It was 2008 when I checked into it. What you get told about "the law" is usually just a bank policy weather the banker knows this or not. Usually they don't. They only know what they've been told.
There may be a way around the physical address restriction, but if they are giving up potential customers that tells me the workaround is sufficiently troublesome as to make it de facto the law.
What I found in the US Code(
http://www.law.cornell.edu/uscode/text/31/5318A) was this regarding the required records for all transactions:
(B) Form of records and reports. Such records and reports shall be made and retained at such time, in such manner, and for such period of time, as the Secretary shall determine, and shall include such information as the Secretary may determine, including
(i) the identity and address of the participants in a transaction or relationship, including the identity of the originator of any funds transfer;
(ii) the legal capacity in which a participant in any transaction is acting;
(iii) the identity of the beneficial owner of the funds involved in any transaction, in accordance with such procedures as the Secretary determines to be reasonable and practicable to obtain and retain the information; and
(iv) a description of any transaction.
(i) does not specify the specifics of what constitutes and address record, but it is probably specified somewhere. I'm just too lazy to find it. It's also possible that this is left up the the Secretary of the Treasury, as the identity requirements are.