FinCEN Digital ID Rules for Banks
Banks can now use government digital IDs for customer checks but must handle fraud risks.
In brief
Banks can now use government digital IDs for customer checks but must handle fraud risks. Banks can use government-issued digital credentials for identity verification but must ensure systems can detect fraud and handle exceptions. Originally reported by Pymnts.
FinCEN clarifies digital ID use
Federal financial regulators allow banks to use government-issued digital credentials for customer identity verification.
Digital credentials require tech checks
Banks must ensure systems can verify digital credentials meet legal identity requirements.
Digital vs. traditional IDs
Digital credentials are cryptographically signed and protected by activation factors unlike photos of IDs.
Fraud risks remain
Banks must check for discrepancies in sanctions, records, addresses and device risks.
Compliance unchanged
Existing customer due diligence and fraud monitoring rules stay in place for digital ID use.
Next steps for banks
Banks need procedures to handle fraud, request extra docs, or suspend onboarding if needed.
At a glance
Banks can use government-issued digital credentials for identity verification but must ensure systems can detect fraud and handle exceptions.
