What is the best way to identify a new customer as a nonresident alien? Our customer identification program (CIP) policy requires foreign customers to provide an Illinois driver’s license and credit card statement for identification purposes, and we obtain their social security numbers. However, these documents do not indicate whether the customer is a resident or nonresident alien, which we need to know for IRS reporting and other purposes.

To identify which of your customer are nonresident aliens for tax reporting purposes, we recommend asking the customer whether or not they are a U.S. person (which would include U.S. citizens and resident aliens) as part of your account opening process.

As you noted, collecting a social security number or driver’s license will not help your bank to determine whether a customer is a nonresident alien — the IRS will provide individual taxpayer identification numbers (ITINs) to both resident and nonresident aliens, and anyone can obtain a driver’s license in Illinois, regardless of immigration status.

Also, we note that Illinois law specifies that a temporary visitor’s driver’s license issued to a foreign national “may not be accepted for proof of the holder’s identity,” as specified on the face of the driver’s license itself in capital letters (“NOT VALID FOR IDENTIFICATION”).

For resources related to our guidance, please see:

IRS, Form W-9 (“If you are a foreign person or the U.S. branch of a foreign bank that has elected to be treated as a U.S. person, do not use Form W-9. Instead, use the appropriate Form W-8 or Form 8233 (see Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities).”)

IRS, Form W-8BEN (“Do NOT use this form if: . . . You are a U.S. citizen or other U.S. person, including a resident alien individual.”)

IRS Webpage, Individual Taxpayer Identification Number (“IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security numbers. They are issued regardless of immigration status, because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. ITINs do not serve any purpose other than federal tax reporting.”)

FFIEC BSA/AML Examination Manual, Nonresident Aliens and Foreign Individuals — Overview (“Foreign individuals maintaining relationships with U.S. banks can be divided into two categories: resident aliens and nonresident aliens. For definitional purposes, an NRA is a non-U.S. citizen who: (i) is not a lawful permanent resident of the United States during the calendar year and who does not meet the substantial presence test, or (ii) has not been issued an alien registration receipt card, also known as a green card. The IRS determines the tax liabilities of a foreign person and officially defines the person as a ‘resident’ or ‘nonresident.’”)

Social Security Administration Webpage, Types of Social Security Cards (“Type 2: Shows your name and Social Security number with notes, ‘VALID FOR WORK ONLY WITH DHS AUTHORIZATION.’ We issue it to people lawfully admitted to the United States on a temporary basis who have DHS authorization to work. We issue it to people lawfully admitted to the United States on a temporary basis who have DHS authorization to work.”)

Social Security Administration Webpage, Types of Social Security Cards (“Type 3: Shows your name and Social Security number with notes, ‘NOT VALID FOR EMPLOYMENT.’ We issue it to people from other countries who:

are lawfully admitted to the United States without work authorization from DHS, but have a valid non-work reason for needing a Social Security number; or

need a number because of a federal law requiring a Social Security number to get a benefit or service.”)

Illinois Vehicle Code, 625 ILCS 5/6-105.1(a) (“The Secretary of State may issue a temporary visitor’s driver’s license to a foreign national who (i) resides in this State, (ii) is ineligible to obtain a social security number, and (iii) presents to the Secretary documentation, issued by United States Citizenship and Immigration Services, authorizing the person’s presence in this country.”)

Illinois Vehicle Code, 625 ILCS 5/6-105.1(a-5) (“The Secretary of State may issue a temporary visitor’s driver’s license to an applicant who (i) has resided in this State for a period in excess of one year, (ii) is ineligible to obtain a social security number, and (iii) is unable to present documentation issued by the United States Citizenship and Immigration Services authorizing the person’s presence in this country. . . .”)

Illinois Vehicle Code, 625 ILCS 5/6-105.1(b-5) (“The Secretary of State may issue a temporary visitor’s driver’s license to an applicant who (i) has resided in this State for a period in excess of one year, (ii) is ineligible to obtain a social security number, and (iii) is unable to present documentation issued by the United States Citizenship and Immigration Services authorizing the person’s presence in this country. . . .”)