On Friday, FinCEN issued an Advisory addressing non-work authorized populations and their employers as related to BSA/AML and other supervisory concerns for banks.
While the advisory raises a number of concerns, the provision that warrants the closest attention is agencies’ recommendation for institutions to treat the use of an Individual Taxpayer Identification Number (ITIN) as a risk factor when a customer opens an account or applies for credit.
That guidance sits in tension with the agencies’ own long-standing position that no customer category carries a uniform level of risk, and, in the credit context, it can place an institution in conflict with fair-lending requirements under the Equal Credit Opportunity Act if applied as a categorical screen or other indicia of heightened risk.
Notably, this Advisory functions as a clear preview of what the agencies are likely to propose in future rulemaking, as directed by the President’s Executive Order, “Restoring Integrity to America’s Financial System.”
IBAT is preparing a resource summarizing concerns raised by the FinCEN Advisory, along with practical implementation steps for member banks. We also expect this topic to be a significant discussion on Wednesday’s “Ask IBAT Anything” call. As always, AIA is free to attend and is open to all members.
As a practical matter for the near term, we recommend anchoring any enhanced due diligence in specific transactional behavior rather than in the identifier itself, which serves the anti-money-laundering objective while limiting fair-lending exposure. We recognize that this is not a straightforward endeavor but should allow your respective institution to demonstrate compliance on all fronts through objective and consistent criteria documented fully.
