PolicyWorks Article: Compliance is the Key to ITIN Lending

POSTED on December 4, 2018 IN ViClarity

The secret to ITIN lending success is understanding the market and knowing the compliance requirements to successfully offer these loans.

Financial services is one of the country’s most regulated industries. Because of regulatory scrutiny, it can be challenging for credit unions to reach beyond standard practices when creating new products and services or adapting existing processes to meet changing consumer needs.  

Such is the case with expanding your loan program to immigrant borrowers who may not have traditional forms of documentation. Individual Taxpayer Identification Numbers, or ITINs, are issued by the Internal Revenue Service to individuals who do not qualify for a social security number, but who need to pay taxes on earnings. ITIN’s can be used to open interest-bearing accounts and apply for loans. The immigrant population in the U.S. is a growing and vibrant segment, and needs access to the same financial products and services as non-immigrants, however, some have lacked options due to the hesitancy of financial institutions to adapt their programs and processes, such as lending to immigrants with ITINs.

The secret to ITIN lending success is understanding the market and knowing the compliance requirements to successfully offer these loans. In addition to serving a largely untapped market and opening a new source of loan income, ITIN loans can help credit unions fulfill their mission of serving the underserved.

PolicyWorks, in cooperation with its sister company Coopera, the Filene Research Institute and Inclusiv (formerly the National Federation of Community Development Credit Unions) in October released the Implementation Guide: Individual Taxpayer Identification Number (ITIN) Lending. The 67-page publication, free to credit unions, offers guidance on ITIN lending for institutions seeking to expand their lending programs.

Like other aspects of business, credit unions can’t afford to ignore the compliance side of ITIN lending. Regulators pay special attention to growth in lending programs and expect institutions to follow comprehensive guidelines to manage compliance and operational risk, including strict adherence to Bank Secrecy Act parameters.

In addition to BSA compliance, any credit union’s risk analysis program should consider how ITIN loans will be underwritten and what type of documentation and borrower history will be acceptable in such cases. Safety and soundness considerations are paramount, which may also help the institution decide how to expand their existing loan programs to allow for ITIN lending.

Staff will need proper training to successfully implement loan procedures, especially in handling non-traditional forms of documentation and identification. How staff members follow policies and procedures in their daily activities may receive special scrutiny during audit procedures.

Proper identification of all members can be especially challenging for lenders, and it’s critical to understand all different sources. In addition to SSNs and ITINs as taxpayer identification numbers, there also are other acceptable forms of identification for account opening, which is often the first step a borrower takes before applying for a loan. Non-traditional forms of identification may include the matricula consular and cedulas issued by governments of the borrower’s country of origin. Review your customer/member identification program to ensure an inclusive list of acceptable identification before proceeding with program development.

The ITIN lending guide covers all this information in greater detail, along with cultural, operational and marketing needs, helpful forms and questionnaires, and testimony from credit unions with successful ITIN lending programs already in place. The guide is a must-have for credit unions interested in growing and serving new untapped markets.

Feel free to contact any of us at PolicyWorks and we will happily provide you with a complimentary copy of the guide.

This article is by Erin O’Hern, Director of League Compliance Services for PolicyWorks LLC. This article first appeared on CUInsight.com.


  1. compliance
  2. coopera
  3. credit unions
  4. hispanics
  5. lending
  6. policyworks
  7. regulatory

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