“Financial institutions are still responsible for the verification of a person’s identity when processing a transaction, such as cashing checks. The institution should verify the identity of the person receiving the proceeds and obtain and retain a record of the name and address, the type of identification reviewed, the number of the identification document (e.g., driver’s license), and the person’s taxpayer identification number (e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States may be made by passport, alien identification card, or other official document evidencing nationality or residence (e.g., a foreign driver’s license with identification of home address).”
This commentary would require many institutions to increase the documentation currently obtained for non-customer check cashing. However, the bulletin states institutions should establish limits and utilize a risk-based approach to the category of checks the institution will accept. Although acknowledging that certain checks pose less of a risk, it is unclear whether the bulletin’s identification procedures will be an agency expectation of all non-customer check cashing procedures or will be risk-based depending on the check cashing services offered by the bank.
At this time, it is our recommendation that institutions consider implementing these verification procedures for non-customer check cashing for items other than on-us, payroll, or government checks. Institutions may also want to consider applying the verification procedures when cashing on-us, payroll, or government checks above a determined dollar threshold.
To read the DBF’s bulletin. Click here.