The American Fintech Council (AFC) has expressed its gratitude to the Federal Deposit Insurance Corporation (FDIC) for adopting a new approach to modernizing the Customer Identification Program (CIP) rule. This development follows an April 2023 letter from the AFC to the Financial Crimes Enforcement Network (FinCEN), which subsequently led to a formal agency request for information in 2024.
Ian P. Moloney, Senior Vice President and Head of Policy and Regulatory Affairs at AFC, stated: "We applaud Acting Chairman Hill for recognizing the urgent need to modernize Customer Identification Program (CIP) requirements to align with today’s financial services landscape." He emphasized that the AFC has been a vocal leader on CIP modernization, advocating for regulatory updates that protect consumers while encouraging responsible innovation.
Moloney noted that their message to FinCEN highlighted inconsistencies between current CIP rules and modern digital banking practices. He explained that existing requirements create unnecessary consumer friction without improving security. According to him, allowing fintech companies and partner banks to collect only the last four digits of a Tax Identification Number (TIN), while verifying the rest through trusted third-party sources, is a necessary update that enhances both security and financial inclusion.
He further stated: "As Acting Chairman Hill rightly pointed out, banks have long been permitted to onboard credit card customers using this approach. Extending this flexibility to fintech-powered services is important to maintaining fairness in the industry and aligns the application of the CIP rule with the intent of its underlying statute."
Modernizing these rules is expected to streamline account opening processes, promote financial access across communities, and maintain strong identity verification standards. The AFC urges FinCEN to proceed swiftly towards formal rulemaking that codifies this update.