Alvaro (Al) Araque, senior vice president and director of Consumer and Private Banking, Johnson Financial Group, Racine, has been selected to become the 2022–23 WBA vice chair by the WBA Nominating Committee.
The nominating committee, which is comprised of the current WBA officers and recent past chairmen from WBA, also selected the following candidates to fill seats for three-year terms on the WBA board of directors: Greg Lundberg, Fortifi Bank, Berlin (Group 3); Paul Hoffmann, Monona Bank (Group 4); Ryan Kamphuis, Bristol Morgan Bank, Oakfield (At-Large); and Tom Mews, First National Community Bank, New Richmond (At-Large).
Pursuant to the WBA Bylaws, the above candidates shall be considered elected on April 2 unless other nominees are offered by petition submitted to the WBA office by April 1. The nominating committee received many nominations of excellent candidates, making the selection process very difficult.
The committee, led by WBA Past Chair Paul Kohler, wishes to thank everyone for their interest in serving on the WBA Board, along with your continued strong support of WBA.
By John Cronin
This legislative session we have seen red proposals and blue proposals that have a lot of people wondering if Wisconsin will soon be going green. No, nobody is commending the Packers for that lackluster playoff performance or proposing we replace Bucky with the Grinch. Though we see a lot of these, I’m not referencing environmentally conscious measures, either. Ranging from people tuned into government and the apolitical, people in banking and those who are not — what is one of the most common questions I get asked? When is Wisconsin going to legalize marijuana?
I’m sure people think to themselves ‘Hey this government guy ought to know,’ but it’s also a topic lots of folks are genuinely curious about, especially as versions of marijuana legalization have been adopted by numerous states across the country, including our neighbors in Illinois, Michigan, and Minnesota. Indeed 39 states either allow for some type of marijuana consumption — either medicinal or recreational — or have removed penalties for possessing small quantities.
From the banking industry perspective, the cannabis industry represents a largely untapped market shrouded in regulatory uncertainty since marijuana technically remains a scheduled drug under the federal Controlled Substances Act. The SAFE Banking Act would go a long way to alleviating this issue by protecting financial institutions serving legitimate cannabis-related businesses operating in compliance with each respective state’s legal framework. Support for the SAFE Banking Act seems to grow each time it is voted on, but final Congressional approval remains elusive out in Washington, D.C.
Shifting back to Wisconsin and the question posed at the outset — the answer remains “To Be Determined,” but the conversation has shifted dramatically from where the discourse was just a few years ago. So where do things stand now?
Marijuana used to be a legislative subject broached exclusively by Democrats. For consecutive sessions, Democrats, including Governor Evers, have pitched full recreational marijuana legalization and regulation. Those attempts may be a bridge too far at the moment and haven’t gained much traction, failing to net even a committee hearing. But they have moved the needle.
Though derived from hemp, Republicans have embraced CBD therapeutics for certain medical disorders. GOP Assembly Speaker Robin Vos is open to a medical marijuana program. But most significantly, we have also seen two Republican-led legislative proposals this session. One bipartisan proposal would create uniform low civil penalties for possessing small amounts of marijuana, so as to prevent those individuals from being convicted of a misdemeanor or felony. In late January, a cohort of thirteen Republican legislators began seeking co-sponsors for a bill creating a medical marijuana program that tightly regulates cultivation, processing, testing, and dispensing to patients. Neither have received action this session.
Both medicinal and recreational marijuana remain illegal in Wisconsin. The 2021–22 legislative session is effectively over, and illegality will remain the status quo for now. However, as Republican aversion continues to thaw, we are bound to hear this conversation ramp up in the near future and could see movement in the 2023–24 session.
By Rose Oswald Poels
The Wisconsin Bankers Association (WBA) offers many opportunities for bankers around the state to get involved and shape the future of their industry. From serving as advocacy officers and taking part in Power of Community Week service activities to joining one of twelve WBA committees or sections — there are options for every member of your team.
WBA will be accepting applications for the 2022–23 committees and sections for a few more days! Ranging from marketing, human resources, and mortgage lending to financial crimes and government relations, WBA offers committees that not only tie into your bankers’ specialties but offer the chance to explore their interests as well.
As members of WBA committees, bankers directly impact what legislation WBA staff lobby for and what educational programs, trainings, and conferences are offered to the membership. Your efforts in diversifying our knowledge and ideas not only help WBA staff better understand your needs but allow us to provide WBA members with information, resources, and events that are relevant to them.
