Keeping Copies of Drivers Licenses with Loan Docs

Answered by:

Question:

The financial institution I am at keeps copies of drivers licenses with the applicants' loan documentation. Should they be concerned about possible discrimination issues, because there is a picture of the applicant present when an application is processed for approval?

Answer:

Answer by Dan Persfull: No. However, examiners may take a different view. There is nothing in Reg B that prohibits you from keeping those copies in the file, it only prohibits you from using that information in a discriminatory fashion. To be on the safe side most lending institutions will segregate that information.

Answer:

Answer by David Dickinson : While I agree with Dan that there is nothing in Reg B that prohibits this practice, footnote #40 of the new BSA/AML Examination Manual states that you should not do this:
Banks are not required to make and retain photocopies of any documents used in the verification process. However, if a bank does choose to do so, it should ensure that these photocopies are physically secured to adequately protect against possible identity theft. In addition, such photocopies should not be maintained with files and documentation relating to credit decisions to avoid any potential problems with consumer compliance regulations.

Answer:

Answer by Dan Persfull: Thanks David, I missed this footnote.

First published on BankersOnline.com 3/27/06