The Federal Reserve Board announced on Thursday that it is joining other federal financial institution regulatory agencies and the Financial Crimes Enforcement Network in allowing banks more flexibility in collecting certain customer identification information. Under the new guidance, banks and credit unions can now obtain a tax identification number from a third party instead of directly from the customer.

Banks and credit unions are legally required to verify the identity of potential customers by gathering specific identifying information before opening an account. This requirement has been in place since 2003. The Board noted that significant changes have occurred in how customers interact with banks and access financial services since then. The updated approach aims to provide banks with additional options for obtaining necessary information while maintaining risk-based procedures for verifying customer identities.

The decision to use alternative collection methods is optional; banks are not obligated to adopt these changes. The Federal Reserve Board coordinated this action with the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the National Credit Union Administration, and the U.S. Treasury Department's Financial Crimes Enforcement Network.

"This requirement's implementation in 2003, there have been considerable changes in the way that customers interact with banks and receive financial services. Today's action will grant banks flexibility in how they obtain this information, while ensuring that risk-based procedures continue to underpin verification of a customer's identity," according to the statement released by the Board.

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