The Customer Identification Program ( CIP ) is a United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a condition of the USA Patriot Act. More commonly known as knowing your customers the CIP requirements were implemented by the regulations in 2003 that require US financial institutions to develop CIPs according to the size and type of business. CIP should be incorporated into the Bank's NTP/Anti-money laundering compliance program, which must be approved by the board of directors of a financial institution.
Video Customer Identification Program
History
In 2002, the Ministry of Finance, through the Financial Crimes Enforcement Network (FinCEN), together with the OCC, the Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), the Office of Supervision of Goods OTS), and the National Credit Union Administration (NCUA) (collectively, Agent), jointly adopted the final rule to implement section 326 of Unity and Strengthen America by Providing the Right Tools Necessary to Intercept and Confront Terrorism (USA PATRIOT) Act of 2001 (the Act).
The Rules have an Effective Date June 9, 2003 and every US financial institution must comply with this final rule on October 1, 2003.
In July 2016, FinCEN enacted new rules on Beneficial Ownership: Financial institutions should collect from legal entities customer names, birth dates, addresses, and social security numbers or other government identification numbers (passport numbers or other similar information in case of foreigners) to an individual who has 25% or more of the equity interests of a legal entity (if any), and an individual with significant responsibility for controlling/managing a legal entity at the time the new account is opened.
Maps Customer Identification Program
Requirements
The Customer Identification Program is intended to enable the bank to establish a reasonable belief that it knows the true identity of each customer. CIP must include a new account opening procedure that determines the identification information to be obtained from each customer. It should also include a reasonable and practical risk-based procedure to verify each customer's identity. Financial institutions should conduct risk assessments on their customer base and product offerings, and in determining the risks, consider:
- Account types offered
- The method of opening an account.
- Types of identification information available
- Institutional size, location, and subscriber base
Section 326 requires the Secretary to jointly prescribe with each Agent, Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC), a regulation which, at a minimum, requires that financial institutions to implement procedures reasonable to verify the identity of everyone who wants to open an account, as far as feasible and practical; maintain records of information used to verify the person's identity; and determine whether the person appears on a known or suspected terrorist list or a terrorist organization provided to a financial institution by a government agency. This final rule applies to banks, savings associations, credit unions, private banks, and trust companies.
References
External links
- CFR 2010 31 CFR 103.121 Federal regulations requiring CIP
- FAQ Concerning Customer Due Diligence Requirements for Financial Institutions
- Trulio Blog - Steps to run a customer identification program
Source of the article : Wikipedia
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