Banks are required by law (Patriot Act) to positively identify account applicants. These are known as Know Your Customer (KYC) regulations. Something is showing up related to your identity, past usage of accounts, or even a fraud alert on an account that you’re not even aware of. It could be something as simple as an address mismatch between your drivers license and application you submitted. An expired license is also another common issue. Name mismatch between application and birth certificate is also common.
Banks are required to keep many things secret per the Bank Secrecy Act. The exact reasons aren’t disclosed to customer support, so literally they don’t know.
Title III of the Patriot Act requires financial institutions to meet two core KYC components: the Customer Identification Program (CIP) and Customer Due Diligence (CDD). Current KYC procedures embrace a risk-based approach to counteract identity theft, money laundering, and financial fraud:
- Identity Theft: KYC helps financial institutions establish proof of a customer’s legal identity. This can prevent fake accounts and identity thefts from forged documents or stolen identity documents.
- Money Laundering: Both organized and unorganized criminal sectors use dummy accounts in banks to store funds for narcotics, human trafficking, smuggling, racketeering, and more. KYC limits their ability to avoid suspicion by spreading money out across several accounts.
- Financial Fraud: KYC helps prevent fraudulent financial activities, such as using fake or stolen IDs to apply for a loan and then receive funding with fraudulent accounts.<<
