Academic journal article ABA Banking Journal

The Man Behind FinCEN: William Fox, the New Head of the "Black Hole" Where You Send Your SARs and CTRs, Talks about Terrorism Challenges, Banks' BSA Frustrations, and Getting Ahead of the Game

Academic journal article ABA Banking Journal

The Man Behind FinCEN: William Fox, the New Head of the "Black Hole" Where You Send Your SARs and CTRs, Talks about Terrorism Challenges, Banks' BSA Frustrations, and Getting Ahead of the Game

Article excerpt

Some things, it seems, will never change. As long as there are federal agencies and federal regulations, bankers will bridle under the authority of both. And, frequently, they will let Washington know just how they feel about it.

Case in point: the complaints that bankers regularly voice about the Bank Secrecy Act and related compliance challenges. The industry clearly recognizes the key role it plays in the anti-drug, antiterrorism battle, yet the level of work and expense involved in that duty can at times be staggering. And, as has been demonstrated by the recent Riggs situation, the penalties for noncompliance can be severe.

Further, BSA/Patriot Act/anti-money-laundering regulations were rated as the most expensive to comply with last year's Compliance Watch study, jointly sponsored by the ABA, Bankers Systems, and ABA Banking Journal (ABA BJ, June 2003).

William J. Fox, director of the Treasury Department's Financial Crimes Enforcement Network (FinCEN), is well acquainted with these views. He's especially cognizant of bankers' frequent, ongoing complaint that they file tons of paperwork with FinCEN and yet, frequently, have no idea whether their efforts have done anything beyond cost them money to process forms and fill federal filing cabinets.

Fox, 43, who assumed his post in December 2003, is the fourth director of FinCEN since its creation in 1990, and every director has heard such complaints. One thing that separates him from his predecessors, however, is that he brings a bit of family banking history to the matter.

Appreciation of the banker viewpoint

Fox's great-grandfather started what is now First National Bank of Albion, Neb. Fox's grandfather, L.J. Fox, Sr., who joined the bank straight from high school, made his mark on banking history shortly after World War II, the FinCEN director relates, when the Comptroller's Office issued a swarm of new regulations.

"My grandfather used to lend money by literally going to the farmers' operations and looking to see how they kept their barns," says William Fox. "Talk about 'knowing your customer'--he knew who ran a good farm and who was hitting the bar at night. Albion was a town of 2,000 and you knew everybody."

Fox's grandfather felt he knew his business better than the bureaucrats. He decided to write a letter to President Harry Truman, objecting to the new regulations.

"In the letter he said, 'I'm a community banker and a citizen and I've paid my taxes dutifully for years. I just received this bulletin, and I'm trying to run a business, and really, you know these regulations are just absolutely --'," William Fox recounts, declining to fill in the last word. Let's just say banker Fox was steamed.

Having vented, the banker went about his business. Like many bankers who tell Washington off, he no doubt figured his letter had been "round-filed" at worst, filed and forgotten at best. But years later, in the 1970s, a Truman senior staffer sought out the banker to tell him what had really happened to the letter.

Not only had Truman actually read the letter, but it apparently struck a chord with him.

"My grandfather was told that Truman liked the letter and kept it. He used to carry it around in his pocket, and when they had a regulatory proposal on the table, he would pull out the letter and show it to people. My grandfather was told that Truman actually had copies of the letter distributed amongst his cabinet. His message was that 'We have got to be careful about regulations'."

Though FinCEN Director Fox didn't work in the family's bank himself (his father briefly did), the story is more than a good anecdote. He agrees with banker complaints on certain points. For instance, in recent testimony ABA suggested that bank examiners had to stop bringing a strict "peer group" mindset to Suspicious Activity Report (SAR) compliance. Too often, the association testified, examiners will fault a bank if it doesn't file as many reports as like-sized institutions, ignoring what are sometimes major differences between the business profiles of banks of similar size. …

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