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