ALEXANDRIA, Va. –NCUA has joined with the FDIC and the Office of Comptroller of the Currency, in concurrence of the Financial Crimes Enforcement Network (FinCEN), in issuing an order granting an exemption from a requirement of the Customer Identification Program (CIP) Rule implementing Section 326 of the USA PATRIOT Act.
The CIP Rule requires a bank or credit union to obtain taxpayer identification number (TIN) information from its customer before opening an account, and the exemption permits a bank or credit union to use an alternative collection method to obtain TIN information from a third-party rather than from the customer, according to the agencies.
The agencies said the order applies to accounts at all entities they oversee.
‘Significant Evolution’
“Since the CIP Rule was issued initially in 2003, there has been a significant evolution in the ways consumers access financial services, along with a rise in reported customer reluctance to provide their full TIN due, in part, to data breaches and identity theft concerns,” the agencies said in a joint statement. “Accordingly, this exemption provides flexibility to those entities supervised by the agencies that must comply with the CIP Rule. The exemption does not change the underlying requirement for banks and credit unions to have risk-based CIP procedures that enable them to form a reasonable belief they know the true identity of each customer.”
The agencies added the exemption is optional, and entities are not required to use an alternative collection method to obtain a customer’s TIN information.
DCUC issues Statement of Support
The Defense Credit Union Council said it strongly supports the joint agency exemption order.
“(Security) concerns are often pronounced in the military community, where operational security and personal privacy are paramount,” DCUC said. “By permitting financial institutions to securely retrieve necessary identification data from reputable third-party databases instead of requiring members to directly divulge sensitive information, regulators have provided much-needed flexibility to improve the member experience.”
Compliance Relief
DCUC said it welcomes the targeted compliance relief, noting that it is entirely optional for credit unions to adopt.
“By eliminating a one-size-fits-all mandate and allowing an alternative TIN collection method, the agencies are empoweringeach institution to choose the approach that best fits its mission and membership. This flexibility is especially valuable for defense credit unions, which often operate on military installations worldwide and serve a mobile, deployed clientele,” DCUC said. “Every dollar diverted to redundant compliance costs is a dollar not spent on military community programs, better rates, or improved services for service members and their families.
“Regulatory improvements like the CIP exemption help ensure that resources can be redirected from paperwork to people – enhancing the financial well-being of those who wear our nation’s uniform. DCUC has long advocated forcommon-sense regulatory right-sizing, and this order is a prime example of smart relief that upholds safety and soundness while easing unnecessary administrative burdens,” the organization added.
Member Access and Experience
The Defense CU Council particularly emphasized that it believes the modernization will directly improve member access to financial services and theoverall banking experience.
“By embracing innovative identity verification tools, “defense credit unions can expand online and mobile banking capabilities to better serve members stationed around the globe. For example, a newly enlisted service member or a military spouse will find it easier to open an account or apply for a loan remotely without the friction of submitting a full TIN through potentially insecure means.
“Regulators themselves have highlighted that this exemption promotes financial inclusion by addressing the legitimate concerns of customers unwilling to provide their full TIN electronically, thereby allowing greater access to accounts and credit,” the DCUC statement continued. “In practical terms, military families – who frequently relocate or deploy – will enjoyfaster, more convenient account opening and verification processes that maintain robust security without sacrificing convenience. DCUC sees this as a win-win: reducing barriers for members while preserving strong anti-fraud protections.”
Benefits for Military Community
DCUC said the exemption is particularly meaningful for credit unions serving the armed forces community. Defense credit unions exist solely to support the financial readiness of military personnel and veterans, and any measure that helps them better fulfill this mission is wholeheartedly welcomed, it stated.
“Credit unions, especially those serving our military community, are vital to financial readiness and inclusion,” Jason Stverak, DCUC’s chief advocacy officer, said in a statement.
