Section 326 Requires Financial Institutions to Verify Customer Information and Check Identities
Amidst concerns regarding terrorism’s link to money laundering following September 11, 2001, financial institutions-including payday loan and check cashing companies-are stepping up their customer verification procedures as a result of the USA Patriot Act.
More specifically, Section 326 of the USA Patriot Act requires financial institutions to:
- Verify the identity of customers opening an account
- Maintain records of the person and information used to verify identity
- Determine whether the customer appears on terrorist lists
Entitled “International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001”, the act has procedures set forth that have been followed by banks since it initially took effect in October 2003. But it is clear that the definition of financial institutions includes payday loan companies, as well as investment and insurance companies, banks, brokers, travel agents and money service businesses.
What Do Payday Loan Companies Need to Do?
Like all other financial institutions, payday loan companies and other Financial Service Centers must collect and verify client information including:
- Date of birth
- Address (P.O. boxes not acceptable)
- Identification Number (either a tax ID or Social Security number)
Official documents may be used in conjunction with identity verification software or services to verify the above information. Thorough identity verification ensures compliance the Patriot Act’s “Know Your Customer” requirement. Once the identity is verified according to USA Patriot Act standards, the clients name needs to be cross-referenced against the Office of Foreign Assets Control’s (OFAC) SDN list. OFAC’s Regulations for Money Service Business are available here. Like with the “Know Your Customer” compliance software, outside vendors supply OFAC compliance software to help payday loan companies satisfy this requirement, too.
How Can Lyons Commercial Data Help Satisfy These Requirements?
Just as many banking and other financial institutions get help from outside vendors to verify identities and check names against terrorist lists, payday loan companies are also seeking services to satisfy these requirements. Lyons Commercial Data offers patriotAGENTTM to payday loan companies to do just that. patriotAGENTTM provides name search and verification for the “Know Your Customer” requirement of the act. In addition to this capability, patriotAGENT offers the flexibility to check the OFAC and other terrorist lists and report any matches that may arise. Lyons Commercial Data offers more than just Patriot Act Compliance to payday loan companies. iBankRegistryTM is an online tool that helps payment processors verify bank routing numbers, a National Automated Clearing House Association (NACHA) requirement for ACH transactions, thus reducing returns and the fees associated with invalid routing numbers.
About Lyons Commercial Data
Established in 1996, Lyons Commercial Data, a division of Autoscribe Corporation, is one of the nation’s largest independent publishers of bank routing information. More than 2,500 U.S. financial and credit institutions rely on Lyons to provide financial intelligence for transaction processing. This includes bank routing information, OFAC/USA Patriot Act compliance, account number verification and other services critical to transaction processing. Lyons customers include financial institutions, national and municipal government offices, insurance companies, treasury departments, and payroll processing operations throughout the United States.