Press Release

Small Banks Get New Money Transfer Tool to Help Fight Terrorism

September 04, 2002 - SAN FRANCISCO — Small banks now have access to a new electronic money transfer tool that will help them to comply with the USA Patriot Act (H.R. 3162), signed into law by President Bush last fall to establish a variety of new and enhanced ways of combating international terrorism.

Developed by San Francisco-based BankServ and known as GFX DEFENDER, it allows small banks to monitor any illegal movement of funds used to support terrorism and the drug trade. For privately held BankServ, which for years has served the nation's banks with more than a trillion dollars in secure wire transfer transactions to date, it opens up a whole new Fed wire transfer processing market, according to David F. Kvederis, president and CEO.

"We are committed to assisting the U.S. banking system fight the war on terrorism through automated tools and features conforming to the recently enacted USA Patriot Act," Kvederis says. "We feel by providing the GFX DEFENDER product to the small bank market that traditionally hasn't been served by any vendor will close a potential gap in the illegal movement of funds used to support terrorism and the drug trade. The GFX DEFENDER is a low-cost, easy-to-implement wire transfer service that can be implemented rapidly and can improve compliance and operational aspects of a wire transfer operation."

The new GFXN (Global Funds Exchange Network) DEFENDER product provides small institutions that do fewer than 100 wires per day with a low-cost, turnkey, real-time secure transfer link to the Fedwire (Federal Reserve Bank) system via BankServ's Application Service Provider (ASP) service.

With the ASP service, small financial institutions will be able to join their bigger sister banks in fighting terrorism and illegal money transfers through two principal government mechanisms:

· The Office of Foreign Asset Control (OFAC), and
· The Bank Secrecy Act (BSA) (also known as the Currency and Foreign Transactions Reporting Act).

Under OFAC, which operates under the U.S. Department of the Treasury, economic and trade sanctions are administered and enforced against targeted foreign countries, terrorism-sponsoring organizations and international narcotics traffickers based on U. S. foreign policy and national security goals. To that end, the agency publishes a list of "specially designated nationals" (SDN) who may be affected. Every time a money transfer is made within GFXN DEFENDER, a wire is sent out automatically checking against the government SDN list in a variety of languages and formats. OFAC then has the power to impose controls on transactions and freeze foreign assets under U.S. jurisdiction when someone on the SDN list is found. Not only does GFXN DEFENDER integrate screening/verification for incoming and outgoing wires that keeps OFAC information current, but it also lowers the banks' exposure to fines and penalties for non-compliance.

Under BSA, the U.S. government fights drug trafficking, money laundering, and other crimes. Banking institutions are required to archive information on money transfers over a certain dollar amount. The new BankServ product provides automatic storage of complete wire text information with permanent online retention and immediate retrieval using sophisticated search techniques. " In effect, what we have made available is a very secure method for providing wire initiation and receipt with many functional, risk control, and compliance features that the Federal Reserve Bank's FEDLINE product does not have" says Randy Gutierrez, chief technology officer and general manager of BankServ's Wire Transfer Group.

"Most institutions in the target market use FEDLINE today. Given the Federal Reserve Bank's announcement that the upgrade of the FEDLINE product from its current DOS platform to WINDOWS has been cancelled, small financial institutions are struggling to provide wire transfer services for their internal lines of business and customers in the manner required to support them adequately. GFX DEFENDER rounds out our service bureau (ASP) product offering to financial institutions that also include GFXN ASP (targeting banks doing 100 - 5000 wires per day) and GFXN HOSTED ASP (targeting 5000 and greater wires per day). With this entry-level product, small financial institutions can grow into our GFXN ASP solution and GFXN HOSTED ASP as their volumes increase."