Matching the Watch Lists

When the Patriot Act came along and OFAC rules were tightened, some of Trillium's other customers talked the vendor into providing a subscription service that would help them comply, and PNC helped define the requirements. Now Trillium digests the unstructured files delivered by the government and translates them into a format its software can understand.

Compliance with identity-verification and -matching regulations will cost PNC just over $1 million a year, Kunkel says, most of which is for back-office labor to investigate possible matches.

After several delays, the final rules for customer identification developed by the U.S. Treasury Department's Financial Crimes Enforcement Network and seven other regulatory bodies were published in April 2003, giving banks and other financial institutions an Oct. 1, 2003, deadline for implementation.

In addition to writing batch routines to search CIF for suspect records, Ford's developers created an interactive application for researching those records and determining whether there really is a high-probability match that must be reported to the government. They also created a Patriot Act compliance solution for PNC to sell to its mutual-fund service-bureau customers.

Smith says household-account matching is also important for compliance with the Federal Trade Commission's Do Not Call List, which allows individuals to specify they do not want to receive telemarketing calls. The law doesn't care that a customer who makes that request may be listed under slightly different names for different accounts. "If we call them because we haven't marked one record, we have a problem," she says. The federal law provides for fines of $11,000 per instance and some state laws are even harsher.

As far as the PNC folks know, none of the possible watch-list matches passed on to government investigators has turned up a genuine terrorist. "In a lot of cases, we never know," Kunkel says. "The government doesn't want us to know." However, one result of combing through customer files is that PNC turned up some 800 accounts whose owners' identities could not be verified. That means PNC is now required to close them.

What's more important for PNC is that the bank protect itself against the embarrassment of being found to harbor terrorist funds or of being found by a government audit to have failed to make a good-faith effort at preventing that sort of thing. "I think we're in pretty good shape," Kunkel says.