Along with the benefit engaged bankers provide the banking industry, WBA committees offer growth and leadership opportunities, peer networking, and special discounts on select educational programs.
WBA is your association. Your expertise and ideas directly aid us in making the greatest impact on your association and industry. I encourage you to volunteer for a WBA committee by March 14 to get involved with WBA and your professional peers for the benefit of our entire industry!
By Scott Birrenkott
Q: What is an Acceptable Form of Customer ID for CIP Purposes?
A: It depends on bank policy, but there are various forms of ID that can meet CIP requirements.
As part of compliance with Bank Secrecy Act regulatory requirements, banks must have a written Customer Identification Program (CIP). Bank’s CIP must include risk-based procedures to verify the identity of each customer at account-opening. At a minimum, each program must obtain the name, date of birth, address, and identification number from each customer. This information must be verified, using documentary, non-documentary, or a combination of both methods, depending on bank’s procedures.
When relying upon documentary methods to verify a customer’s identity, bank’s procedures must specify which documents to obtain. Similarly, if procedures permit non-documentary methods, bank’s procedures must specify which methods to use. A bank need not establish the accuracy of every element of identifying information obtained, but it must verify enough information to form a reasonable belief that it knows the true identity of the customer. For most customers who are individuals, banks typically review an unexpired government issued form of identification evidencing a customer’s nationality or residence and bearing a photograph or similar safeguard. Nondocumentary methods may include contacting a customer, or otherwise independently verifying the customer’s identity through other sources.
A bank may encounter unique forms of identification. What forms are acceptable depends upon bank policy. Theoretically, any legitimate form of identification could be acceptable. Examples include state-issued driver’s license, state-issued ID card, passport, and alien ID card. There are also a variety of forms issued by the United States Citizenship and Immigration Services. For example, the U.S. Department of Homeland Security may provide certain records to refugees or asylees, who may also possess identification documents through the United States Citizenship and Immigration Services. These, and other forms of identification may be acceptable for CIP purposes if bank’s policy permits.
By Detective Daniel R. Kuhnz, Beaver Dam Police Department
All around Wisconsin and the country, financial institutions have been targeted by check fraudsters who use homeless or indigent people to cash counterfeit checks. This method of operation has been dubbed “operation homeless” around the country. Essentially what happens is bad guys get a hold of valid business checks by intercepting them from unsecured mailboxes of businesses. Other methods of obtaining banking information of a victim business might be by purchasing blocks of data from sellers on the dark web. The bad guy then provides the account identifying information from the check or the check itself to a person who actually manufactures a new check with the valid account number and routing number on it but alters the dollar amount to stay under a certain limit (common amounts are $2,500 or less), alters the payee, and alters the check number.
They then proceed to recruit vulnerable people who are promised a portion of the proceeds. They will travel substantial distances to financial institutions that the checks are written from, so the account numbers can be validated and adequate funds are determined to be in the account to cover the check amount. They are told to use their real identification when cashing the checks to legitimize the transaction.
The bad guys who are driving the homeless or indigent people around will usually wait in an adjacent parking lot and monitor the building. If the teller determines the transaction to be suspicious and calls the police, the homeless or indigent individual is abandoned at the bank. In most cases, the homeless or indigent person is arrested and put in jail. However, law enforcement and prosecutors are usually more interested in “moving up the chain” to identify the intermediate individuals that were driving the homeless or indigent person around and ultimately, who manufactured the counterfeit check. This can be very difficult as the intermediate suspects usually provide false names and change their phone numbers.
This crime, contrary to popular belief, does not only occur only in the big cities. In fact, many of the cases that were recently found to be connected around Wisconsin overwhelmingly occurred in suburban and rural communities.
Law enforcement around the state would benefit from tellers and other employees at banking institutions to always be vigilant and constantly question whether something makes sense or not. We are confident that banking institutions are always on the lookout for fraudulent activity such as internet scams but this type of fraud can be more difficult to detect and act on. We simply want to remind you that you are on the front lines of this type of criminal activity and should know about current trends and fraud schemes that are occurring.
The following is a brief interview between WBA President and CEO Rose Oswald Poels and Cornerstone Community Bank President Paul A. Foy.
Rose: How did you first get into the banking industry?
