Tag: Customer Identification Program

Customer Identification Program (CIP): Common Questions – Part II

Posted on by SCM Communications

[Continued from Customer Identification Program (CIP): Common Questions – Part I]

What Is A “Reasonable Time” To Verify Customers’ Identities?

A customer’s identity must be verified within a “reasonable time” before or after the customer’s account is opened. The rule does not specify what counts as a “reasonable time,” and the Adopting Release for the Broker-Dealer CIP Rule emphasizes that broker-dealers must be reasonably flexible when undertaking such verification. The broker-dealer must be able to undertake verification before or after an account if opened, as the amount of time needed may depend on various factors, which is part of the firm’s risk assessment.  A firm’s CIP procedures must enable the broker-dealer to form a reasonable belief that it knows the true identity of each customer. Read More…

Customer Identification Program (CIP): Common Questions – Part I

Posted on by SCM Communications

In our previous post on customer identification programs, “Customer Identification Program (CIP): Definitions and Requirements,” we defined “account” and “customer” and went over the minimum requirements for CIP procedures and verification, including touching on non-documentary means of identity verification. This post will get a little more specific, addressing common questions firms have when developing and implementing their customer identification programs. Read More…

Customer Identification Program (CIP): Definitions and Requirements – Part II

Posted on by SCM Communications

[Continued from Customer Identification Program (CIP): Definitions and Requirements – Part I]

How Does Risk Assessment Affect a Firm’s CIP?

Appropriate verification procedures for a CIP are governed by a risk-based assessment. A CIP must include risk-based procedures for verifying the identity of each customer to a reasonable and practicable extent. These procedures must be based on the broker-dealer’s assessment of the relevant risks, including those presented by the types of accounts maintained by the broker-dealer, the methods of opening accounts, and the types of identification information available. Additionally, this risk-based assessment should take into consideration the broker-dealer’s size, location, and customer base.

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Customer Identification Program

Customer Identification Program (CIP): Definitions and Requirements – Part I

Posted on by SCM Communications

Customer Identification Program

A broker-dealer must establish, document, and maintain a written Customer Identification Program (CIP) as a part of the broker-dealer’s anti-money laundering (AML) compliance program (31 CFR 1023.220) as required by FINRA Rule 3310. The CIP must be appropriate for the broker-dealer’s size and business, and it must outline the following procedures: Read More…

RegTech: Customer Identification and AML Compliance

Posted on by SCM Communications

Welcome to the second part of our three-part series on Regulatory Technology (RegTech) tools and the securities industry! As we discussed in our previous post, “RegTech: Surveillance and Monitoring,” more and more members of the financial services industry are using RegTech tools to effectively and more efficiently meet their regulatory compliance requirements. FINRA has identified five major areas in which RegTech tools are being applied: surveillance and monitoring, customer identification and anti-money laundering (AML) compliance, regulatory intelligence, reporting and risk management, and investor risk assessment. Today we will be focusing on customer identification and AML compliance RegTech applications.

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AML-CIP Requirements for Private Placement Transactions

Posted on by SCM Communications

The world of private placement transactions is one that is highly scrutinized by both FINRA and the SEC. It seems that with all of the Ponzi schemes and actions for misappropriation of investor monies, private placement transactions are always on the regulators’ exam priorities lists. With that in mind, it is imperative that firms participating in such offerings ensure that their compliance programs are kept current and up-to-date. However, an area that is often overlooked in such compliance preparation is the Anti-Money Laundering (“AML”) / Customer Identification Program (“CIP”) process. Read More…