ID Theft Red Flags FAQ IIB8 – Does the term “covered account” include accounts established in the U.S. by non-U.S. residents?

Compliance > Lending > FCRA
Q:  Does the term “covered account” include accounts established in the U.S. by non-U.S. residents?
 
A:  Yes.  The term “covered account” includes all accounts located in the U.S., including those established by non-U.S. residents.  While section 615(e) of the FCRA does not expressly address this question, it directs the Agencies to prescribe regulations and guidelines that relate to “risks to account holders or customers or to the safety and soundness of the institution or [creditor].”  Thus, section 615(e) of the FCRA serves both a consumer protection purpose and a safety and soundness purpose.
 
Federal consumer protection regulations take different approaches with regard to accounts established by non-U.S. residents.  However, regulations and examinations related to safety and soundness and other matters generally consider the risks posed by all activities undertaken and accounts held by an institution, including activities undertaken with and accounts opened by non-U.S. residents.  For example, the Customer Identification Program regulations implementing the USA PATRIOT Act encompass customer information collection and identity verification procedures for both U.S. persons and non-U.S. persons opening an account with a financial institution. See 31 C.F.R. § 103.121.
 
Therefore, in light of the fact that section 615(e) of the FCRA includes a safety and soundness component that requires financial institutions and creditors to protect themselves from identity theft perpetrated in connection with all accounts located in the U.S., the term “covered account” applies to accounts opened and maintained in the U.S. by non-U.S. residents, as well as by U.S. residents.
 
 
ADDITIONAL INFORMATION:
This information was obtained from the Interagency FAQs for Identity Theft Red Flags and Address Discrepancies - https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20090611a1.pdf
 

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