[House Report 115-523]
[From the U.S. Government Publishing Office]


115th Congress     }                                  {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session        }                                  {       115-523
======================================================================

 
  TO ESTABLISH REQUIREMENTS FOR USE OF A DRIVER'S LICENSE OR PERSONAL 
 IDENTIFICATION CARD BY CERTAIN FINANCIAL INSTITUTIONS FOR OPENING AN 
  ACCOUNT OR OBTAINING A FINANCIAL PRODUCT OR SERVICE, AND FOR OTHER 
                                PURPOSES

                                _______
                                

 January  22, 2018.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1457]

      [Including cost estimate of the Congressional Budget Office]

    The Committee Financial Services, to whom was referred the 
bill (H.R. 1457) to establish requirements for use of a 
driver's license or personal identification card by certain 
financial institutions for opening an account or obtaining a 
financial product or service, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. MAKING ONLINE BANKING INITIATION LEGAL AND EASY.

  (a) Definitions.--In this section:
          (1) Affiliate.--The term ``affiliate'' has the meaning given 
        the term in section 2 of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1841).
          (2) Driver's license.--The term ``driver's license'' means a 
        license issued by a State to an individual that authorizes the 
        individual to operate a motor vehicle on public streets, roads, 
        or highways.
          (3) Federal bank secrecy laws.--The term ``Federal bank 
        secrecy laws'' means--
                  (A) section 21 of the Federal Deposit Insurance Act 
                (12 U.S.C. 1829b);
                  (B) section 123 of Public Law 91-508 (84 Stat. 1116); 
                and
                  (C) subchapter II of chapter 53 of title 31, United 
                States Code.
          (4) Federally recognized indian tribe.--The term ``federally 
        recognized Indian Tribe'' has the meaning given the term by the 
        Secretary of the Interior under section 104(a) of the Federally 
        Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131(a)).
          (5) Financial institution.--The term ``financial 
        institution'' means--
                  (A) an insured depository institution;
                  (B) an insured credit union; or
                  (C) any affiliate of an insured depository 
                institution or insured credit union.
          (6) Financial product or service.--The term ``financial 
        product or service'' has the meaning given the term in section 
        1002(15) of the Consumer Financial Protection Act of 2010 (12 
        U.S.C. 5481(15)).
          (7) Insured credit union.--The term ``insured credit union'' 
        has the meaning given the term in section 101 of the Federal 
        Credit Union Act (12 U.S.C. 1752).
          (8) Insured depository institution.--The term ``insured 
        depository institution'' has the meaning given the term in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813).
          (9) Online service.--The term ``online service'' means any 
        Internet-based service, such as a Web site or mobile 
        application.
          (10) Personal identification card.--The term ``personal 
        identification card'' means an identification document issued 
        by a State, local government, or federally recognized Indian 
        Tribe to an individual solely for the purpose of identification 
        of that individual.
          (11) Personal information.--The term ``personal information'' 
        means the information displayed on or electronically encoded on 
        a driver's license or personal identification card that is 
        reasonably necessary to fulfill the purpose and uses permitted 
        by subsection (b).
          (12) State.--The term ``State'' means any State, 
        commonwealth, territory, or possession of the United States, 
        the District of Columbia, the Commonwealth of Puerto Rico, the 
        Commonwealth of the Northern Mariana Islands, American Samoa, 
        Guam, or the United States Virgin Islands.
          (13) Scan.--The term ``scan'' means the act of using a device 
        or software to decipher, in an electronically readable format, 
        personal information displayed on or electronically encoded on 
        a driver's license or personal identification card.
  (b) Use of a Driver's License or Personal Identification Card.--
          (1) In general.--When an individual initiates a request 
        through an online service to open an account with a financial 
        institution or obtain a financial product or service from a 
        financial institution, the financial institution may record 
        personal information from a scan of the driver's license or 
        personal identification card of the individual, or make a copy 
        or receive an image of the driver's license or personal 
        identification card of the individual, and store or retain such 
        information in any electronic format for the purposes described 
        in paragraph (2).
          (2) Uses of information.--Except as required to comply with 
        Federal bank secrecy laws, a financial institution may only use 
        the information obtained under paragraph (1)--
                  (A) to verify the authenticity of the driver's 
                license or personal identification card;
                  (B) to verify the identity of the individual; and
                  (C) to comply with a legal requirement to record, 
                retain, or transmit the personal information in 
                connection with opening an account or obtaining a 
                financial product or service.
          (3) Deletion of image.--A financial institution that makes a 
        copy or receives an image of a driver's license or personal 
        identification card of an individual in accordance with 
        paragraph (1) shall, after using the image for the purposes 
        described in paragraph (2), permanently delete, within a 
        reasonable amount of time--
                  (A) any image of the driver's license or personal 
                identification card, as applicable; and
                  (B) any copy of any such image.
  (c) Disclosure of Personal Information.--Nothing in this section 
shall be construed to amend, modify, or otherwise affect any State or 
Federal laws that govern a financial institution's disclosure and 
security of personal information that is not publicly available.
  (d) Relation to State Law.--The provisions of this section shall 
preempt and supersede any State law that conflicts with a provision of 
this section, but only to the extent of such conflict.

                          PURPOSE AND SUMMARY

    Introduced on March 9, 2017 by Representative Tipton, H.R. 
1457 the ``Making Online Banking Initiation Legal and Easy Act 
of 2017'' or ``MOBILE'' Act authorizes a financial institution, 
upon an individual's request, to record personal information 
from a scan, copy, or image of such individual's driver's 
license or personal identification card and store the 
information electronically to verify the customer's identity 
and prevent fraud or criminal activity. H.R. 1457 requires the 
financial institution to delete the image after using it for 
the permitted purpose.

