Regulation

Six tips for automating a customer identification program

August 31, 2021
Today’s columnist, Alain Meier of Cognito, lays out the six requirements by the Treasury Department of a strong customer identification program for companies that offer financial services of any kind. https://www.flickr.com/photos/[email protected]; https://creativecommons.org/licenses/by/2.0/legalcode
  • Identify the right information: All CIPs require a complete account of the identifying information and risk-based procedures that let the company verify customers’ identities. This includes addressing situations in which the team can’t form a reasonable belief that they know the true identity of the customer. Develop a plan for the following: Instances where the company would not and should not open an account; situations where the customer can use an account while their information remains under scrutiny; circumstances when the company must close current account; and scenarios in which the company needs to take it a step further and file a Suspicious Activity Report.
  • Collect the info from customers: There are four pieces of identifying information that the team needs to collect for every customer: name, address, date of birth, and identification number. While it’s normally a tax identification number, there are other options for those who don’t have citizenship, a green card, or political asylum with the U.S.
  • Decide on a verification method: All CIPs have to include a primary method for identity verification and the appropriate procedures: documentary verification may include government-issued identification proving nationality or residence, and bearing a photograph or similar safeguard; or non-documentary verification may include contacting the customer, independently comparing the information they provide with information obtained from other sources, checking references with other financial institutions, and obtaining a financial statement.
  • Set record-keeping procedures: All information collected on a customer must remain available for at least five years after the account closes.
  • Develop a cross-checking procedure. Check customer identities using government lists to make sure customers are not suspected terrorists or members of terrorist organizations.
  • Create a confirmation process. Have a process that confirm that all customers are aware that their information will be collected and used to verify their identities.
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