Do the new CIP regs REQUIRE us to photocopy a driver's license? There has been discussion on this forum as to how to comply with CIP and not violate (or appear to violate) Fair Lending laws, particularly ECOA. My question is this: can't we devise a way to establish the identity of the customer without the driver's license photocopy? I have heard of one organization (credit card) requesting a Social Security Card copy and an original utility bill. Do you think this would work for banks? Just throwing the idea out there to see what you guys think.

It is my understanding that a photocopy of the identifying document is required and must be retained in the files. In a newsletter article I read yesterday, the feeling is that the fair lending laws will be altered to be in synch with the PATRIOT Act

Opinions are mine and mine alone.

CIP does require us to get a valid ID with a picture. It also states that all documentation used must be photocopied and kept. Sounds to me they will be making some adjustments to one law or the other, sooner or later. That's just my opinion.

Brenda Weinberger

They require you to retain a copy of the document you used to verify the identity of the individual. In my experience, you would not just ask for a utility bill to evidence someones identity, you would have to use one of the photo ids. That said, we are all cringing a bit when it comes to the photocopying of drivers license, but what we began doing some time back due to an overwhelming amount of check fraud, was at account opening we began photocopying the ID and keeping the copy under dual control in the safedeposit box. If there is ever an identity question, then we could quickly retrieve the copy and yet they are constantly locked up where "lenders" can't get to them (ECOA). I anticipate that we will implement a similar type procedure for the lending area once we finalize our CIP procedures. Because you had to ask for the ID before, now you can copy it and send it out of your department to a secured area without (hopefully) any ECOA backlash. Since the safedeposit box is under dual control (with no lending staff having access) we felt this was a good process until we see how this pans out with ECOA.

For whatever reason, the system is considering me as Anonymous today. ????

MackenzieS

This is my opionion and not the opinion of my employer.

A unexpired government issued ID, bearing a photograph, is your best bet in verifying the identity of a person. Most IDs of this type also contain the individual's signature, a hollogram or other tamper resistant feature, as well as other identifying info. The proposed rule does allow other methods of non-documentary verification. Opening accounts in non face-to-face situations is riskier. The agencies suggest contacting the individual, using a credit bureau to verify info provided by the individual, references, obtaining financial statements, etc. I'm probably not helping much! So I'll shut up now.

I am wondering if the Fair Lending examiners will use these photocopies to expand the scope of their reviews. Currently they can only review HMDA loans for racial discrimination and check other consumer lending for sex discrimination based on the first names of the borrowers. Now they could use the photo IDs to look for racial discrimination in all consumer lending and small business lending too. Will the next step be they will require us to record the information in a HMDA type of database? I think the expanded fair lending exam will be the worst aspect of these new rules.

Do you use imaging? We are planning to photocopy the DL, etc. at account opening and send document to dept. to be imaged. All of these documents may be stored under a special "project" with limited access. We are still in the planning stages so I do not have all the bugs worked out yet, but this is my line of thinking at this time.

Anyone have any suggestions for or against this? Your input would be appreciated.

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I am wondering if the Fair Lending examiners will use these photocopies to expand the scope of their reviews. Currently they can only review HMDA loans for racial discrimination and check other consumer lending for sex discrimination based on the first names of the borrowers. Now they could use the photo IDs to look for racial discrimination in all consumer lending and small business lending too.

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Funny you mention that because during our last compliance exam, since we originate very minimal amounts of HMDA reportable loans, the examiners went to our personal loan portfolio (which of course monitoring information is not suppose to be obtained) and guess what they did? They pulled me into the conference room to ask me if I could tell, based upon the names on the loans, what the sex and/or race of the individuals was! If you could ever imagine saying to an examiner "Are you serious?", I did. I anticipate that you have hit the nail on the head with that statement.

MakenzieS (still showing up as Anonymous)

So really when it comes to CIP and Loan files... we are waiting until Oct. 25. Right? Just be prepared for anything.

I don't think 10-25 is going to answer any questions we have now. It will simply create a conflict between what some examiners practice and others don't, i.e. photocopies of the ID.

It will take some time and the fair lending folks will say copy it, but ignore it for these purposes. The same thing they say now, look at the consumer, but don't pay any attention to visually obtained monitoring information. And remember, Reg. B still has a proposal out to voluntarily gather monitoring information on loans we don't gather this on now. Who knows, this could be bundled together to resolve several things. Collect it, copy it, report it, ignore it.

That's some good advice from Andy and I also like the technique of making a copy of a loan applicant's picture ID but storing it separately from the loan file. Reg B record retention simply requires you to keep the information, but does not require the place information is kept or that it all be together.

