| Our Security Efforts Protect You
Amy Manzetti
As part of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), new security measures are being implemented that protect you and the credit union.
What does this mean to you and your credit union?
Title III of the Act, International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, requires all financial institutions to:
- Implement reasonable procedures to verify the identity of any person seeking to open an account.
- Maintain records of the information used to verify the person's identity.
- Determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency.
- Provide the customer/member opening a new account with notice of the information collection requirement.
While some civil libertarians raise cautions about the law, almost 70% of financial industry professionals believe the USA PATRIOT Act will achieve its goal. That is protecting the U.S. financial system from terrorist financing and money laundering, according to a recent survey conducted by eFunds Corporation in Scottsdale, Ariz.
Additionally, the USA PATRIOT Act will help prevent the growing incidence of identity theft. According to the Privacy Rights Clearinghouse and a study by the University of California at San Diego, identity theft costs consumers an average of $808, and the cost to a financial institution is $1,800 per incident. If not contained, identity theft could cost U.S. consumers and institutions more than $8.6 billion by 2006.
Identity theft costs consumers an average of $808 per incident.
The final regulation requires all financial institutions to implement a customer identification program (CIP) that requires them to have procedures in place to obtain identifying information from anyone opening an account and to verify that information.
The CIP requirements will apply to every customer who opens an account, effective Oct. 1, 2003. Credit unions also will have to verify the identity of certain nonmembers.
Who is considered a customer?
The definition of a customer, according to the Act, includes:
- Individuals applying for credit union membership;
- Businesses applying for credit union membership;
- Associations applying for credit union membership;
- Other legal entities, such as trusts, applying for membership (but not the beneficiaries of trusts);
- Nonmembers who will be added as joint account owners on share, share draft, share certificate, deposit, and other savings products offered by the credit union; and
"In order to help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account."--U.S. Treasury Department
- Nonmember co-borrowers (but not guarantors and others who are not receiving the loan proceeds).
What information is required?
The information required by the CIP for people opening a new account includes:
- Customer name;
- Customer's date of birth;
- Customer's street address; and
- Customer's identification number--taxpayer identification number, Social Security number, or an employer identification number, and so forth.
You may not notice a significant change in the way your credit union does business. Perhaps the next time you visit your credit union to open an account, a staff member may ask for more information that will allow the credit union to identify you--and to protect you.
Published October 6, 2003
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