Paul: I was working as a marketing product manager for an orthopedic company in the mid-to-late 1990s. I worked with surgeons around the country as we developed new products for total knee and shoulder joint replacement systems. It was a great job, but not conducive to raising a young family. My father-in-law was an investor in a start-up bank and was increasing his stake around the same time. He was encouraging me to join the bank, so I could be closer to family and have more time to be with my kids. After several attempts by him, I saw the light. I really enjoyed banking more than I thought I would, and I was able to participate in my kids’ lives by coaching little league, attending plays, recitals, and chaperoning many field trips over the years!
What is your favorite aspect of your role at your bank?
I enjoy visiting our customers and seeing all the different ways people earn a living in this world. I especially like to see how the money we lend enables people to be more productive and add jobs to the local economy. It is rewarding to see the money we lend at work invested in these companies.
What do you wish the general public understood about the banking industry?
Banks and credit unions are not the same! Unlike the credit unions, banks pay state, local, and federal taxes that add about 30% more in operating costs. Yet, credit unions have been able to expand their scope of services competing on an uneven playing field. Credit unions boast that they are not-for-profit as if it’s some sort of admirable quality. People need to know that it’s the community banks who pay their fair share and contribute significantly more to the communities that they serve than credit unions.
Where do you believe the industry’s greatest challenges are in the next three to five years?
Fraud is going to be one of the industry’s greatest challenges in the next few years. Cyber-crime attempts are more widespread and far more sophisticated than in times past. As bankers, we invest significant funds in hardware, software, and training to help prevent fraud.
Loan closing instructions are being hijacked to the point that we’ve moved back to the fax machine. Corporate email servers are being manipulated to the point where employees are being “instructed” to perform significant fraudulent transactions by actors posing as authorized signers of accounts held by their companies. Elder fraud is another area becoming more intense and personal as the fraudsters use social media posts to learn of familiar relationships helping fraudsters make a convincing case to unsuspecting victims. We experienced a situation recently where an elderly victim couldn’t be convinced by me and another officer of the bank that a contrived situation was fraudulent. We then involved the police, and still she didn’t believe the officer when he told her she didn’t need to send the fraudsters money!
Please share one of your more rewarding or memorable experiences with us.
We support many of the local charities in the communities we serve. In addition to the hours our employees volunteer to support several charitable organizations, we also assist at Chamber of Commerce events for Grafton, Mequon, Thiensville, and Greater Menomonee Falls-Sussex. However, the most recent memorable experience of supporting our community was in the early days of the COVID-19 pandemic when we assisted our customers with the SBA Paycheck Protection Program (PPP). In a very short period of time, we came up with policies, procedures, and documents to support a program which was not fully defined. Our small community bank helped our new and existing customers by originating 278 loans in the first round totaling approximately $29.5 million. This came at a time when we were already very busy generating mortgage applications and modifying loans to numerous commercial loan customers to help them through the pandemic. Much of this work was performed with employees working remotely from one another as we weren’t sure if we were going to lose several staff members to the virus itself. We ended up producing another $16.5 million in the second round for our customers. However, it was far less hectic given the lessons learned in round one, thanks, in part, to the WBA.
By Wisconsin Bankers Association President and CEO Rose Oswald Poels
In a deal announced yesterday, Summit Credit Union will acquire West Bend’s Commerce State Bank. This marks the sixth acquisition of a taxpaying Wisconsin bank by a tax-exempt credit union in a decade, continuing a concerning trend of taxpaying community banks being bought by large, growth-oriented credit unions. The acquisition will bring Summit Credit Union to nearly $6 billion in assets with 54 locations. With Commerce State Bank’s $837 million in assets, this is one of the largest credit union acquisitions of a bank nationwide to date.
Wisconsin taxpayers should be very concerned about this transaction as the state alone will lose over $1 million annually in future tax revenues with this sale because credit unions do not pay any state or federal income tax. With large credit unions becoming indistinguishable from tax-paying banks, it is time for the public and elected officials to question the public policy rationale for this significant tax benefit. Why should the 14 Wisconsin-based credit unions over $1 billion in asset size pay nothing in state income tax to support social services, law enforcement, schools, and other public services? Individuals, families, and tax-paying businesses are left to shoulder these growing expenses. Not only is tax revenue lost in these transactions, but jobs in the state are often lost when the acquirer is an out-of-state credit union and/or when certain functions are consolidated. This type of consolidation is not in the public’s interest.
