WASHINGTON--America's Credit Unions President/CEO Scott Simpson sent a letter to Treasury Secretary Scott Bessent outlining how credit unions currently work to verify members' identities, following comments that an Executive Order is in the works to add citizenship verification to new and existing financial institution accounts.
"Credit unions already comply with the Customer Identification Program (CIP) requirements established under the Bank Secrecy Act and implemented by the Financial Crimes Enforcement Network," Simpson wrote. "The existing CIP framework requires credit unions to obtain and verify identifying information for each person opening an account and provides a risk-based approach that has functioned effectively for more than two decades. Expanding these obligations to require the collection and verification of citizenship information would impose additional operational, technological, and member-service burdens on credit unions, and those burdens would fall particularly hard on smaller institutions with limited compliance resources."
Should the Administration move forward with an Executive Order, Simpson outlined recommendations to minimize the impact on credit unions:
- Implementation: Simpson asked for CIP changes to go through notice-and-comment rulemaking to "allow affected institutions to identify operational concerns, provide data on implementation costs, and propose workable verification standards before new obligations take effect" while also allowing financial regulators to coordinate supervisory expectations
- Prospective application: Simpson requested that any new requirement apply to prospective accounts, noting that requiring retroactive citizenship documentation for existing accounts "would present substantial operational challenges" and "would fall disproportionately on smaller credit unions, which often serve rural, low-income, and underserved communities and which have limited staff and technology resources available for large-scale outreach"
- Compliance runway: Simpson called for "an adequate implementation period" to allow credit unions time to appropriately update processes and systems, in consultation with regulators and industry stakeholders to determine what is feasible
- Good-faith standard: Simpson commended the Administration on its commitment to reducing regulatory burdens on community financial institutions. Consistent with those efforts, federal regulators should honor good-faith efforts to comply with any new requirements