Counterterrorism Blog

Last week Andy Cochran posted about the post-Katrina balancing act between providing regulatory relief to Katrina-affected banks and customers and the Bank Secrecy Act reporting requirements (as toughened by the USA PATRIOT Act). Now the balance is tilted towards the regulatory relief side, with the regulators and key Congressmen ready to help Katrina-area banks and make a significant reduction in reporting requirements for all financial institutions. On September 15, the Federal Reserve Board reiterated the guidance first given on September 2 that "The Federal Reserve encourages depository organizations to use nondocumentary verification methods for affected customers that may not be able to provide standard identification documents, as permitted under the regulation." With respect to broader relief, a U.S. House Financial Services Subcommittee will hold a hearing this Thursday on the relief bill proposed by Rep. Jeb Hensarling (R-TX). It appears that the bill will include an agreement between the regulators and the industry that financial institutions won't have to file currency transaction reports (CTRs) for transactions with businesses that have been customers for at least 12 months ("seasoned customers"). The House Financial Services Committee has passed regulatory relief bills for financial institutions before, but they haven't been agreed to by the Senate. In the post-Katrina climate, with concerns about nationwide economic growth added to the desire to help the affected area's businesses, the Hensarling bill has a much better chance of success.