A number of consumer privacy laws protect individuals from having to reveal their social security number to businesses and various organizations, unfortunately banks are not one of those businesses.  Banks require customers to provide their social security number for identification purposes to comply with tax and national security laws.

Consumers are generally required to provide their social security number to businesses that are engaging in a transaction that requires notification to the Internal Revenue Service or initiating a financial transaction subject to federal Customer Identification Program rules.

Federal regulations that were established in May 2003 specifically require banks, savings associations, credit unions, and other financial services providers establish a Customer Identification Program (CIP).  Information required with CIPs includes the customer’s name, date of birth, address, and a social security or federal tax identification number.

Under the USA Patriot Act, financial institutions are required to establish minimum standards for properly identifying their customers.  Banks and other financial institutions are required to obtain an identification number for several different kinds of transactions including reporting the interest earned on deposit accounts to the IRS, making monetary transactions, and when opening a new account such as a new checking account, savings account, loan account, and/or other investment accounts and related financial products.

These requirements also make it easy for the bank to verify the account holder’s identity when they contact the bank through various communication channels as well as help ensure that any funds are distributed to the correct designated individual when any financial disbursements are made.

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