While Wisconsin now has two pending bank acquisition transactions by credit unions, credit unions are also actively seeking expansionist powers from the legislature and their regulator that, among other things, would permit credit unions to raise capital from private equity investors. The days of small, employer- or neighborhood-focused credit unions are long gone. Elected officials should carefully scrutinize this legislation and strongly oppose Wisconsin AB 478/SB451 as it is in direct conflict with the public policy intent behind the tax exemption granted by this same body decades ago.
It is time for growth-oriented credit unions to be paying their fair share of taxes. Competition in any industry is fair and healthy, but only when the playing field is level. Taking a tax-paying business off the tax roll by a “not-for-profit,” tax-exempt entity directly harms the citizens of this state and threatens the vibrancy and diversity of our state’s financial system.
By Rose Oswald Poels
*March 7, 2022 update: Gov. Tony Evers has launched Wisconsin Help for Homeowners Program.
I wish to remind Wisconsin’s bankers of the availability of the Wisconsin Help for Homeowners (WHH) Homeowner Assistance Fund (HAF) Program as another tool to assist homeowners struggling with a financial hardship as of January 21, 2020, due to the coronavirus. Program funding is available from the Treasury through the Homeowners Assistance Fund established under the American Rescue Plan Act of 2021.
The State of Wisconsin, through its WHH partners, will accept and process applications from homeowners within the state of Wisconsin. Homeowner income eligibility requirements are limited to households whose incomes do not exceed 100% of the area median income or 150% of the area median income if the homeowner meets the definition of Socially Disadvantaged under 24 CFR 124.103. Eligible expenses are those that were due on or after January 21, 2020, as described in the Wisconsin Homeowner Assistance Fund and Need Assessment Plan. The plan has recently been approved by the Treasury. The state has implemented the WHH HAF, and applicants can now apply. Funds are limited to $40,000 per applicant.
The State of Wisconsin, through its WHH partners, will be using the Common Data file (CDF) to share borrower information with loan servicers. If unable to utilize the CDF another mutually agreeable format will be used. A borrower general release and information sharing agreement is also required to be executed. All payments to servicers on behalf of borrowers will be disbursed using ACH.
If a bank is its own servicer, the bank could execute a collaboration agreement, and other required documents under the WHH HAF program, and work directly with WHH partners to process WHH HAF program payments on behalf of their borrowers. If a third-party is the servicer, the bank should alert its third-party servicers of Wisconsin’s program so that the servicer can execute the required documents in preparation for assisting affected borrowers.
To participate, several documents need be executed by servicer or borrower, including: a Collaboration Agreement, WHH Contact Information Form, WHH Borrower Consent Form, DOA-6460 New Supplier Form, DOA-6456 Authorization for Electronic Deposit Form, and a W-9 Request for Taxpayer Identification Number (TIN) Certification.
Upon receipt of the above documents, the Collaboration Agreement will be signed electronically by the state’s identified contact and a fully executed copy of the agreement shall be sent to the servicer. Program documents, in addition to those linked above, need be obtained from Wisconsin Department of Administration’s Tamra Fabian at tamra.fabian@wisconsin.gov. Fabian is leading the intake of the Collaboration Agreements.
More details regarding Wisconsin’s Homeowner Assistance Fund Program, may be found at: homeownerhelp.wi.gov.
By Kenneth D. Thompson
As bankers, our unique position both in our economy and in our community shows us a widened perspective of our daily lives. Jack Uldrich, leading global futurist and author, shared with Wisconsin’s banking leaders during his keynote session at WBA’s annual Bank Executive Conference in Wisconsin Dells that today is the slowest rate of change that we will ever experience again.
Whether we realize it or not, the COVID-19 pandemic has launched us into the future. As our world continues to evolve and community banks lead efforts in digital and technological expansion, the next ten years are becoming increasingly difficult to predict. What once was an “unconventional” practice, is quickly becoming the new normal.
It is clear to me that community bankers are resilient no matter the circumstance. Wisconsin bankers are quite familiar with conducting business in the unfamiliar. Our ability to stay relevant has only strengthened among widespread technological advancement and bank mergers as well as our efforts in approaching PPP loans and growth in liquidity. We have quickly become a source of comfort for our communities during times of uncertainty — something I know each of us significantly values — and our ability to act fast in times of need is critical.
Uldrich advises that we continue to explore the unknown, take time to think further than today or tomorrow, and to always ask questions. Business as unusual means change, and I am thrilled to see how each of us rises to the occasion for the betterment of our communities time and time again.