Treasury and Federal Financial Regulators Issue Final Patriot Act Regulations on Customer Identification
April 30, 2003
The Department of the Treasury, the Financial Crimes Enforcement Network, and the seven federal financial regulators today issued final rules that require certain financial institutions to establish procedures to verify the identity of new accountholders.
The rules announced today were developed jointly by the Treasury Department, Treasury's Financial Crimes Enforcement Network, and the seven federal functional regulators, including the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Securities and Exchange Commission.
These regulations are part of the Administration's continuing work to implement the USA Patriot Act and prevent money laundering, terrorist financing, identity theft, and other forms of fraud while also providing financial institutions the flexibility they need to effectively implement the rules.
These final regulations implement section 326 of the USA PATRIOT Act, which directs that regulations be issued requiring that financial institutions implement reasonable procedures to (1) verify the identity of any person opening an account; (2) maintain records of the information used to verify the person's identity; and (3) determine whether the person appears on any list of known or suspected terrorists or terrorist organizations.
The regulations apply to banks and trust companies, savings associations, credit unions, securities brokers and dealers, mutual funds, futures commission merchants, and futures introducing brokers.
Institutions subject to the final rules will be required to establish a program for obtaining identifying information from customers opening new accounts. The regulations will require that institutions implement procedures for collecting standard information such as a customer's name, address, date of birth and a taxpayer identification number (for U.S. persons, typically a social security number and for non-U.S. persons, a similar number from a government-issued document).
A financial institution's program is also required, among other things, to contain procedures to verify the identity of customers within a reasonable period of time. Many financial institutions may rely on examining standard identification such as a driver's license or passport. However, the final rule gives financial institutions the flexibility to implement procedures to verify identity in other ways appropriate to their individual circumstances.
Financial institutions will have until October 1, 2003, to come into full compliance. Publication of the final rules in the Federal Register is expected to occur later this week.
Contact ALTA at 202-296-3671 or communications@alta.org.