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Maintaining Photo Identification of Customers

Lucy Griffin explained to our Minnesota Bankers compliance group that we must not keep photo copies of picture IDs in loan files because of a possible Reg B violation. However, we also do this when we open new accounts (it could be helpful in cases of identity theft, or just so staff will recognize new customers). We also do it when we make a credit card cash advance for noncustomers, as we have experience identity theft there. Can we do this in nonloan situations and not run afoul of Reg B or other regs?

Answer by Ken Golliher

This is something of a "golden" Bankers Thread, the issue gets worked over routinely there. The consensus: No banking regulation prohibits copying identification for use in opening new deposit accounts. The concerns expressed by commenters focus on two things:First, is there a state or federal law prohibiting reproduction of the particular type of identification you are copying? (The prohibition would likely be an attempt to prevent the fraudulent reproduction of the document, not the use of its image as a record, but the wording of the prohibition may be overly broad.)

Many banks routinely make enlarged (200% +) copies of identification to eliminate any accusation that the reproduction was for illegal purposes. Obviously, the larger and better quality the copy, the greater its value for the institution anyway.

Second, as you know, the license contains information related to race and sex that cannot be used in a credit decision. Are there controls in place that assure that the copy does not migrate to a credit related file or have the potential to be used in a credit decision; e.g. whether to pay or return an NSF check? (The "controls" may be as simple as storing the copies in different files in the security or fraud prevention areas of the institution.) If controls exist, there should not be a problem.

If you have not realized it yet, if AAA gave driving directions like compliance people give advice, the map for your summer vacation route would be accompanied by a five page list of the potholes along the way. There is risk in making copies of identification, but whether the possible risk outweighs the obvious value is a judgment call.

Recent federal legislation literally requires financial institutions to "…verify the identity of any person seeking to open an account…" and maintain "…records of the information used to verify a person's identity." The contexts in which such actions are required as well as the acceptable methods for keeping the required records will be decided by regulation. However, in the current environment, it is likely the value of a quality reproduction of identification will be thought to outweigh all else.


Answer by Lucy Griffin:


First published on 11/5/01

First published on 11/05/2001

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