House Committee Draft Bill Could Expand Use of Municipal ID Cards

The House Financial Services Committee may consider legislation that would require financial regulators to tell banks and credit unions that identification cards issued by many cities and counties may be used as an acceptable form of identification.

In preparation for a hearing featuring heads of the so-called “mega-banks,” the panel released a list of draft legislation it might consider. Rep. Ritchie Torres, (D-N.Y.) is listed as the possible sponsor of the identification card legislation.

The draft bill states that financial institutions must have a risk-based process for evaluating new customers to establish the true identity of the person.

The draft bill indicates that during the past decade, more than two dozen cities and counties have issued municipal identification cards to people who may not have a driver’s license, including young people, the elderly, homeless residents, and immigrants. “Municipal identification programs help vulnerable populations access private and public services, including library services, utility accounts, food, medical care, and housing assistance,” according to the legislation.

While the financial regulatory agencies have issued statements saying that such documents are acceptable, some financial institutions have declined to accept them. “It is important for the Agencies to clarify, in guidance, that financial institutions may accept municipal identification to establish a customer’s identity if such identification enables the bank to form a reasonable belief that the bank knows the true identity of the customer,” the legislation reads.

The Center for Popular Democracy has recommended that cities and counties work with financial institutions in designing the cards in an effort to ensure they are acceptable to credit unions and banks.

“As municipal ID programs become more and more common and financial institutions become more familiar with city-issued cards, the list of banks that accept them should grow and will likely start to include many of the larger financial institutions,” the center, which states it works to “create equity, opportunity and a dynamic democracy,” said in a report.

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