                  BACKGROUND AND NEED FOR LEGISLATION

    Currently, the majority of states' laws permit mobile 
banking applications or apps to copy (aka ``scan'' or 
``swipe'') state-issued driver's licenses or personal 
identification cards to verify the identity of their customers. 
In these states, there is no legal barrier to consumers that 
wish to open a bank account or seek certain other banking 
services on a mobile device.
    However a minority of states do not permit the use of 
state-issued driver's licenses or personal identification 
cards. Five states prohibit making and retaining copies of 
driver's licenses (Colorado, Kansas, Mississippi, North Dakota, 
and Tennessee) and two states prohibit swiping driver's 
licenses (Illinois and Oregon). Twelve additional states and 
the District of Columbia have potentially ambiguous laws 
(Arizona, California, Florida, Hawaii, Maine, Nebraska, New 
Hampshire, North Carolina, Oklahoma, Oregon, Rhode Island, and 
Vermont).
    The MOBILE Act creates uniformity and certainty that will 
allow financial institutions to offer the full range of mobile 
banking to all consumers. It creates a new national standard 
that would permit financial institutions to scan and retain 
information from driver's licenses and personal identification 
cards in every state. This legislation also permits mobile 
banking apps to use state-issued driver's licenses or personal 
identification cards for the limited purposes of verifying an 
individual's identity and complying with financial 
institutions' legal obligations to obtain, retain, and transmit 
this information when a customer opens an account or obtains a 
financial product or service. Current anti-money laundering and 
terrorism financing regulations already require financial 
institutions to verify customers' identities, and obtain, 
record, and transmit information pertaining to that 
information.
    This legislation also includes provisions to promote the 
security of consumers' information. The bill requires financial 
institutions to delete all copies of driver's licenses and 
personal identification after having used them for the 
permitted purpose. The legislation does not affect state and 
federal laws governing financial institution's disclosure and 
security of non-public personal information, and limits its 
preemption of state law to only those provisions that directly 
conflict with the MOBILE Act.

                                HEARINGS

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 1457 on July 12, 2017.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
December 12, 2017 and December 13, 2017 and ordered H.R. 1457 
to be reported favorably by a recorded vote of 60 yeas to 0 
nays (Record vote no. FC-125), a quorum being present. Before 
the motion to report was adopted, the Committee adopted an 
amendment offered by Mr. Tipton.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 60 yeas to 0 nays 
(Record vote no. FC-125), a quorum being present.




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 1457 
will authorize a financial institution, with an individual's 
consent, to record personal information from a swipe or copy of 
an individual's driver's license or personal identification 
card and store the information electronically for the purpose 
of verifying the authenticity of the driver's license or 
identification card, or complying with legal requirements. 
Under current law, financial institutions are prohibited from 
selling, renting, transferring, or making such information 
available to another person, other than an affiliate.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, January 19, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1457, the MOBILE 
Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Sarah Puro 
(for federal costs) and Rachel Austin (for mandates).
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 1457--MOBILE Act of 2017

    H.R. 1457 would require states to permit consumers to open 
Internet-based bank accounts with a scanned photograph of their 
driver's license or other personal identification. Under 
current law, fewer than 10 states prohibit such actions. 
Because the bill would exclusively affect state laws, CBO 
estimates that it would have no effect on the federal budget.
    Enacting H.R. 1457 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 1457 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 1457 would preempt state laws that conflict with the 
bill's provisions; those provisions would allow financial 
institutions to record information from a driver's license or 
personal identification card and store the information when 
verifying the authenticity of the documents, verifying a 
person's identity, or complying with legal requirements.
    Although that preemption would limit the application of 
state laws and regulations, CBO estimates that H.R. 1457 would 
impose no duty on state, local, or tribal governments that 
would result in additional spending or a loss of revenues. 
Consequently, the cost of the mandate would not exceed the 
threshold established in the Unfunded Mandates Reform Act 
(UMRA) for intergovernmental mandates ($78 million in 2017, 
adjusted annually for inflation).
    The bill contains no private-sector mandates as defined in 
UMRA.
    The CBO staff contacts for this estimate are Sarah Puro 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was approved by H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   DISCLOSURE OF DIRECTED RULEMAKING

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee estimates that the bill requires one 
directed rulemaking within the meaning of such section.
    The rulemaking requires the CFPB to issue final regulations 
to carry out the amendments made by the Act within 90 days of 
the enactment of the Act, and those regulations shall be 
effective upon issuance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Making Online Banking Initiation Legal and Easy Act of 2017

    This section defines the various terms utilized within the 
Act.
    This section also authorizes a financial institution, upon 
an individual's request, to record personal information from a 
scan, copy, or image of such individual's driver's license or 
personal identification card and store the information 
electronically for the purpose of verifying the identity of a 
customer and preventing fraud or criminal activity. A financial 
institution must delete the image after using it for the 
permitted purpose.
    The bill specifies that it does not affect applicable state 
and federal laws that govern a financial institution's 
disclosure and security of personal information that is not 
publicly available.
    This section clarifies that the Act preempts and supersedes 
any conflicting State law to the extent of such conflict.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 1457 does not repeal or amend any section of a 
statute. Therefore, the Office of Legislative Counsel did not 
prepare the report contemplated by clause 3(e)(1)(B) of rule 
XIII of the Rules of the House of Representatives.

                                  [all]