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Updated ID Verification Process for HSA Applications Coming Dec. 1

November 23, 2020

Home // News & Updates // Updated ID Verification Process for HSA Applications Coming Dec. 1

Our HSA custodian, National Advisors Trust South Dakota (NATSD), provides oversight to the Health Savings Account (HSA) activity managed through our platform. From time to time, NATSD requires updates to our compliance program, and our HSA operations department will be implementing a change in identification verification as of December 1, 2020.

This change will further improve our compliance in a manner that actually reduces your own administrative burdens. Although this affects account approval and opening, it does not impact the application or enrollment process – which means there is nothing you need to do on your end to accommodate or prepare for it.

New Process for Identification/OFAC Failures

Our business model is to support the TPA, while they support their clients. Thus, our current process for handling Identification or OFAC failures is to ask the TPA to request additional Identification from the applicant, such as a driver’s license or utility bill proving place of residence. However, in order to satisfy the requirements NATSD has placed on us, our operations department will send out the initial communication to the account owner and only involve the TPA if we cannot get a response.

Beginning December 1, 2020, any account failing the OFAC or ID verification (IDV) will automatically be placed in Pending status and we will send the applicant an email requesting additional documentation. The email notice will provide clear instructions on the type of documentation needed. In addition, the notice will have a link the applicant can use to upload the documentation via their smartphone. (To see an example, click below.)




Although pending an account prevents contributions from posting, we can receive deposits and temporarily hold them as unallocated funds. This gives the applicant time to provide the requested information. If the applicant has not responded within 45 days, we will refund the deposit.

Why This Change is Needed

Patriot Act and BSA/AML regulations require that custodians “know their customer.” Application information is used to confirm or verify (IDV) the identity of the applicant. If the information matches the IDV check, then the application is approved and the account is established. If the information cannot be confirmed, then the custodian has the responsibility to collect additional documentation. If the applicant does not provide the documentation, then the regulations are clear: the custodian cannot open the account.

DataPath has always worked to abide with Patriot Act/BSA/AML rules without letting these measures become overly problematic for our clients. We do not want HSA account administration to become too burdensome for you, but we do take pains to satisfy the regulations.

The nature of HSAs carries added compliance duties. As we prepare to implement this change, we would appreciate any feedback that could help reduce the impact on you or your clients.   Please send any suggestions or comments to