The Department of the Treasury, the Financial Crimes Enforcement Network, and the seven federal functional regulators1 , including NCUA, issued final rules implementing section 326 of the USA PATRIOT Act. The rules require financial institutions to establish procedures for identifying and verifying the identity of persons that open new accounts. The final rules are effective June 9, 2003; however, financial institutions have until October 1, 2003 to come into compliance. A copy of the Federal Register notice is enclosed.
Credit unions and other financial institutions must implement reasonable procedures for (1) verifying the identity of any person opening an account; (2) maintaining records of the information used to verify the person’s identity; and (3) determining whether the person appears on any list of known or suspected terrorists or terrorist organizations.
A credit union’s program must contain procedures for obtaining and verifying identity information for new members. The identifying information is likely to be the same information currently obtained by most credit unions including the member’s name, address, date of birth, and an 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). Verification procedures must occur within a reasonable period of time and may include examining driver’s licenses, passports, credit reports, and other similar means.
The program must also contain procedures for keeping records of the information used to verify the member’s identity and for determining if the member appears on any list of known or suspected terrorists or terrorist organizations designated by Treasury.
The final rule gives credit unions flexibility to tailor their procedures based on the size, location, and types of services offered; however, every program must meet these minimum elements.
In developing these regulations, consideration was given to the need to guard the U.S. financial system against terrorist financing and money laundering. Consideration was also given to the legitimate privacy interests of individuals, and the need for these regulations to be effectively integrated into the daily operations of financial institutions.
If you have any questions, please contact your regional office, examiner, or state supervisory authority.
1The seven federal functional regulators are: National Credit Union Administration; Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation; Office of the Comptroller of the Currency; Office of Thrift Supervision, Securities and Exchange Commission, and Commodity Futures Trading Commission.