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Jan10 - 23

Requirements for Customer Identification Programs at Financial Institutions 

As part of an anti-money laundering (AML) compliance program that meets the requirements set forth by the federal government in the Bank Secrecy Act (BSA), money services businesses (MSBs) are required to implement Customer Identification Programs (CIP). At Bates Group, our experienced AML compliance specialists can assist your financial institution in developing an AML compliance program that includes a robust CIP. Consider the following requirements for customer identification programs at financial institutions, and call our consultants directly for the support you can trust. 

What Is a Customer Identification Program?

Financial institutions are required to implement programs that adhere to the minimum standards for identifying the true identities of customers who open accounts. In addition to AML requirements that are set forth in the BSA, Customer Identification Programs are required under the US Patriot Act, which amended the BSA and which contains multiple provisions intended to prevent, detect, and prosecute money laundering and terrorist financing activities. The idea is that if customers who are deemed as risks are prevented from conducting financial transactions, the risk of financial crimes being committed decreases dramatically. CIP requirements are bolstered by other AML compliance requirements. 

Elements of a Customer Identification Program

According to the FDIC, or Federal Deposit Insurance Corporation, the procedures that are implemented by a financial institution must be appropriate and reasonable for the size and type of business. With that in mind, there are six general requirements for financial institutions:

  1. The program must be in writing.
  2. There are four pieces of identifying customer information that must be collected—name, date of birth, address, and identification number (tax ID number, passport number, etc.)
  3. Identity verification procedures must be established.
  4. A recordkeeping system must be established. 
  5. There must be a comparison of information collected with government lists. 
  6. Customer notice must be given. 

How Bates Group Can Help

Your financial institution is required under law to establish and maintain a CIP. If your institution’s CIP doesn’t meet federal requirements, it could risk penalties and be complicit in the crimes of money laundering or terrorist financing. At Bates Group, our professionals recognize the importance of airtight identification programs that satisfy all requirements. To learn more about how our professionals can help your business design, implement, and maintain a CIP or another compliance program, please reach out to us by phone or online at your convenience to schedule a consultation. We have years of experience and can start advising your business today.




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