CareCredit - Women's Health April 2024

FinCEN Seeks Comments on Modernizing Customer Identification Program Requirements


The Financial Crimes Enforcement Network (FinCEN) requested comments on its Customer Identification Program (CIP) requirements for banks.

The agency is exploring ways to modernize these requirements and has issued a request for information on the topic, FinCEN said in a Thursday (March 28) press release.

The CIP Rule requires banks to collect a taxpayer identification number from a customer before opening an account, according to the release. For individuals from the United States, this generally means collecting a full Social Security number.

Because there has been “significant innovation” in the collection of customer identifying information and the verification tools available to financial institutions since the adoption of the CIP Rule, FinCEN is seeking comment that will inform its consideration of allowing banks to collect partial SSN information from customers and then obtain the full SSN from reputable third-party sources before account opening, the release said.

Comments submitted in response to the request will also help FinCEN identify regulations and guidance that may be outdated, redundant or otherwise not useful in promoting a risk-based anti-money laundering/combating the financing of terrorism (AML/CFT) regime, per the release.

“The requirement for banks to collect identifying information from a customer prior to opening an account has been a long-standing component of a bank’s anti-money laundering program,” FinCEN Director Andrea M. Gacki said in the release. “However, FinCEN recognizes the significant changes in technology and financial services that have taken place since promulgation of the CIP Rule, and we welcome comments from interested parties as we explore ways to modernize the U.S. anti-money laundering/countering the financing of terrorism regime.”

In its press release, FinCEN also reminded banks of their responsibilities under the existing CIP Rule.

Over a 14-month period in 2021 and 2022, FinCEN imposed more than $600 million in fines for AML violations. All of these enforcement actions included references to weak or inadequate customer due diligence processes that facilitated or could have facilitated suspicious transfers, PYMNTS reported in April 2022.

PYMNTS Intelligence found that 7 in 10 financial institutions are now using artificial intelligence and machine learning to strengthen their efforts to combat money laundering, bank fraud and other illicit activities.

More than 40% of financial institutions said incidents of fraud are increasing, according to the PYMNTS Intelligence study “Financial Institutions Revamping Technologies to Fight Financial Crimes.”