client information when we had always processed international wire transfers without questions in the past," says International Payment Services product manager John Smith. "The answer is that we are required to ask those questions, because we're now responsible for verifying that the international payments we process are reasonable and normal for a particular client's business."

Bank Secrecy Act
That responsibility is mandated by two significant pieces of legislation. The first is the Bank Secrecy Act, which became law in 1970 as part of a government effort to deter money laundering. It uses regulatory reporting requirements to create a paper trail for tracking large currency transactions.

The Bank Secrecy Act has been amended and expanded over time, but it basically requires a bank to obtain and maintain the kinds of standard client identification information (name, address, taxpayer ID number) that are needed for any account opening.

USA PATRIOT Act
The second significant piece of legislation is the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act) of 2001. The USA PATRIOT Act, passed after 9-11, expands Bank Secrecy Act provisions to include the tracking of money used to finance terrorism. The law requires financial institutions to implement systems and methods specifically designed to identify those funds.

"The USA PATRIOT Act doesn't really require new record keeping," Mr. Smith says. "However, it does mandate increased bank due diligence in monitoring and verifying information about international payments.

"If our clients are exchanging payments with non-U.S. parties in countries with lax anti-money laundering laws or ties to terrorism or with certain overseas correspondent banks, we may have to ask for additional information about those transactions to verify they are normal for those businesses. Obviously, getting that information can sometimes lead to slight delays in completing transactions."

Section 326
According to Mr. Smith, those reporting requirements could be further expanded if an additional PATRIOT Act provision, section 326, is signed into law. Although it is currently only a proposal, section 326 in its present form would mandate minimum standards for obtaining client information each time a new client opens an account.

"Those standards would include complete business information, such as articles of incorporation and an employer tax ID number, as well as complete information on each business owner, beneficiary owner and signatory on the business account," Mr. Smith says. "This would represent a significant increase in required information gathering, and I think it is likely that the proposed section will, in some form, eventually become law.

"Fortunately, international services clients can take proactive steps to ensure that current and additional reporting requirements don't hinder the prompt processing of their global transactions. The most important step is to provide the bank with clear, accurate and complete information at the start of your account relationship and at the start of each transaction.

"When one of our clients acquires a new overseas trading partner, if they provide us with accurate, basic information about that partner, such as the correct name and address, it will help expedite future transactions," says Jane Jones, a Financial Services Production Supervisor. "If a discrepancy occurs during a transaction, we will have this information available in our files to help clarify any confusion and resolve the issue promptly."