Global financial institutions are faced with a growing need to “know” – identify and authenticate – their customers, to prevent fraud losses, the funding of terrorism, money laundering, and tax evasion. Failure to comply with proper identification of the institutions customers can result in monetary losses, Patriotcashoffer fines, and bad publicity.
Current ID Verification Practices at Financial Institutions
Financial institutions typically verify ID for the following types of transactions:
- Account Opening: The Patriot act initially required institutions to retain a copy of the ID presented during the account opening. This was subsequently reduced to requiring only the recording of key information proving that ID was verified (e.g. driver’s license number). While it may suffice to note the ID number, a simple clerical error, such as transposing numbers may invalidate the proof of the ID verification. Capturing the ID card during the account opening process confirms that the ID was verified, Cashforhousesillinois and opens the door for better subsequent interactions with the customer. Possibilities include: a) Adding the photo ID to a bank-issued debit or credit card, without the need for photo capture equipment. Small photo IDs are used by warehouse clubs in combined member/credit card applications. b) Showing the ID/photo, personal characteristics, and signature to the teller during a transaction to reduce ID fraud.
- Routine Transactions: Machine-readable identification cards (ID cards, credit/debit/ATM cards) can be used to identify a customer. The teller application can pre-populate information about the customer to speed up the transaction, and to create a more pleasant customer experience. nevadacashoffer
- Cash Withdrawals: ID cards are typically required for any cash withdrawal by a customer at a branch unless the withdrawal is at the customer’s home bank and the customer is personally known to the bank employee.
- Large Transactions: Financial institutions typically require multiple pieces of ID for transactions over a certain amount threshold, including transfers and deposits. This is necessary because losses can occur with large deposits (such as cashier’s checks) where the deposit is a forgery, but only detected after the amount was withdrawn.
- Check cashing: A recent FDIC survey sellahousefastohio (1) showed that 7.7% US households are unbanked, and over a quarter – 25.6 percent – of all households either don’t have a checking or savings account at all, or have a bank account but still choose to rely regularly on “alternative financial services” like payday lenders and pawn shops. Serving these customers can be profitable, especially in a tough economy, but require solutions to positively identify a person who is not a customer of the financial institution. This business is today largely handled by check cashing stores, pawn brokers, sellfastarkansas but increasingly viewed as an opportunity to bring customer into stores (such as convenience stores and gas stations) by offering check cashing services. In check cashing applications, the ID card is required for initial account registration and for subsequent check cashing transactions.
- Government Regulations: ID verification is required for any financial transaction that may require government reporting, such as in the US cash transactions over $10,000. In countries with foreign exchange regulations, transactions need to be reported by government ID number. Most foreign exchange windows require a valid ID.
Developments in Identification Documents
Post 9/11, it has become evident that government-issued identification (passports, national ID cards, driver’s licenses) were not sufficiently protected against forgery. The 9/11 Commission recommended that the U.S. improve its system for issuing identification documents, urging the federal government to set standards for the issuance of sources of identification.
For international travel, the International Civil Aviation Organization (ICAO) issues a standard for biometric passports, or e-passports. E-passports include biometric information on the passport holder on a secure chip. Public key infrastructure is used to authenticate the data stored on the passport chip. The United States (2) and most of the EU nations have adopted e-passports for all new passports issued.
Passports are only required for international travel, and are not typically used as ID in domestic commercial transactions where state-issued driver’s licenses are the primary identification documents.
The design of state driver’s licenses has typically been insecure and very easy to forge. The easy availability of counterfeit state ID documents creates a problem with ID theft, and the enforcement of liquor sales restrictions.
In 2005, President Bush signed the Real ID-“Improved Security for Driver’s License and Personal Identification Cards” Act (3). Real ID has been controversial, with several states demanding a repeal and replacement with the proposed PASS ID act. As of January 2011, Department of Homeland Security issued a waiver of the deadline, but states must be in full compliance by May 2011.
In addition to Real ID, webuyhousessaltlake Michigan, New York, Vermont, and Washington are issuing Enhanced Driver’s Licenses (EDL) (4). EDL’s provide proof of identity and U.S. citizenship, are issued using a secure process, and include technology that makes travel easier. EDLs are an alternative document to comply with travel rules under the Western Hemisphere Travel Initiative (WHTI) for entering the United States from Canada, Mexico, or the Caribbean through a land or sea port, in addition to serving as the permit to drive. Michigan, New York, Vermont, and Washington issue WHTI compliant documents.