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Treasury Decides Not To Require Photocopying Of Customer IDs

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Treasury Decides Not To Require Photocopying Of Customer IDs



Life insurance companies and agents are praising the Treasury Department for its decision not to require financial institutions to photocopy customer identification documents.

Carl Wilkerson, chief counsel for securities with the American Council of Life Insurers, Washington, calls Treasurys action a sensible result.

ACLI, he says, is gratified Treasury decided to retain its original interpretation that the burden of maintaining photocopies exceeded the benefit.

William Anderson, senior vice president of government affairs with the National Association of Insurance and Financial Advisors, Falls Church, Va., adds that NAIFA is pleased Treasury responded to the concerns of NAIFA members, who sent thousands of letters to the department.

Under current regulations, financial institutions are required to take appropriate steps to verify the identity of their customers.

The requirement is part of the USA Patriot Act, which was enacted by Congress in the wake of the Sept. 11, 2001, terrorist attacks as a means of tracking the funds of terrorist groups and preventing money-laundering.

While photocopying of identification documents is permitted under the current rule, it is not required.

However, Treasury recently reopened the issue and asked for input on whether photocopying of documents should be required.

The life insurance industry strongly opposed such a requirement arguing that it could, in effect, force life insurance agents to take photocopying equipment with them on their visits to clients.

Treasury says it received 9,623 comments opposing any photocopying requirement.

Wilkerson says more than half of those comments came from the life insurance industry. Clearly, he adds, this issue was a lightning rod for public input.

Under the Treasury regulation, all financial institutions must have a customer identification program in place by Oct. 1, 2003.

The program must include reasonable procedures that would collect identifying information about customers opening an account, verify that the customers are who they say they are, maintain records of the information used to verify identity and determine whether the customer appears on any list of suspected terrorists.

In other news, the Senate Banking Committee has approved legislation, S. 1633, that would permanently extend the Fair Credit Reporting Act, but one provision of the legislation is causing concern among life insurers.

Overall, S. 1633 would continue the current preemptions of inconsistent state laws relating credit and information sharing among affiliates.

Specifically for life insurers, it would allow companies to continue to use medical information as they have in the past.

However, S. 1633 also contains a provision that effectively limits marketing and solicitation by financial institutions.

Under this limitation, financial institutions that share personal financial information among affiliates must notify their individual customers and give them the opportunity to opt out of any communications relating to solicitation and marketing.

Jack Dolan, a spokesman for the ACLI, says that overall, ACLI is pleased the Banking Committee approved FCRA reauthorization.

In addition, he says, ACLI especially is pleased that the committee did not alter the rules on medical information.

Life insurance, Dolan says, is the only industry that deals with medical information, and life insurers had to illustrate to the committee that the current FCRA provisions serve consumers well.

However, Dolan adds, ACLI is concerned about the opt-out provision relating to information sharing among affiliates for marketing purposes. In effect, by limiting target marketing, he says, this provision would force companies to advertise to a wider range of people, which is exactly the opposite of what consumers want.

Consumers, he says, want one-stop financial shopping, and this provision does not promote that objective.

Dolan adds that the opt-out provision will raise costs for both financial firms and consumers.

Similar legislation, H.R. 2622, has been approved by the House of Representatives. However, the House bill does not contain the opt-out provision.

If S. 1633 is approved by the full Senate, a House-Senate Conference Committee would convene to develop a consensus bill.

FCRA will expire at the end of this year unless it is reauthorized.

Finally, Anderson says NAIFA is pleased with language contained in a military appropriations bill that would maintain the current rules regulating life insurance sales on military bases.

Currently, a directive is in place that regulates the time, place and manner in which life insurance agents can offer products to military personnel on military bases.

However, the Defense Department has suggested that it might change the directive in a way that could effectively ban life insurance sales on bases.

NAIFA says the current directive should remain in effect, since it provides military personnel with access to life insurance products while protecting service personnel from predatory sales practices.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 26, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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