Digital Identification: What It Means for Credit Union CIP Compliance

As account opening becomes increasingly digital, credit unions have more options for verifying member identities. Online applications, remote verification technology, and digital forms of government-issued identification are changing how institutions establish and confirm a member’s identity.

On September 8, 2026, the Financial Crimes Enforcement Network (FinCEN), jointly with staff from the National Credit Union Administration (NCUA), Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), issued updated Frequently Asked Questions (FAQs) addressing the use of verifiable digital credentials (VDCs) for identity verification under the Customer Identification Program (CIP) Rule.

The guidance clarifies how credit unions may use state-issued mobile driver’s licenses (mDLs) and other government-issued digital credentials to verify member identifies. 

Importantly, the FAQs do not change existing Bank Secrecy Act (BSA) requirements or establish new supervisory expectations. Instead, they clarify how digital identification may be incorporated into existing CIP procedures.

For credit unions, the guidance provides an opportunity to evaluate whether written policies, account-opening practices, and identity-verification technology remain aligned.

What Is a Verifiable Digital Credential?

A VDC is a form of electronic identification that contains information about an individual and incorporates safeguards designed to support its authenticity.  

Under the agencies’ definition, a VDC is:

• Digitally signed by the issuing source.

• Cryptographically bound to a device.

• Protected by an activation factor, such as a PIN, password, fingerprint, or facial recognition.

  
  

One example is a state-issued mDL, which provides a digital version of a driver’s license or identification card containing the same information as its physical counterpart.  

Unlike a photograph or scanned copy of an identification card, a VDC incorporates technical features designed to support verification of the credential and its authorized use.

Can Credit Unions Accept Digital Identification?

Yes. The guidance clarifies that credit unions may accept qualifying government-issued digital credentials as a means of verifying member identities, provided the requirements of the CIP Rule are satisfied.

The CIP Rule neither requires nor prohibits reliance on government-issued VDCs. Rather, their acceptance depends on the credit union’s established procedures and its ability to verify the information appropriately.

An unexpired government-issued VDC, including a state-issued mDL, may qualify as government-issued identification for documentary verification if it:

• Evidence of nationality or residence.

• Bears a photograph or similar safeguard.

• Can be processed using technology or systems capable of extracting the relevant information.

• Is permitted under the credit union’s CIP procedures.

These credentials may be used for accounts opened in person, over the internet, or through other digital channels.

Regardless of the identification method, the underlying requirement remains unchanged: the credit union must be able to form a reasonable belief that it knows the true identity of the individual opening the account.

When Digital Verification Raises Concerns

A physical driver’s license can be examined for signs of alteration or fraud. But when identification is submitted digitally, how does a credit union recognize when something is wrong?

Digital verification requires the same scrutiny as traditional identification. Indications of fraud must still be evaluated, and employees need to understand when additional verification is necessary.

For credit unions using electronic credentials issued and maintained by nongovernment third parties, there is another consideration: ensuring the provider applies the same level of authentication the credit union itself would use.

The technology may change how identity is verified, but it does not replace the judgment and oversight required to do so effectively.

Do Your Written CIP Procedures Reflect Actual Practices?

One of the most practical considerations arising from the guidance is whether a credit union’s written CIP accurately reflects its current account-opening processes.

For example, a credit union may have expanded online account opening or implemented new identity-verification technology while its written procedures continue to focus primarily on traditional, in-person identification.

Even when the technology functions as intended, inconsistencies between documented procedures and actual practices can create compliance risk.

Credit unions should consider the following questions:

• Accepted verification: Do our written CIP procedures clearly identify the forms of digital identification we accept?

• Consistency: Do our actual account-opening practices align with our written procedures across all channels?

• Technology: Do we have the systems necessary to obtain and verify the required information from accepted digital credentials?

• Fraud detection: Do employees understand how to respond when a credential cannot be verified or presents indications of fraud?

• Third-party oversight: Have we evaluated whether our identity-verification providers’ authentication practices satisfy our CIP requirements?

• Employee training: Are employees consistently applying our identification and verification procedures, including when new technology is introduced?

  
  

Identifying gaps between policy and practice allows management to determine whether procedures, training, or internal controls should be updated.

How Griffin & Furman Can Help

Do your credit union’s written CIP procedures accurately reflect how member identities are verified in practice?

Through our BSA audit and CIP testing procedures, Griffin & Furman evaluates identify-verification practices, reviews compliance with established practices, and identifies potential gaps in procedures and internal controls.

Contact our team to learn how we can assist with your credit union’s BSA compliance needs or upcoming BSA audit.