The Federal Reserve Board announced it will allow banks and credit unions to use an alternative method for collecting certain customer identification information. This move, coordinated with the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the Financial Crimes Enforcement Network, permits financial institutions to obtain a tax identification number from a third party rather than directly from customers.
Banks and credit unions are required by law to verify a customer’s identity before opening an account. The requirement has been in place since 2003. Over time, there have been significant changes in how customers interact with banks and access financial services.
“Today’s action will grant banks flexibility in how they obtain this information, while ensuring that risk-based procedures continue to underpin verification of a customer’s identity,” according to the statement.
The agencies clarified that this new approach is optional; banks can choose whether or not to use alternative collection methods.
The change reflects ongoing adjustments in regulatory practices as technology and customer behavior evolve within the banking sector.
