USA PATRIOT Act: the fallacy of private banking definition.

Dollar Bank (see story Identity Theft: a new twist is an example of why the USA PATRIOT Act was ill thought out. Across much of the world, the basic requirement for private banking is GBP100,000 or an equivalent in liquid assets.

Sometimes it is a little more but rarely a great deal more. Dollar Bank requires customers to have a net worth (not the same as liquid assets) of USD250,000. This sort of sum is easily achievable by those who have repaid mortgages on property bought some years ago in a slump market and before house price inflation took off. But the definition in the USA PATRIOT Act calls private banking that which involves a deposit of a sum in excess of USD1 million. It was always a long way from reality but the fact that the Act has sought to re-define a term that is in global use demonstrates just how ill thought out some of it was.

The irony of this is that the service provided by Dollar Bank, a personal banking service, is precisely what banks worldwide mean by "private banking." But some in enforcement and politics in the USA have misunderstood the term and consider it tantamount to secret banking. The USA PATRIOT Act is, in general, the adoption of of one bank's private banking criteria as described to a Congressional hearing several years ago. "It is, simply, not representative of the industry. And as such it fails to meet the objectives that many would expect of such a piece of legislation," says Nigel Morris-Cotterill of leading counter-money laundering strategist, Silkscreen Consulting. His paper on the USA PATRIOT Act is available from Vortex.Centrum.Com