Answer:
A broad prohibition on opening accounts for NRA/RA’s may lead to accusations of discrimination and reputational risk.
Speaking from an AML perspective, Institutions should proactively have a Customer Identification Program (CIP) that is risk based and reasonably designed to allow the institution to form a reasonable belief that it knows the identity of its customers, regardless of citizenship. This includes having a policy for account opening for resident aliens or nonresident aliens.[1]
TCA often finds that institutions already have accounts for NRA/RA’s that the institution thinks are US Citizens. This misconception is due to the fact that the customer presents a tax id number (TIN) that is a social security number (SSN), and the institution thinks the SSN is proof of citizenship. There are many noncitizens who are issued SSN’s because they are lawfully present in the US, are allowed to work, and earn social security benefits[2]. The SSN for noncitizens allows them to later collect the benefits they have earned[3]; SSN cards for noncitizens state “Valid for work only with DHS Authorization” on the card. Also sometimes, an individual taxpayer identification number (ITIN) is confused for an SSN as proof of citizenship if the institution is not clarifying if the nine digits being presented are an SSN or an ITIN.
Institutions should establish CIP standards for NRA/RA, clearly define the required documentary and nondocumentary identification verification methods to be used, consider factors related to citizenship in customer risk ratings (CRR), and develop other procedures and processes to analyze and mitigate risk for all customers. Employees should be trained to understand the different forms of TINs.
[1] FFIEC BSA/AML Assessing Compliance with BSA Regulatory Requirements – Customer Identification Program: Pay special attention to footnote 15 within this section of the FFIEC BSA Exam Manual; FFIEC BSA/AML Risks Associated with Money Laundering and Terrorist Financing – Nonresident Aliens and Foreign Individuals
[2] Taxpayer identification numbers (TIN) | Internal Revenue Service
[3] U.S. International SSA Agreements | International Programs | SSA
