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FinCEN Issues Order Related to CIP Rule

Michael Christians • June 28, 2025

Under 31 CFR 1020.220, a financial institution's Customer Identification Program (CIP) requires the collection of certain information in connection with the opening of a new account. Specifically, the rule requires the financial institution to collect the following from the customer:

Name
Date of birth (for an individual)
Residential or business street address, and
Identification number (e.g., taxpayer identification number)

Under an order issued by the Financial Crimes Enforcement Network (FinCEN) on June 27, 2025, financial institutions are now permitted to collect a customer's taxpayer identification number (TIN) from a third-party, instead of directly from the customer. To utilize this alternative collection method, the financial institution must have written procedures that: a) enable the financial institution to obtain the customer's TIN prior to account opening, b) recognize the relevant risks associated with obtaining the customer's TIN from a third-party, and c) enable the financial institution to form a reasonable belief that it knows the true identity of the customer. Nothing in the order requires the financial institution to utilize this alternative collection method.

You can access a copy of the FinCEN order here.

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Small Business Lending Rule Delayed Again

By Michael Christians • June 18, 2025

Today, the Consumer Financial Protection Bureau (CFPB) published an interim final rule extending the mandatory compliance dates once again for its small business lending data collection rule under Section 1071 of the Dodd-Frank Act. The new mandatory compliance dates are as follows: Tier One Lenders (those that originated at least 2,500 covered credit transactions in both years of their determination period) July 1, 2026 Tier Two Lenders (those that originated between 500 and 2,499 covered credit transactions in both years of their determination period) January 1, 2027 Tier Three Lenders (those that originated between 100 and 499 covered credit transactions in both years of their determination period) October 1, 2027 The interim final rule also clarifies that a covered financial institution may use any of the following combinations for its determination period - 2022 and 2023, 2023 and 2024, or 2024 and 2025. The CFPB indicates that it plans to use this additional time to initiate a new Section 1071 rulemaking. The notice of proposed rulemaking, which we anticipate will make significant changes to the current small business lending data collection framework, will be issued as expeditiously as possible according to the agency.

Section 1033 Open Banking Rule Likely to be Struck Down by Month's End

By Michael Christians • May 27, 2025

In late 2024, the Consumer Financial Protection Bureau (CFPB) finalized its open banking rule as required by Section 1033 of the Dodd-Frank Act. The rule requires financial institutions and other data providers to make covered data regarding financial products and services available to consumers and authorized third parties in electronic form. Almost immediately, the CFPB was sued in federal district court in Kentucky, alleging several deficiencies with the rulemaking. On May 23 rd , the CFPB’s general counsel indicated that the agency plans to file a motion for summary judgment by May 30 th asking the court to cancel the rule. In a status report filed with the court, the CFPB stated, “after reviewing the rule and considering the issues that this case presents, Bureau leadership has determined that the rule is unlawful and should be set aside.” Notwithstanding this development, financial institutions must keep in mind that Section 1033 of the Dodd-Frank Act statutorily mandates that the CFPB prescribe rules requiring covered persons to make certain information about financial products and services available to consumers in electronic form. Absent an act of Congress striking this requirement from the Dodd-Frank Act, the CFPB will need to start anew with its open banking initiative.

CFPB Withdraws Three Proposed Rules, Search for a Permanent Director Continues

By Michael Christians • May 15, 2025

On May 15, 2025, the Consumer Financial Protection Bureau (CFPB) published notice in the Federal Register that it is withdrawing three proposals introduced under the previous administration. First, the CFPB is withdrawing a proposed interpretive rule regarding applicability of the Electronic Fund Transfers Act to emerging payment mechanisms. Under the January 2025 proposal, a stablecoin, bitcoin, or other cryptocurrency transaction conducted in connection with a consumer asset account would be considered an electronic fund transfer subject to Regulation E’s requirements. Next, the CFPB is withdrawing a proposed rule that would have banned unfair provisions in credit contracts and specifically prohibited certain terms and conditions. Under the January 2025 proposal, a credit contract could not contain provisions such as a confession of judgment or waiver of exemption. In addition, a covered financial institution would not be able to enforce any term or condition that permits it to unilaterally amend a contract or restrain expression. Finally, the CFPB is withdrawing its proposed rule concerning harmful data broker practices. The proposal, issued in December 2024, would have treated data brokers as consumer reporting agencies, required a permissible purpose to obtain credit header data (e.g., name, address, date of birth, and social security number of a consumer) from a consumer reporting agency, and emphasized that marketing is not a permissible purpose to obtain a credit report under the FCRA. On May 9, 2025, the White House announced that President Trump is nominating Jonathan McKernan as Undersecretary of Treasury for Domestic Policy. It was later confirmed that as a result, Mr. McKernan’s previous nomination to head the CFBP is being withdrawn. Russell Vought, the Director of the White House Office of Management and Budget, is currently serving as acting director of the Bureau. He may continue to do so for an additional 210 days under the Federal Vacancies Reform Act. The White House has yet to announce a new nominee for CFPB director.

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Michael Christians Consulting, LLC

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