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Why Sofi, ZacksTrade, and Tastyworks Need SSN (Social Security Number) When Setting Up Account


2020: why ZacksTrade, Tastyworks, Sofi Invest, and Dough asking for SSN (Social Security Number) and address when opening a brokerage investing account?



Why Do Stock Brokers Need My Social Security Number?


Any time you open a brokerage account, suck as Tastyworks, ZacksTrade, Sofi Invest, or Dough, you’ll be asked to supply several pieces of personal information. There are good reasons why broker-dealers require such details.


USA Patriot Act of 2001


The USA Patriot Act of 2001 requires all financial institutions (brokerage firms, banks, credit unions, and other financial companies) to identify their customers when they open accounts. They can do this in one of several ways. They can ask for your Social Security Number. They may also request a driver’s license number, a foreign tax ID # if you have one, a passport number, or other identification number from a government-issued document.

Because brokerage firms and other financial institutions are required by law to obtain such information, there’s no way around it at this point. Specifically, we’re dealing with the Customer Identification Program, which has its origins in Section 326 of the Patriot Act.


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SEC and FINRA Regulations


The Securities and Exchange Commission and the Financial Industry Regulatory Authority both require brokerage firms to get the Social Security Number of anyone who opens an investment account. There’s no way around these regulations, either.


Tax Reporting


Any earnings in an account, whether dividends or realized capital gains, will have to be reported to the Internal Revenue Service. This means a brokerage account must have a tax ID linked to it.


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Maintaining Your Information


Besides getting your particulars, financial institutions are required by law to hang onto the details and keep the data safe. For a driver’s license, they must record the number, expiration date, and state that issued it. Financial institutions are required to keep a record of your ID for five years after your account is closed.


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Checking Databases


When opening a new account, a financial institution is required by law to check and see if the person opening the account is on the government’s List of Specially Designated Nationals and Blocked Persons. This list is published by the Office of Foreign Assets Control. It is composed of individuals who are suspected by the government of money laundering or terrorist activity.

Having your Social Security Number helps the bank or brokerage firm determine if you’re on that list or not. If the financial institution finds you on the list, it is required by law to report you to the government. It is also prohibited by the same law from informing you of the report.


Running a Credit Check


In order to open a margin account, a brokerage firm must run a credit check. After all, a margin account is a type of loan. In order to run a credit check, the brokerage account needs your Social Security Number.


Other Pieces of Information a Brokerage Firm Will Want


Industry regulations also require brokerage firms to ask if you’re an officer, director, or major shareholder in a publicly-traded company. If you work in the brokerage industry as a regulated person, you’ll also have to note that. Furthermore, you may be asked if you’re a senior military officer or other high-ranking political official in a foreign country.


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