BSA/AML Examiner Training Series 2

31 CFR Chapter X – Financial Crimes Enforcement Network (Continued)

Code

Failure of CIP to contain procedures for verifying customer identity Section 1020.220(a)(2)(ii) of the Treasury Department’s Bank Secrecy Act regulations requires a covered financial institution’s Customer Identification Program to contain procedures for verifying the identity of the customer within a reasonable time after the account is opened. This Section further requires that the procedures must describe when the covered financial institution will use documents, non-documentary methods, or a combination of both methods. Failure of CIP to contain procedures setting forth documents that will be used Section 1020.220(a)(2)(ii)(A) of the Treasury Department’s Bank Secrecy Act regulations requires that for a covered financial institution relying on documents, the Customer Identification Program must contain procedures that set forth the documents that the covered financial institution will use. Failure of CIP to contain procedures that describe non-documentary methods used Section 1020.220(a)(2)(ii)(B) of the Treasury Department’s Bank Secrecy Act regulations requires that for a covered financial institution relying on non-documentary methods, the Customer Identification Program must contain procedures that describe the non- documentary methods the covered financial institution will use. Failure of non-documentary procedures to address certain situations Section 1020.220(a)(2)(ii)(B)(2) of the Treasury Department’s Bank Secrecy Act regulations requires that a covered financial institution’s non-documentary procedures must address situations where an individual is unable to present an unexpired government- issued identification document that bears a photograph or similar safeguard; the covered financial institution is not familiar with the documents presented; the account is opened without obtaining documents; the customer opens the account without appearing in person at the covered financial institution; and where the covered financial institution is otherwise presented with circumstances that increase the risk that the covered financial institution will be unable to verify the true identity of a customer through documents. CIP does not address when to obtain information about account authority or control Section 1020.220(a)(2)(ii)(C) of the Treasury Department’s Bank Secrecy Act regulations requires that a covered financial institution’s Customer Identification Program must address situations when, based on the covered financial institution’s risk assessment of a new account opened by a customer that is not an individual, the covered financial institution will obtain information about individuals with authority or control over such account, including signatories, in order to verify the customer’s identity. This verification only applies when the covered financial institution cannot verify the customer’s true identity using the verification methods described in Section 1020.220(a)(2)(ii)(A) and (B).

72,004

72,005

72,006

72,007

72, 008

Revised 5/3/2023

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