Banks supervised by the Federal Reserve Board are now permitted to obtain a customer’s tax identification number (TIN) from a third party under an exemption order approved July 24 and announced Thursday by the Federal Reserve Board.
The order, approved by unanimous vote of the Fed Board, provides an exemption from the rule governing how a bank may obtain TIN information as part of the customer identification program (CIP) required by section 326 of the USA PATRIOT Act (which amended the Bank Secrecy Act, or BSA). That rule requires that a bank, as part of its anti-money laundering (AML) program, directly obtain a customer’s TIN information before account opening.
Now, under the Fed order, supervised banks “for all accounts at all banks (and their subsidiaries)” may instead use an alternative collection method to obtain TIN information from a third-party source rather than the customer as long as the institution otherwise complies with the CIP rule. That rule, the order says, requires written procedures that:
(1) enable the bank to obtain TIN information prior to opening an account;
(2) are based on the bank’s assessment of the relevant risks; and
(3) are risk-based for the purpose of verifying the identity of each customer to the extent reasonable and practicable, enabling the bank to form a reasonable belief that it knows the true identity of each customer.
The order underscores that obtaining TIN information through a third party is optional.
The Fed’s order, approved with concurrence of Treasury’s Financial Crimes Enforcement Network (FinCEN), mirrors the one announced jointly in late June by the Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC).
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