Banks in the US will benefit from greater flexibility in collecting Taxpayer Identification Numbers (TINs) under new Customer Identification Program (CIP) rules from FinCEN, the OCC and the FDIC.
Comply Exchange, a provider of tax compliance software, recently delved into the update and what it means.
Previously, banks were required to collect full nine-digit TINs directly from customers during onboarding. The updated regulations acknowledge the challenges of digital banking and privacy while maintaining compliance with IRS Code 3406, which mandates accurate TIN collection to avoid 24% backup withholding.
The changes now allow banks to use trusted third-party data sources to obtain TINs, offering a way to simplify onboarding and improve customer experience while meeting compliance obligations.
Technology is expected to play a central role in supporting these new processes. AI-driven identity verification and TIN validation tools, such as Comply Admin and eForms, can help banks quickly and securely collect and confirm customer data. These solutions automate data collection, reduce fraud risks, and enhance compliance, ensuring banks meet IRS standards while reducing manual effort.
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