Customer Identification Program and Modern Nomads

Question of the week: How does a credit union verify the identity of a minor when opening a new account?

Compliance10/22/2019

Modern Nomads and Customer Identification Program (CIP)

You can find many individuals who have decided to take up a nomadic life. Whether they are living full-time out of a travel trailer, camper van, or even traveling with only a backpack, these individuals no longer have a residential street address where they live.

One of the challenges credit union face opening accounts for such consumers, includes the Customer Identification Program (CIP) requirements that the U.S. Patriot Act imposes on all financial institutions. Per 31 CFR 1020.220, financial institutions must collect at account opening:

  1. Name
  2. Date of birth
  3. Address, which shall be:
    1. For an individual, a residential or business street address
    2. For an individual who does not have a residential or business street address, an Army Post Office (APO) or Fleet Post Office (FPO) box number, or the residential or business street address of next of kin or of another contact individual; or
    3. For a person other than an individual (such as a corporation, partnership, or trust), a principal place of business, local office, or other physical location; and
  4. Identification number, which shall be:
    1. For a U.S. person, a taxpayer identification number; or
    2. For a non-U.S. person, one or more of the following: A taxpayer identification number; passport number and country of issuance; alien identification card number; or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.

The address element can be a challenge for credit unions when approached by a potential new member who wishes to establish an account. Since these “nomads” no longer have a residential street address, credit unions will need to rely on the residential street address of the next of kin or of another contact individual.

Question of Week

Q. When opening an account for a minor, how does the credit union verify the minor’s identity?

A. If the minor opens an account, you can verify their identification using documentary methods such as a state-issued identification card, driver’s license, or work permit. If these are not available, you can use non-documentary methods such as verification by an existing member or using public databases. If you have an adult opening an account for a minor, you must verify the identification of the adult, not the minor. Either way, your BSA and CIP policy must specify what types of identification you will accept and under what circumstances.

Legal Briefs

National Credit Union Administration

NCUA Board Sets 2020 Meeting Schedule

The NCUA Board released its monthly meeting schedule for 2020.  Open Board meetings are scheduled to begin at 10 a.m. Eastern Time.

Consumer Financial Protection Bureau

Private Education Loan 2019 Annual Report

The CFPB Private Education Loan Ombudsman issued the 2019 Annual Report showing that from September 1, 2017, through August 31, 2019, the Bureau handled approximately 20,600 complaints related to private or federal student loans. Of these, there were approximately 6,700 private student loan complaints and 13,900 federal student loan complaints. The report also provides policymakers with a series of recommendations.

Office of Foreign Assets Control (OFAC)

OFAC has updated the Specially Designated Nationals And Blocked Persons List (SDN) list as of Oct. 14, 2019. The last update before this was Oct. 11, 2019.

­­­­­­­­­­­­­­­­­Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].