Jan 1, 2006 12:00 PM, By Gail E. Cohen, executive vice president and general trust counsel, Fiduciary Trust Company Intern

By: By Gail E. Cohen, executive vice president and general trust counsel, Fiduciary Trust Company Intern

Trustees face many challenges as we begin the year 2006. First, trust institutions are grappling with the anti-money laundering (AML) and bank secrecy act (BSA) requirements of various federal agencies. Second, all trustees — both institutional and individual — must strike the appropriate balance between the expectations of beneficiaries and the demands of a changing legal environment. And third, trustees are witnessing an explosion of investment opportunities and must understand how to incorporate these into a trust portfolio.

As Riggin Dapena, senior vice president at Bank of America, put it on Oct. 20, 2005 when speaking on a panel of South Florida private bankers at the Bankers Club of Miami: “We all have a responsibility because The Patriot Act has deputized U.S. bankers as an extension of the U.S. government in controlling money laundering, RICO activities and terrorism.” As deputies, bankers are faced with a growing number of rules and regulations on how to conduct business so as to detect and report money laundering and terrorism financing. These requirements are written to encompass all banking activities, and trust institutions are struggling to adapt the rules to their unique businesses. To date, the federal government has offered no set of procedures showing trust institutions exactly how they can appropriately satisfy their obligations to detect money laundering and monitor activity so as to detect terrorism financing. As a result, trust institutions and the agencies that regulate them are operating in a great deal of uncertainty. We look forward to the American Bankers Association's attempts to provide certainty in this area during 2006.

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