I have heard various information over the years as to whether copying a customer's driver's license in a new account situation is a good or bad thing to do. I know some banks do it across the board and have been able to justify it to their regulators, while I have heard other tales that by using this practice we are collecting race information which we are only allowed to do on mortgage applications! While I was out on maternity leave my trainer and deposit operations manager decided to implement this procedure but before I jump down their throats, I wanted to get some other opinions --- thanks for your help!

We have determined that as long as the "new account file" is only kept for the purpose of establishing the depository relationship and is not reviewed as part of any loan determination, we are fine. We caution all our branches to not forward the file with the copy of the license to our underwriters.
Having the license has proved useful in new account fraud situations. The branch were the account was opened is called and over the phone descrribes the account holder. Doesn't happen too often, but it has saved some potential loses.

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Randy at Washington Trust

As long as the file is not shared with the lending operations I see no problem in collecting this information and yes it can be very useful information to have.

But, never keep a copy of the drivers license in a credit file is the advise an FDIC examiner gave me years ago.

Though not directly related to the question at hand, I would review your institution's newly implemented procedures and caution the use of the term "driver's license." Perhaps "photo identification" would be preferable. This will help avoid any problems under ADA with respect to persons with disabilities who cannot or do not drive. If an institution always requires a "driver's license" and subsequently refused to open an account because the customer did not have one, there could be repercussions.

We discuss this topic to an exhaustive level of detail roughly every 6 months, so you might search the archives for the earlier discussions.

Anonymous regulator here. Mr. Insley is correct that this topic rears up every so often, the fear being, of course, that you may be cited for a violation of Reg B.

It's not a violation of Reg B for a bank to retain a copy of a loan applicant's driver's license so long as there is a legitimate reason for doing so and the bank is copying every applicant's license. For example, if we find that you copy only minority applicants' licenses, or only females', this would be a problem.

Also, if a bank has a problem with fraud and believes copying the licenses will somehow alleviate the problem, that won't result in a violation either.

Even if you can't tell us why you copy licenses, we won't cite a violation of ECOA.
We will, however, check to make sure that you copy everyone's license and that the copying isn't being done in order to discriminate against certain classes of individuals.

Hope this helps. AR.

Section 326 of USA PATRIOT requires that regulations must be final by October 26, 2002 regarding verfication of customer identity. One of the things that will be required is for the institution to have reasonable procedures for "maintaining records of the information used to verify a person's identity". It will be interesting to see if they deal with keeping a copy of a government issued ID as a record.

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This is a personal observation that should not be taken as legal advice nor relied upon for any purpose.

At my previous OTS regulated bank (we originated mortgages only), they did not have a problem w/ a photo ID in the file. However, we were cited when our HMDA data did not match what was in the file.

We had made it a company policy to require photo ID on all originated files but I do remember several states having issues w/ a driver's license being copied. Sorry but I can't seem to remember which states.

Remember, having a copy of the drivers license in the credit file may just provide the examiners with a rope to hang you with.

The last thread on this topic, regarding checking accounts, was 11-26-01 if you want to review.

Am I understanding AR correctly when it is stated that a photocopy of identification is permissible for a loan file? Can this be collected at time of application? My knowledge of Reg B is very limited but to me, this seems to be in violation. Could someone please explain.

You understood me correctly, Ms. Patty. It's not a violation as long as you request copies from all applicants. AR.

AR -
What about requesting a driver's license in all scenarios where address on the loan application doesn't match the credit bureau. Or some other verification.

If drivers license is requested as a know your customer tool consistently, it wouldn't be an issue, correct?

I enjoy beating a topic into the ground...In reviewing previous posts, a post last dated 6-11-01 takes a different approach in that id collection is a violation of Reg B. SO....which is it, where can I find the answer within Reg B and why do we think ID collection is not allowed when it is?

Section 202.5(d) prohibits inquiries about marital staqtus; income from child support, alimony, etc; sex; childbearing; and race, color, religion, and national origin. Section 202.5(b) provides an exception for loans for the purchase or refinance of a borrower's principal dwelling, which is how we get the monitoring information requirements for home loans.

The answer to: which is it? is, we're not quite sure. That's why we have this conversation every six months or so, and why the answers today are somewhat different than they were back in June. This is a gray area, as you can see from the responses to this and past threads on the topic.

The current thought on this issue is obviously affected by the events of Sept 11 and the passage of the PATRIOT Act. Add in that the Federal Reserve has proposed at least twice over the past five years to allow "optional" collection of race and gender data on all loans, and the landscape gets grayer still.

AR's rational approach to finding such information in a file is not universal among his colleagues at the regulatory agencies, either.

There is plenty of good guidance here on the deposit side for retaining a copy of the id. I also think it's likely that we may soon be required by Treasury to do that.

I would still step carefully on the loan side, however.

Remember that AR is from one regulatory agency, mine thank goodness. Other agencies may still be treating this differently. I know, I know, you're all saying, "how could that be, we all have to follow the same rules". Yes Virginia, there are variances among agencies and geographic regions.

While I believe his thinking is sound and the upcoming PATRIOT Act may even encourage this, there are those who may disagree.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 02-08-2002).]

Compliance Survival Tactic #1:
Call your regulator with the question. Obtain the answer either in e-mail or voice mail. When your examiner arrives and disagrees, show/play him/her the message.

It's worked for me more than once!

Compliance Survival Tactic #1 (alternate plan): Get someone else to call your regulator on your behalf and pose the question for a party who wishes to remain anonymous (but "satisfactory" or better!)