NY’s DFS “encourages” acceptance of Municipal IDs

September 7, 2016 at 9:05 am Leave a comment

I swear we have been through this before.

New York’s Department of Financial Services Superintendent Maria T Vullo recently sent a letter to my boss, the inimitable William Mellin,  president of the New York Credit union Association  and Michael P Smith, his counterpart with the Bankers encouraging state chartered and licensed banks and credit unions to accept New York City’s Municipal Identification Card as valid identification for purposes of satisfying the requirement that they know their customer or member when they open an account.

The Guidance explains that   “The CIP rule does not prescribe a specific type of government-issued identification card for use by institutions. Institutions that rely on documentary forms of evidence to verify a customer’s identity should have procedures in place to identify the types of documents the institution will accept for such verification. Accordingly, it is the Department’s position that institutions may accept the Municipal ID as a means of documentary verification as provided in the institutions’ CIP procedures.” It goes onto encourage state chartered and licensed financial institutions to accept the municipal IDs.

First, I’m sure the Department is pleased to know that I agree 100  percent with its legal analysis. As described in a FinCen Q&A , your credit union’s responsibility is to “verify enough information to form a reasonable belief that it knows the true identity of the customer.”

The purpose of the CIP rules is to have procedures in place so you can know who your member is and establish a baseline of expected account activity for account monitoring purposes. After all,  a twenty-something investment banker is going to have different account activity than his eighty year-old grandma.  So long as a government issued ID tells you that a member is who she says she is it satisfies your CIP requirements.

Where the Department’s Guidance makes me a little nervous is in its encouragement to use these IDs.  I hope we don’t start hearing reports of institutions that may not wish to accept  these IDs being pressured to do so.  We are dealing with federal laws and regulations that give institutions flexibility to choose appropriate identification.  Nothing the Superintendent says changes that.

There is really nothing new here, just the same old song with a different tune. Every so often the issue of bank identification flares up in tandem with debates over immigration.  More than a decade ago  Governor  George Pataki, a Republican who was smart enough to know that you won’t win many more elections in America pandering to embittered white males, pushed for the acceptance of   matricula consular  identification cards and NCUA opined that the use of such identification was acceptable.

Let’s be honest about what we are really talking about here: illegal aliens.   To those of you whose views on illegal immigration make you uncomfortable accepting non- traditional forms of Identification I say:  Get Over It.  Your  credit union doesn’t have a dog in this fight. To those of you with well-established policies that have worked well for your credit union and that you don’t feel like changing I say: stick to your guns. Your ultimate responsibility is to run a well- functioning credit union not advance political agendas coming from either  side of the political  spectrum.

Entry filed under: Compliance, Legal Watch, Regulatory. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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