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FinCEN Asks for Input on Bank Customer Verification

FinCEN is updating its Customer Identification Program (CIP) rules and is calling for insights and suggestions as to how it can be made better and more secure.

03 min read

The Financial Crimes Enforcement Network (FinCEN) is now looking for thoughts on how banks can verify customer identities in a more modern and simpler way. FinCEN is planning to update its Customer Identification Program (CIP) rules and is calling for insights and suggestions as to how it can be made better and more secure.

As of now, the banks are required to collect a taxpayer identification number (TIN) from anyone who is opening an account. For U.S. citizens, there is a collection of their entire SSN, which is the Social Security number (SSN). This practice has been going on for a very long time and has been used as a standard everywhere. But just recently as the world of finance is undergoing major changes with the coming of technology, FinCEN has been forced to change its working and is wondering if there are better ways to streamline this process of opening an account.

FinCEN Director Andrea Gacki, in her recent statement mentioned the role of the CIP rules in putting a stop to crimes including financing of terrorists and money laundering. But she also said that she understands the way technology is changing for the better. The aim of the request for information (RFI)  is to collect details from banks as to how the system can be improved.

One area that FinCEN really wants to work on is the possibility of allowing banks to collect only partial SSN information in the beginning. When banks get the consent of customers, they can use a third-party source to get their hands on the full SSN before the account opening is finalized. By making use of this approach, the account opening process can be made simpler for both banks as well as the customers, while still maintaining strong security measures.

The focus of RFI is not just on SSNs. FinCEN is also open to finding alternate methods that can be used to confirm identities that are secure and efficient. For this, they are open to experimenting with new technologies and different types of documents for identification.

Anyone including banks, financial institutions, privacy advocates, and consumer groups with a genuine interest in this topic can share their comments with FinCEN. The comments that will be received by FinCEN will be reviewed in detail to see how it can benefit the system and help in making the CIP requirements more modernized.

FinCEN is not working on this project alone. In fact, other federal agencies involved in financial regulation like the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), are also taking part and sharing information. Once FinCEN is able to gather different viewpoints it will be able to create an improved version of the CIP rule that can fight crimes more effectively.

So, if you have thoughts on how to improve customer identification while improving financial security and preventing crimes, let FinCEN know now!

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Category

PEP

Industry

Financial Services

Published Date

April 1, 2024

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