1.2.1.3 Customer Identification Program (CIP)
The USA PATRIOT Act requires the Treasury Department to develop regulations for financial institutions (including broker-dealers) that include minimum standards to verify the identity of any person who applies to open an account. The regulations require financial institutions to implement reasonable procedures for the following:
- • Verifying the identity of any person seeking to open an account
- • Maintaining records of the identifying information used
- • Determining whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency
In 2003 FinCEN and the SEC jointly published the Customer Identification Program (CIP) rule to fulfill the requirements of the PATRIOT Act. Under the rule, financial institutions must have a written CIP appropriate for its size and type of business. The program must enable the institution to form a reasonable belief that it knows the true identity of each customer. It must include account opening procedures that specify the identifying information that will be obtained from each customer. It must also include reasonable and practical risk-based procedures for verifying each customer’s identity.
The identifying information to be gathered prior to opening an account must include at a minimum:
- • Customer name
- • Date of birth
- • Address
- • Identification number—either a taxpayer identification number for a U.S. perso