[Federal Register Volume 68, Number 186 (Thursday, September 25, 2003)]
[Proposed Rules]
[Pages 55335-55337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24226]
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DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AA28
Customer Identification Programs for Financial Institutions
AGENCY: Departmental Offices, Treasury.
[[Page 55336]]
ACTION: Disposition of comments and termination of inquiry.
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SUMMARY: The Department of the Treasury is announcing the results of
its July 1, 2003, Notice of Inquiry that sought comment on two aspects
of the final rules issued pursuant to section 326 of the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (the
Act). Following a review of comments and a careful analysis of the
issues, Treasury has determined that no changes to the final rules are
warranted.
FOR FURTHER INFORMATION CONTACT: Office of the General Counsel, (202)
622-1927.
SUPPLEMENTARY INFORMATION:
I. Background
On May 9, 2003, the Department of the Treasury (Treasury), through
the Financial Crimes Enforcement Network (FinCEN), together with the
federal functional regulators, jointly issued final rules implementing
section 326 of the Act.\1\ The final rules require banks, securities
broker-dealers, mutual funds, and futures commission merchants and
introducing brokers to establish reasonable procedures for the
identification and verification of new accountholders. These rules
became effective on June 9, 2003, although financial institutions have
until October 1, 2003 to come into compliance.
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\1\ See 68 FR 25089-25162. The Federal functional regulators
include the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision, the National
Credit Union Administration, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission. In addition to the
joint rules, FinCEN also issued separately a rule applicable to
various state chartered institutions lacking a Federal functional
regulator.
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On July 1, 2003, Treasury published a Notice of Inquiry seeking
additional comment on two discrete aspects of the final rules: (i)
Whether and under what circumstances financial institutions should be
required to retain photocopies of identification documents relied on to
verify customer identity; and (ii) whether there are situations when
the regulations should preclude reliance on certain forms of foreign
government-issued identification to verify customer identity.\2\
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\2\ 68 FR 39039.
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II. Summary of Comments
Treasury received over 34,000 comments in response to the Notice of
Inquiry.\3\ All comments have been reviewed. Treasury received comments
from a wide variety of individuals and entities, including members of
Congress, the Department of Justice, representatives and officials of
State and local governments, the financial services industry (including
the banking, securities, mutual fund, and insurance industries), faith-
based organizations, advocacy groups, and interested citizens.
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\3\ Treasury received over 27,000 comment letters, e-mails, and
web postings. Many of the comment letters offered separate opinions
on the two issues, thus raising the total number of comments
received on the two issues to over 34,000.
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The Photocopy Issue: Treasury received approximately 10,700
comments relating to the question of whether the final rules should
require financial institutions to make and retain photocopies of
identification documents relied upon to verify identity. As issued, the
final regulations do not require financial institutions to photocopy
identification documents. Although it is not dispositive of the issue,
Treasury notes that the great majority of those submitting comments,
nearly 90 percent, did not believe that the rules should be amended to
require financial institutions to make and retain photocopies of
identification documents.
The Foreign Identification Documents Issue: Treasury received
approximately 24,000 comments relating to the question of whether the
final rules should preclude financial institutions from relying on
certain forms of identification issued by a foreign government. As
issued, the final rules neither endorse nor preclude reliance on
particular forms of foreign government issued identification. Virtually
all comments were directed toward encouraging Treasury either to allow
financial institutions to accept, or to preclude them from accepting,
the Mexican consular identification document, the Matricula Consular.
Indeed, many of the comments addressed questions of immigration policy,
rather than the security of such documents. Again, although not
dispositive of the issue, the vast majority of those submitting
comments, nearly 83 percent, did not believe that the final rules
should be changed to preclude reliance on certain forms of
identification issued by a foreign government.
III. Resolution
Treasury issued the Notice of Inquiry to enhance the administrative
record with respect to the two issues outlined above. The addition of
over 34,000 comments has done precisely that. Despite the volume of
comments received, the comments presented no new arguments or
information relative to the requirements of the final rules that
Treasury and the financial regulators did not already consider in
developing the final rules.
Treasury remains persuaded, as it was at the conclusion of the
rulemaking process, that requiring photocopies of identification
documents is not an appropriate requirement to impose. While individual
financial institutions may well determine that it is prudent to
photocopy identification documents in some instances, an across-the-
board requirement is inconsistent with the risk-based approach of the
final rules and is not warranted.
The divergence of opinion concerning the relative security of
consular identification cards demonstrates the difficulties associated
with drafting a rule that would purport to specify ``unacceptable''
documents. And, given the wide array of identity documents available,
the security and reliability of which is constantly changing, it makes
little sense from a regulatory perspective to specify individual types
of documents that cannot be used within the regulation itself. Any such
list would inevitably be quickly out of date and may provide financial
institutions with an unwarranted sense of security about documents that
are not prohibited. Treasury is committed to protecting the financial
system from abuse by those seeking to finance terrorism or commit
financial crimes. This commitment includes providing financial
institutions with information relating to the security and reliability
of identification cards. Treasury will use appropriate methods, both
formal and informal, to ensure that such information is collected and
shared with the financial community to assist them in verifying the
identity of their customers.
IV. Compliance Deadline
Numerous commenters from the financial community requested that
Treasury extend the October 1, 2003 deadline for complying with the
customer identification regulations in light of the Notice of Inquiry.
The implementation deadline will not be extended. Treasury expects all
financial institutions covered by the customer identification
regulations to have their customer identification program drafted and
approved by October 1, 2003.
[[Page 55337]]
Dated: September 17, 2003.
Wayne A. Abernathy,
Assistant Secretary of the Treasury.
[FR Doc. 03-24226 Filed 9-24-03; 8:45 am]
BILLING CODE 4810-25-P