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After an aggressive round of disciplinary actions against five local financial institutions, Florida bankers will finally get a chance to discuss — and protest — the way federal banking regulators are interpreting and enforcing the nation’s anti-money laundering laws. The Florida Bankers Association and the Florida International Bankers Association have separately arranged at least four meetings in the next month with regulators from the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Deposit Insurance Corp., the Federal Reserve, Florida Department of Financial Services and the Treasury Department’s Financial Crimes Enforcement Network. “Our bankers are telling me they are getting inconsistent applications of the Bank Secrecy Act and the USA Patriot Act,” said Alex Sanchez, chief executive of the Florida Bankers Association in Tallahassee. “We need a consistent application,” he said. “We are talking about new regs and new laws. We want to make sure when the examiners come that we know what is required to be in compliance. Right now even the examiners will tell you it is a work in progress. They need more time; we need more clarity.” The heightened scrutiny came after Congress intensified pressure on regulators to make it difficult for money launderers to use the U.S. financial system to help underwrite terrorist and narco-trafficking activities. The rules emanated in part from the 2001 passage of the USA Patriot Act that tightened the 1970 Bank Secrecy Act. The scheduled face-to-face meetings follow five enforcement actions in nine months against locally based banks. A sixth institution has disclosed in its Securities and Exchange Commission filings that it is working with federal banking regulators to resolve compliance issues. Organizers are hopeful the meeting will provide bankers a clearer sense of the regulators’ expectations. They also hope that regulators will listen to bankers’ recommendations about ways to meet their goals and make it less burdensome on the banks. “This is to allow everyone to express their views,” said Miami banking attorney Bowman Brown, who is a director and chairman of Florida International Bankers Association’s legal and regulatory affairs committee. The regulations involve know-your-customer requirements that force banks to do extensive background checks and other due diligence to better understand a customer’s profile before opening an account. Many banks are being forced to adopt written policies and greatly expand their compliance departments to ensure all procedures are followed. The training of all employees about anti-money laundering laws is a top priority. The requirements also often require the purchase of software upgrades to better track suspicious activities that must be reported to regulators and possibly forwarded to law enforcement. Banks face huge costs in creating and implementing compliance programs; but the cost of not complying could be even worse. Disciplinary actions are dreaded by bankers because they restrict the little flexibility that institutions have in the United States’ most regulated industry. Those actions often require institutions to provide capital injections, replace personnel, eliminate business lines and halt any expansion plans. Fines, loss of charters and the banning of individuals from working in the banking can also result from severe cases of noncompliance. Public reprimands tend to last into the years, not months. “These are complex and oftentimes difficult regulations to comply with,” said Robert Brookes, president and chief executive of Miami’s Eagle National Bank. His institution entered into an enforcement order Dec. 20 with the comptroller’s office. Brookes is a director of the Florida Bankers Association. “We bankers do our best to ensure that our banks are safe and sound,” he said. “I don’t think this is a safety and soundness issue in the least.” In Eagle’s situation and many of the other institutions reprimanded, the banks are generally well capitalized and profitable, but were found to have failed to adhere to every aspect of the expanded anti-money laundering rules. Everything will be up for discussion beginning Jan. 27 when William J. Fox, the director of the Financial Crimes Enforcement Network at the Treasury Department, and his top regulator, William Langford, are scheduled to participate in a two-hour town hall meeting with an estimated 150 bankers. On Feb. 1-2, members of the six directors of the Florida Bankers Association are scheduled to fly to Washington, D.C., to meet with the OCC, the FDIC, the Federal Reserve and the OTS. On Feb. 8-10, some 120 members of the Florida Bankers Association are to fly to Washington to meet with the Florida legislative delegation and regulators. This is an annual event that this year will focus primarily on the stepped-up regulatory enforcement of anti-money laundering laws. On Feb. 9-11, the Florida International Bankers Association is bringing down top officials from the comptroller, the FDIC, the Federal Reserve and the Florida Banking Department to speak at its anti-money laundering and USA Patriot Act conference. The conference is at the Radisson Hotel just north of downtown Miami, and is expected to attract about 600 people, a 50 percent increase compared with last year’s conference. The Financial Crimes Enforcement Network’s Fox said it is important for regulators to meet with bankers so they can explain themselves and listen. He said he expects his town hall meeting next week to be straightforward on both sides. “We are accountable and responsible for the act,” Fox said. “This is a big burden on the industry. I think what we have here in this situation are people of goodwill on all sides — regulators, the Treasury Department, banks, the institutions — all trying to do the best job they can. One of the most important things that we can do is enter into this sort of dialogue. I actively welcome the dialogue, even if it is going to be sharp. It is important for us to hear it.”

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