After September 11, 2001, President George Bush ratified the USA Patriot Act as a means to combat terrorism and limit the financing available to terrorist organizations. Asking for a driver’s license is part of the customer verification policy required under the USA Patriot Act.
Bank Secrecy Act
The USA Patriot Act amended the Bank Secrecy Act to require every bank to adopt a customer identification program as part of the internal procedures of the bank. Section 326 of the Bank Secrecy Act requires that every bank institute reasonable measures to establish the identity of a customer, which includes the customer name, address and any other verifying information the bank believes is necessary for identification. The bank is required to ensure that the customer does not appear on any terrorist lists, known or suspected, and to keep proof of identity on record.
The most basic way a bank can begin to comply with the USA Patriot Act regulations is to start with easily obtainable identification such as a driver’s license, as proof of identity establishment must occur prior to account opening. Banks and other financial institutions found to be in violation of the USA Patriot Act are subject to severe financial penalties. No financial institution is going to risk the severe penalties that will occur, so the bank will ask for a driver’s license and other forms of identification it deems necessary before any lending occurs.
Every financial institution will have USA Patriot Act disclosures posted throughout the bank branch or office. The customer identification program regulation offers the following model language for financial institutions to post: “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.” The banks are very clear that this information will be requested, and requesting a driver’s license is the easiest place to start complying with the regulations.
A bank will not lend funds to a person if the bank cannot properly establish the identity of the customer. A birth certificate is not sufficient to comply with identity verification, as identification with a picture is required. Other picture forms that are acceptable are military identification cards and passports. If a person does not have a driver’s license, the financial institution will inform the customer as to what alternate forms of identification the institution will accept.
Mary Frazier began writing in 2011 for various websites and has over 20 years of experience as a bank vice president and senior trust officer. Frazier is a Certified Trust and Financial Advisor, holds a Bachelor of Arts in economics from the University of North Florida and holds a Master of Science in finance from the College for Financial Planning.