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Why Ally Invest Needs SSN (Social Security Number) When Signing Up For Account


2020: why is Ally Invest asking for my SSN (Social Security Number) when opening brokerage account?



Why Does Ally Invest Needs SSN?


So you’ve decided to open an Ally Invest account (hopefully by using their promotion offer) but are surprised that they are asking for your social security number (SSN) during the application process. You might be thinking it’s odd and wondering why/if they really need this. This is completely normal and this article will explain why.


All Brokers Are Required to Record Your SSN


First off, you should know that all U.S. brokers, not just Ally, will require a SSN before allowing you to open an account with them. This is primarily because the U.S. government requests all brokers collect your SSN and other personal information before opening an account in your name. Additionally, most self-regulating organizations in the financial services industry, such as FINRA, also recommend collecting customers’ SSN as a best practice. There are a few reasons as to why this is, which we’ll get into next.


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Record-Keeping Requirements


The Securities and Exchange Commission (SEC) requires that brokers collect personal identification information, including your name, address, date of birth, and SSN among others, for anyone that wants to open an account. Therefore, Ally must make a good faith effort to collect your SSN. And given how most broker applications, including the Ally Invest application, are handled entirely online today, you wouldn’t be able to continue with the application process without providing your SSN.


Customer Identification Rule


The SEC and the U.S. Department of the Treasury together implemented the customer identification rule back in 2003. This rule requires brokers to have procedures in place to verify the identity of all of their account holders, effectively requiring them to collect your SSN. Brokers are also required to use this information to check that their account holders are not included on a government list of known or suspected terrorists.





Anti-Money Laundering Preventative Measures


The customer identification rule was put in place to fight money laundering, which is one of the primary ways that terrorist organizations fund themselves. So even if your broker decided to ignore your SSN for record-keeping purposes, they would still be required to collect it because of the customer identification rule. If Ally Invest ignored this rule, they could face punitive measures from the U.S. government, including monetary fines, for their refusal to collect required personal information.


Personal Information to Determine Investment Suitability


Even besides the customer identification rule and record-keeping protocol, FINRA advises its broker members to collect the personal information of its account holders because it enables the broker to help you reach your investing goals. Ally’s application process includes personal questions about your net worth, salary, investing goals, and risk appetite so that in theory they can provide you with more tailored financial and investment advice. They can also use this information to hopefully minimize the chances of recommending an unsuitable investment for you based on the answers you provided about your financial situation.


Summary


In summary, if you are going to open an Ally Invest brokerage account (or an account with any other U.S. broker) you will be required to provide your SSN; there is no way of getting around this requirement. Not only does FINRA recommend financial institutions collect your personal information, but the U.S. government also legally requires brokers to collect this via the Customer Identification Rule in order to help the government in its efforts to combat terrorism and its covert funding methods.


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