"Know Your Customer"???

This article is from the Sovereign Society. To become a subscriber go to www.sovereignsociety.com

Friday, August 31, 2007 - Vol. 9, No. 207
I've Heard of "Know Your Customer" Rules,
But This is Ridiculous!


Today's comment is by Erika Nolan, The Sovereign Society's founding publisher and executive director.

Dear A-Letter Reader,

I walked into a local branch of Citibank last week along with a business partner. The office was nothing spectacular - just another Florida strip mall with a Citibank sign. I was there to open a simple business bank account for a new wealth consulting firm I've founded.

Let me tell you, I've opened my fair share of bank accounts, in the U.S. and abroad. So I was confident that we had all the necessary documents - tax ID number, corporate articles of incorporation, photo IDs, proof of address, etc. Plus, we had a check to fund the account on the spot. Sounds good, right? Well, not exactly.

The "Banking Relationship" Associate that we met with was cordial - he seemed like a respectable guy. He told us that Citibank wanted to help us with our business needs. But, that was before our conversation got underway.

Attacked By Questions
Of course, I wasn't shocked when he asked the nature of our business - a bank needs to know if we're bakers, painters or real estate agents. But when we told him that we were private wealth consultants, it threw him for a loop. We explained that the firm's primary objective is to create international financial wealth plans for individuals...and that's when the questions started. Here's a quick run down:

Would the firm be registered with the SEC? Do you give investment advice? If you don't, who does? How many clients will the firm accept? What did we mean when we said "international?" Did we have a business plan statement that the Citibank Compliance Department could review? How about client contracts - the Compliance Department needs to review those as well. Also, can you furnish invoices between you and your clients - preferably at least three - that will show us the source of the money?

Of course, this was just the tip of the bureaucratic iceberg. He wanted to know if international wires would be sent to and from the account. "It's a possibility," we told him. He let us know that international wires are a "red flag," which we immediately questioned.

Mr. Associate kindly told us that as one of the largest banks, Citibank was under the microscope and closely scrutinized by the government. They have to be extra careful. While the "other" regional banks, like Sun Trust, could easily help us, Citibank had to go the extra mile to cover their behinds. They were, in Mr. Associate's words, "a target." I began to see a bull's eye growing on his forehead. Was he beginning to perspire?

With many years of international financial experience between my partner and I, we assured Mr. Associate that we knew all about the "Know Your Customer" rules, but we thought this was going a bit too far. But, there was more.

More Hoops to Jump Through
Should the average amount in the account vary by a certain percentage on a given month, the account would be frozen automatically by the bank. They'd need to know why our firm was "suddenly" depositing more funds. We explained that an increase in funds would mean we had taken on new clients, which would be great news to any firm. But apparently not to Citibank. Make more money and suddenly you're a crook.

Mr. Associate again let us know that he was sure a less prestigious regional bank, like Sun Trust, would welcome our business...without all the limits, the questions. But, it would come without the sterling Citibank worldwide reputation. Mr. Associate assured us that when our clients saw that we banked with Citibank, they'd know we were truly legitimate.

Hmm, I am pretty sure that advertising the bank you use has never resulted in more business, better clients or more reputable partners. But Mr. Associate certainly thought it would.

We thanked the gentleman for his time and left without opening the account. But, the meeting was not a waste of time because he had given us some good advice. We went to a local branch of Sun Trust. With our ample documentation, we had the account approved, opened and funded in less than 30 minutes. The Sun Trust representative even wished us good luck with our new venture!

In Wealth & Prosperity,
ERIKA NOLAN, Executive Director
www.sovereignsociety.com