Treasury Announces Results of PATRIOT ACT Section 326 Notice of Inquiry

September 19, 2003

On September 18, 2003, the U.S. Treasury Department announced the results of the notice of inquiry published in the Federal Register July 1, 2003 requesting additional information pertinent to the final rules published on May 9, 2003 implementing customer identification requirements for financial institutions under Section 326 of the USA PATRIOT Act.  After reviewing over 34,000 comments, Treasury found that no new information had been presented that had not been considered prior to issuing the final rules.  Accordingly, Treasury is recommending no changes to the rules. 

The July notice of inquiry sought comment on two specific issues: (1) whether financial institutions should be required to retain photocopies of identification documents used to verify customers' identities; and (2) whether financial institutions should be prohibited from accepting foreign government issued identification documents other than passports as an acceptable form of identification.

On the first issue, Treasury reaffirmed its original judgment that the maintenance of photocopies in all cases did not provide a security benefit that justified the additional record keeping burden.  Further, many identification documents contain security features that render copies illegible.  However, Treasury does note that in some cases financial institutions, at their discretion, may find it prudent to maintain photocopies of identification documents.

On the second issue, Treasury concluded that the risk-based approach taken by the final rules, combined with the ability to notify financial institutions if concerns arise with specific identification documents, provide an ample mechanism to address any security concerns. 

Treasury expects all financial institutions covered by the customer identification regulations to have their customer identification program drafted and approved by October 1, 2003.

This additional comment period, which concluded July 31, represented Treasury's commitment to considering all relevant information in implementing these regulations in a way that is fair to those regulated and effective in properly identifying new customers. 

A fact sheet providing further information on the notice of inquiry and the original rule, as well as a copy of the notice that will appear in the Federal Register announcing the results of the notice of inquiry are attached.

Source: Treasury Department


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