As for information prohibitions -- I have been expressing the view (or bet) that the FRB will relax the prohibition on information gathering. There are a lot of entities -- such as consumer advocacy groups -- that want the information. CIP gives the FRB the needed momentum to drop the prohibition in spite of lender concerns that obtaining information could quickly become a requirement.

Hey, I can believe anything....and I DO believe that keeping copies of drivers licenses in credit files WILL trigger examiners to expand their scope....... I don't care how any changes are made to current fair lending rules.

I think it is a shame if the examiners give us a hard time for maintaining photo ID's on our customers when they know why we are doing it. It is also a shame if our courts entertain lawsuits because we are doing what is necessary to satisfy a regulation imposed on us by the federal government. Regulations should not be made when they are in conflict with other regulations. If there are conflicts, those conflicts should be resolved FIRST!

You mean there are actually regulations that conflict with each other?

Let me throw a little bit different slant on this. We have a certain segment of customers that do not have any type of photo identification because it is against their religion to have their picture taken. So, we'll work in our policy methods of verifying identity when photo ID is not available. Can I specify that we will only accept this other ID if the person has religious beliefs against having their picture taken, or will I have to allow anyone to provide this other type of ID (whatever we decide it will be - utility bill, financial statement, etc.) if they cannot provide a photo ID? Are there any fair lending issues for allowing an exception for one group and not another?

I guess I didn't read the reg thoroughly, I read recaps and excepts. I thought you needed to see an ID at account opening, then retain a record verifying what you looked at. We have a new account checklist that says "Type of ID", then we check which one we saw and write in the ID number and dates off of it. I know our state gave us grief in the past for copying drivers' licenses with regard to non customer check cashing. I am very hesitant to tell my girls to start copying IDs.

Surely the government limits exceptions to the picture requirement. The non-photo license should at least describe the person (height, color of eyes, etc)giving you some idea how they should look. However I would not place too much faith in the "weight" category. Fortunately, the license bureau does not require persons to weigh in! I do not believe there is law or reg that would prohibit you from making limited exceptions to the photo identification requirement. In most states, even if you do not drive, a state ID is available. (looks just like a drivers license) As far as fair lending is concerned - as long as you do not base identification procedures on any of the prohibited basis and you apply these requirements without regard to any prohibited basis, you should be ok.

"At a minimum, a bank must obtain from each customer the following information prior to opening an account or adding a signatory to an account: name; address; for individuals, date of birth; and an identification number." You must then verify this information, either through document, such as "unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard". You may also use non-documentary verification such contacting the customer after the account is opened; obtaining a financial statement; Chex systems; credit bureau report; and logical verification between identifying information.

"I am very hesitant to tell my girls to start copying IDs."

"...my girls..."? does this mean your young daughters would be copying the IDs? I'm sure you wouldn't refer to the young women working under your supervision as "my girls"!

After a great deal of thought, I modified my comment letter to ask why we want a copy (paper or electronic) of the ID, wouldn't it be better to just collect the information and verify the signature.

I spent yesterday at the airport - my DL picture is almost 10 years old - so is the rest of the information. I have changed both the color and style of my hair - and the picture has almost no value as ID - or at least none of the airport people thought so.

So, why collect the picture?? most of us already collect the DL number and use either a credit report or a chexsystem type vendor to assist us in verifying the customer's ID - I'm not sure how a picture 10 years out of date, at account opening is going to do anyone any good.

Are we going to record the expiration date and ask to obtain a new copy of the DL - assuming that the state updates the picture every time.

Thank you for listening to my rant

An interesting issue to consider is that (at least here in California), the Motor Vehicle Department does not consider a Driver's License to be an identification document. They consider the Driver's License to be a license that allows a person to operate a motor vehicle.

At least that's what they told when I asked to update my Driver's License after I moved. The DMV will not issue a new license and told me to simply write my address on a piece of paper and keep it with the license. So now, both my photograph AND my address are years out of date!

And making a copy of this will protect our country.... how?

Bonnie - I still have my first SS card, and it specifically states "Not for purposes of identification." Sure! The plans in the works to standardize all 50 states' drivers' license formats, then link all 50 DMVs, will most likely overrule CA's present stance toward the DL as ID.

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The plans in the works to standardize all 50 states' drivers' license formats, then link all 50 DMVs

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That sounds suspiciously like an attempt to create a "National ID Card". I seem to remember that debate going on shortly after 9/11. Personally, I am wary of anything like that. Just my opinion.

And they've got a lot of standardizing to do, should they decide to. In Texas, you can get a citation for having a driver's license that doesn't have your current address on it.