Treasury Department Issues USA PATRIOT Act Report to Congress

October 22, 2002

The Department of the Treasury has sent a report to Congress addressing issues related to domestic financial institutions' ability to verify the identity of foreign nationals who open an account. (USA Patriot Act Report [pdf] )

Under section 326(b) of the USA PATRIOT Act, Congress directed that Treasury, in consultation with the federal functional regulators and other relevant agencies, study and provide recommendations for enhancing the ability of domestic financial institutions to verify the identity of foreign nationals. After examining the impediments to identifying foreign nationals and consulting with the federal functional regulators, the Department of Justice, the Immigration and Naturalization Service, and other agencies, Treasury recommends that, in the absence of reliable and standardized identification for all foreign nationals, domestic financial institutions should make reasonable efforts to verify identity using existing and available identifying information and documents, as directed by Treasury's pending regulations to be issued under the PATRIOT Act (section 326(a)).

The report also considers the question of whether Treasury should require foreign nationals to obtain a unique identification number, assigned only after their identity has been verified, prior to opening an account with a financial institution.

First, the report recognizes that currently there is no system for assigning all foreign nationals a unique identification number after their identity has been verified. Existing identification numbers, such as the individual taxpayer identification number issued by the Internal Revenue Service, are insufficient as a means for verifying the identity of a foreign national.

Second, the report states that the issue of creating a governmental system to verify the identity of foreign nationals exceeds the scope of this report, which is limited to identity verification for purposes of opening financial accounts. Such a system must be addressed as part of an overall assessment of our national immigration controls and national security interests. Accordingly, the report recommends that the appropriate parties, including the Department of Homeland Security, when established, study this issue further within that framework to determine whether such a system is feasible and appropriate.

Finally, the report recommends that financial institutions not be required to consult government databases to verify identity until such databases are complete and made available to them, preferably in one location. Presently, the government maintains no such comprehensive database.

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Treasury Department Issues USA PATRIOT Act Report to Congress