Customer Identification Program (CIP)

After September 11th, in an Act of Congress called the USA PATRIOT Act, the United States implemented a wide range of rules and regulations to protect America from domestic and international terrorism. The name is an acronym for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism. The PATRIOT Act had a variety of consequences across many segments of public and private life in America. One of the areas that it affected was the world of finance and banking. This was due to the money laundering that funded the attacks prior to September 11th. As part of the crackdown, the government instituted the Customer Identification Program (CIP). According to the Customer Identification Program (CIP) rules and the Customer Identification Program (CIP) policy, financial institutions including banks must verify the identity of individuals who wish to use their services to conduct financial transactions. Now, financial institutions must develop a Customer Identification Program (CIP) according to their size and the type of business in order to comply with federal law. The program is subject to approval by the board of directors of the given financial institution.

What the Customer Identification Program (CIP) Does:

The program accomplishes several things. First and foremost, it helps to ensure the safety and security of our Country by verifying the identity of those men and women who use our financial institutions. In doing so, it helps to better track and keep tabs on the money flowing in and out of our banks and other finance institutions. Customer Identification Program (CIP) rules state that each new account opening must be accompanied by a series of verification measures to determine and identify the true identity of the account opener. As part of the Customer Identification Program (CIP), financial institutions must also conduct a risk assessment of their customers and service offerings. In doing so, according to Customer Identification Program (CIP) policy, they must assess the risks inherent in account opening methods, different types of identification information they use, the location, size, and customer base of the institution, and the various types of accounts that are offered there. Another component of customer identification policy ensures that accurate and detailed records of the information used to collect and verify the individual’s identity are kept and maintained. In addition, according to Customer Identification Program (CIP) rules, Banks and other financial institutions must cross-check their identification records against government lists to see if any known or suspected terrorists or terrorist organizations appear on their records.

Who the Customer Identification Program (CIP) Affects:

Private Banks, trusts, savings associations, and credit unions are among the financial institutions that are required to comply with these Customer Identification Program (CIP) rules. If they do not follow them, they could be subject to penalties and repercussions from the federal government. Customers of these financial institutions could also find themselves affected by the rules, as they may be asked to provide substantial information in order to verify their identity. In Today’s post-9/11 World, it’s important that financial organizations follow the Customer Identification Program (CIP) policy.

Filed Under: Blog

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