Mr. Robert E. Feldman
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429

RE: EGRPRA Burden Reduction Comment Letter

Peoples Bank is a $660 million bank with 23 offices in Washington State. We are glad to offer any recommendations that would reduce regulatory burden, specifically in the area of Anti-Money Laundering.

Complying with BSA and the USA Patriot Act has become a substantial burden on our institution. Because of the continual customer monitoring, periodic due diligence and ongoing staff training, we anticipate an increase in both personnel and system costs in order to meet expectations as our customer base continues to grow.

SAR Filing The lack of clear guidance and possibility of examiner scrutiny, has given banks no choice but to defensively file a SAR and accept a “when in doubt - file” attitude. The consequences of not filing are greater than over-populating FinCEN’s database. Banks are also required to maintain a file and document situations when we do not file a SAR. This practice is time-consuming and creates more paperwork

CTR and Monetary Instrument Log Reporting Thresholds The current CTR reporting threshold of $10,000 was established forty years ago, and has not been adjusted for inflation. Raising this threshold would benefit both banks and the IRS in detecting true money launders who deal in currency much larger than $10,000.

Likewise, the Monetary Instrument Log reporting threshold should also be raised to a more appropriate level and financial institutions who sell monetary instruments only to their customers be exempt from maintaining this log. Peoples Bank has established a policy to limit monetary instrument sales to customers, which reduces the risk of “smurfing” in our institution. Entries made to this log are sporadic, but gathering, reviewing and maintaining this log is burdensome from an operational standpoint and the value it provides to law enforcement seems minimal.

Customer Monitoring/Due Diligence The expectations for monitoring customer’s account activity are burdensome and put the bank in a position of questioning, policing and then reporting activity that may appear suspicious but is usually legitimate. As a community bank, we do “know” our customers in order to effectively meet their needs. Maintaining additional paperwork to confirm that only requires more resources.

The recent guidance issued for MSBs has assisted banks in knowing what is expected and outlines the requirements. However, MSB monitoring should not be placed on the financial institution that holds the account. FinCEN has specific requirements for registration, which puts them in a better position to monitor MSB activity.

Peoples Bank acknowledges BSA is an effective tool for law enforcement to detect white collar crime and provide evidence of cash transactions. However, the expectations are being enforced differently based on a particular examiner’s interpretation. A consistent training program for examiners would improve this lack of consistency.

Our bank prides itself in having knowledge of our community banking markets, as well as having the flexibility to provide a high level of customer service in an efficient manner. If these burdens continue to increase, our ability to compete with larger banks will ultimately affect the products and services we provide.

Sincerely,

Melinda Kaemingk
Compliance Officer
Peoples Bank