FinCEN clarifies that banks may use government-issued digital credentials to verify customer identities, subject to compliance requirements

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FinCEN and staff from federal banking regulators issued two FAQs clarifying that banks and credit unions may use qualifying government-issued digital credentials to verify customer identities under the CIP, but institutions are not required to accept them. VDCs must be digitally signed by the issuing agency, cryptographically bound to a device, protected by activation factors such as a PIN or biometric authentication, and capable of being processed by the institution’s systems. Banks must still identify signs of fraud, handle anomalies, and retain sufficient records; existing customer due diligence, beneficial ownership, sanctions compliance, and suspicious activity monitoring obligations remain unchanged.