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CUNA Regulatory Comment Call

June 30, 2003

EXECUTIVE SUMMARY

• The Department of the Treasury is seeking additional comments on two issues under the recently issued regulations implementing Section 326 of the USA PATRIOT Act, which requires financial institutions to follow certain procedures to verify an individual's identity when opening an account. Those issues are: (i) whether and under what circumstances financial institutions should be required to retain photocopies of identification documents relied on to verify customer identity; and (ii) whether there are situations when reliance on certain forms of foreign government-issued identification, such as Matricula issued by Mexican consulates located in the United States, should not be permitted to verify members' identity.
• Credit unions should continue to do everything they can to prepare for the October 1, 2003 compliance date based on the final rule published in May 2003.
• On May 9, the U.S. Treasury, working with the National Credit Union Administration and other federal financial regulators, published the final rules implementing Section 326. The final rules are scheduled to take effect October 1, 2003. Even if changes are made to the final rules, there are no assurances additional time would be provided for compliance.
• Under the rules as published, financial institutions are not required to photocopy the documents on which they rely to verify identity. CUNA strongly supported this flexible approach provided under the final rule. CUNA also advocated the approach under the final rule to permit institutions to use matricula to verify an individual's identity.
• However, concerns have been raised within the Administration and by the House Judiciary Committee Chairman as to whether the final rule would be strengthened if photocopying were required and reliance on matricula no longer permitted, under some circumstances.
• CUNA's Regulatory Advocacy will be meeting with Administration officials and others in the next few days to oppose changes in the final rule to require photocopying and that would limit or preclude the use of Matricula. We are also objecting to the fact that key aspects of the final rule are being reconsidered so close to the October 1 effective date. Treasury and the federal financial regulators took the correct approach in the final rule, and we want to encourage them to stick with it. We encourage all leagues and credit unions to oppose the changes suggested in the request for comments.
• Comments are due by July 31, 2003. The Operation Comment section of CUNA's website provides a user-friendly way for you to write your e-mail and send it in to the Treasury. Operat ion Comment provides some talking points to assist credit unions in writing their e-mail. Copies of e-mails sent through Operation Comment are automatically sent to CUNA.
• If you send comments via another method than CUNA's Operation Comment, please also send a copy of your comments to CUNA by July 25, 2003. Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Senior Regulatory Counsel Catherine Orr at corr@cuna.com; or mail them to Mary and Catherine in c/o CUNA's Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. If you would like a copy of the Treasury notice seeking additional comments, please contact us or click here

Photocopying

• Regarding photocopying, Treasury and the regulators are seeking comments on specific questions:

1. Should the regulations require financial institutions to make and maintain a photocopy of identification documents upon which the financial institution relies to verify identity in all cases?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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2. Should the regulations identify specific instances in which photocopies of documents relied upon must be made and maintained?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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3. Should the regulations provide guidance to financial institutions concerning risk factors indicating when photocopying identification documents relied upon may be appropriate?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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   Matricula and Other Forms of Identification
   
   Regarding Matricula and other forms of identification issued by foreign governments, the regulators are seeking additional comments on:
   
   
4. Should the regulations preclude financial institutions' reliance on certain forms of identification issued by certain foreign governments?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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5. Should the regulations require financial institutions to obtain a passport number from all customers who are non-U.S. citizens?
   
   Yes ______ No ______ Please explain why or why not.
   
   

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6. What are the anticipated effects on non-U.S. citizens in the United States who are not required to have a passport?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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7. What are the anticipated effects on non-U.S. citizens who open accounts from broad, and thus are not required to have a passport?
   
   Yes ______ No ______
   
   Please explain why or why not.
   
   

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