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Agencies Issue Final Rules on Identity Theft
(PYA Alert dated November 30, 2007)
The federal financial institution regulatory agencies and the Federal Trade Commission are jointly issuing final rules on identity theft “red flags” and mailing address discrepancies. The final rules implement Sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act). The rules implementing Section 114 require each financial institution to develop and implement a written identity theft prevention program to detect, prevent, and mitigate identity theft in connection with the opening of certain accounts or certain existing accounts.
The final regulations list the four basic elements that must be included in the identity theft prevention program of a financial institution. The program must contain “reasonable policies and procedures” to:
- Identify relevant red flags for covered accounts and incorporate those red flags into the program;
- Detect red flags that have been incorporated into the program;
- Respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and
- Ensure that the program is updated periodically, to reflect changes in risks to customers or to the safety and soundness of the financial institution or creditor from identity theft.
The final rules are effective on January 1, 2008. Covered financial institutions and creditors must comply with the rules by November 1, 2008. The full text of the final rules is available on the agency websites and will be published shortly in the Federal Register.
If you would like to discuss how PYA can assist your financial institution with identity theft compliance, please contact Mike Shamblin, Doug Arnold or Matt Neilson.
The information provided via PYA Alert, Tax Planning Alert, or Audit and Accounting Alert should not be construed as accounting, auditing, consulting, or legal advice on any specific facts or circumstances. The contents are intended for general information purposes only. Please contact us at (800) 270-9629 to discuss your specific situation or to discuss any specific questions you may have.
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