Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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12/13/2006 Identity Theft Prevention and AML Customer ID Program Requirement Overlaps Suggest Efficiencies in Compliance, Training

Proposed regulations on identity theft prevention programs would require financial institutions and creditors to determine which customer accounts are subject to a risk of identity theft, taking into consideration the methods provided for opening such accounts, the methods provided for accessing them, and the institution’s size, location, and customer base. This is similar to language found in the statutory and regulatory scheme for Customer Identification Programs under the Bank Secrecy Act and the proposed identity theft prevention rules specify that a financial institution or creditor with a CIP program implementing 31 U.S.C. 5318(l) (e.g., 31 CFR 103.121 for banks) will satisfy the identity theft customer verification requirements. The identity theft prevention rules define “customer” and “account” more broadly, however, and the identity theft rules suggest some different responses upon the discovery of a possible identity theft. When the identity theft regulations are finalized, efficiencies in compliance and training will, for many financial institutions, call for combining aspects of the two compliance areas. A detailed discussion of the identity theft prevention proposal (or the final rules if they are published in the meantime) will be carried in the February 2007 issue of the Monitor.

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