In a recent letter to Andrea Gacki, Director of the Financial Crimes Enforcement Network (FinCEN), Federal Deposit Insurance Corporation (FDIC) Acting Chairman Travis Hill expressed his support for updating the Customer Identification Program (CIP) requirements to better align with modern financial services practices. This initiative is part of Hill’s broader commitment to regulatory reform and innovation, as outlined in his recent policy statements.

Background on Hill’s Policy Direction

As discussed here, since becoming Acting Chairman of the FDIC on January 20, Travis Hill has emphasized several key priorities, including regulatory review, innovation, and a focus on core financial risks. Hill has advocated for a comprehensive review of regulations to promote economic growth and has called for a more open-minded approach to fintech partnerships and technology adoption. His policy direction also includes improving the bank merger approval process, enhancing supervisory and capital adjustments, and modernizing the implementation of the Bank Secrecy Act.

Key Points from Hill’s Letter to FinCEN

In his letter dated February 7, Hill highlighted the need to update CIP requirements to reflect current financial services practices. He noted that many nonbank fintech companies use processes where customers provide the last four digits of their tax identification number (TIN) and give permission to obtain the rest of the TIN from a trusted third-party source, such as a consumer reporting agency. Hill pointed out that many banks have requested the ability to onboard customers in this manner but believe the current CIP rule does not permit such an approach.

Hill emphasized the progress made by FDIC and FinCEN staff in exploring potential changes to the CIP rule to eliminate frictions for customers seeking relationships with banks and fintechs. He expressed his support for expediting efforts to provide flexibilities for banks to comply with CIP requirements using the last four digits of the TIN.

Hill stated, “Aligning regulatory requirements to modern onboarding processes is long overdue. Federal authorities have long allowed banks to onboard credit card customers in this way; I support extending this approach more broadly.”

Our Take

Hill’s support for modernizing CIP requirements is consistent with his broader vision for the FDIC, which includes fostering innovation and ensuring that regulatory frameworks keep pace with technological advancements. His support follows Congresswoman Maxine Water’s letter to FinCEN in September 2023 requesting the same change. FinCEN also issued a request for information in March 2024 on the requirement to collect all nine digits of a TIN.