JPMorgan Chase (JPM) is getting serious about getting to know its customers.
The megabank is sending out letters to "millions" of clients asking for additional information about their country of citizenship, occupation and phone numbers, according to a JPMorgan customer service representative. One such letter asks clients to update their identifying information by calling a customer service line or visiting a branch by March 21.
"We basically looked at our records and realized we have these gaps in these places," JPMorgan spokeswoman Mary Jane Rodgers said Friday.
The letters are of a piece with the company's broader efforts to comply with the Bank Secrecy Act and anti-money laundering regulations, which require financial institutions to monitor customers and report suspicious activity.
"We're making sure that we're taking every step to keep the bank and our customers and our country safe through closer adherence to anti-money laundering and know-your-customer regulations," Rodgers said. "We're reaching out to customers across lines of business to make sure that we have accurate information about them."
Sending mail to a sizable portion of the company's consumer base may be expensive, but the benefits of doing so far outweigh the drawbacks, says Gerard Cassidy, the head of bank equity research at RBC Capital Markets.
"When you compare the cost of sending out letters versus the fines you pay for not complying, it's cheap," Cassidy says. "This is part of the new world order for banks."
And while some customers may perceive the request for additional information as an intrusion of privacy, Cassidy says today's stringent regulatory environment leaves lenders little choice. "Customers may not be pleased with it, but the world we live in today requires this kind of documentation," Cassidy said.
JPMorgan chairman and chief executive Jamie Dimon announced in September that the company would toughen internal controls "around 'Know Your Customer' and transaction monitoring" in an email to employees. To that end, JPMorgan began requiring consumers to provide identification in order to make cash deposits in branches in February. The company also admitted in January to violating Bank Secrecy Act requirements by ignoring red flags of the Bernard Madoff Ponzi scheme.