Copying Military ID- Is it Allowed?

Manager at a credit_union ($3.6BUSA)

​Hi all, I wanted to know if any of you photocopy military IDs for CIP purposes. It's my understanding that this is not allowed by law, but others in the credit union have a different opinion.
It's my understanding that Federal law generally prohibits the copying or scanning of military ID. Here's the excerpt:

Whoever manufactures, sells, or possesses any badge, identification card, or other insignia, of the design prescribed by the head of any department or agency of the United States for use by any officer or employee thereof, or any colorable imitation thereof, or photographs, prints, or in any other manner makes or executes any engraving, photograph, print, or impression in the likeness of any such badge, identification card, or other insignia, or any colorable imitation thereof, except as authorized under regulations made pursuant to law, shall be fined under this title or imprisoned not more than six months, or both. (****Emphasis added.)

I've read this to mean that credit unions generally cannot photocopy a military ID. The DOD came out with a regulation that provided some exceptions, such as to comply with SCRA, or for check cashing but I do not read this to allow for CIP purposes. While counsel at NAFCU, I always advised against it and advised credit unions to instead document information found on the military ID. But this question has come up here and there are different opinions. Wanted to check to see how others are interpreting and applying this.