FDIC’s New Anti-Money Laundering Plan Is Protested

The FDIC is being deluged with thousands of e-mails and letters from citizens furious about new anti-money laundering rules proposed for banks that they view as an invasion of privacy.

As a visible symbol of the federal government with a plaque in every bank branch, the Federal Deposit Insurance Corp. has become a magnet for consumers’ anger over the proposed rules.

But regulators at other federal banking agencies also reported Thursday they had received many protesting e-mails, letters and telephone calls--some of them apparently instigated by anti-government groups.

The ire is directed at the proposed regulations, called “Know Your Customer” rules, that would require banks to verify their customers’ identities and know where their money comes from. Banks also would have to determine customers’ normal pattern of transactions and report any “suspicious” transactions to law enforcement authorities.

The proposal, published Monday in the Federal Register, is designed to combat money laundering techniques used by drug traffickers and other criminals to hide illegal profits. Laundering includes the use of wire transfers and bank drafts as well as “smurfing,” the practice of breaking down transactions into smaller amounts that don’t have to be reported under banking laws.

The torrent of e-mail, first reported in Thursday’s editions of the Wall Street Journal, came as the 90-day public comment period opened for the proposal.

The FDIC had received a staggering 2,700 e-mails and letters opposing the proposal, agency spokesman David Barr said.

Regulators and banking industry officials have taken pains to reassure consumers that their privacy would be protected. Most of the nation’s banks already follow similar procedures voluntarily, said John Byrne, senior counsel of the American Bankers Assn.