If a bank declines an application for a checking account, their decision probably stems from two possible factors If they cannot adequately authenticate the identity of an applicant, then a bank’s staff may elect to turn down the application because of the expectations of their prudential regulator. If the bank’s research determines that a consumer banking history shows a pattern of misbehavior, it’s also likely that the bank will pass on the account.
The first reason owes to regulatory expectations placed on banks by the state and federal regulators. Banks must be able to prove that they have verified the identity of a person before approving them for an account. The banks ask for a variety of personally identifiable information. While they do not have to turn over such info to the government (as many fear in today’s political environment), they must show that they have processes in place to ascertain the identities of applicants.
If you attempt to open an account in person, most banks will ask for two forms of i.d. You could submit a Social Security card, a driver’s license, a state-issued i.d., a passport, or a birth certificate. At least one of them should bear your photograph.
If you are not a citizen of the United States, you can sometimes produce other forms of documentation. Some institutions will accept a matricula consular card. Some will take an ITIN (individual tax identification number).
Either way, you will need to have a physical address in the United States where the bank can send a card to you. Sometimes, the compliance departments in banks will flag an application if many applications have already listed that address for many other accounts. Sometimes, people living in institutional housing encounter challenges. Nonetheless, most banks can intervene with human intelligence to, waive that block if staff understands why so many people are asking to have cards sent to the same place.
Recently, new technologies have emerged that allow banks to verify the identities of individuals who would otherwise not have access to the right documentation. These methods could be a powerful tool in the battle to reduce the number of unbanked households in the United States.
Their arrival may have contributed to recent positive changes in financial inclusion. The ranks of the unbanked (households without checking or savings) have dropped recently. As far back as in 2011, 8.2 percent of households were characterized as unbanked by the FDIC. By 2015, the count fell to 7.0 percent. In the report it issued last week, the FDIC found that only 6.5 percent were now unbanked.
These systems allow a consumer to upload information that can validate identity. A user can upload a copy of a utility bill as a means of verifying residence at a US address. Because so many non-citizens try to apply for an online account, even though they live outside of the US, the technologies can permit a bank to establish a device location.