Community Bankers' Advisor

i  March - April, 2004

Page 3  


2. Can a bank open an account for a U.S. person that does not have a taxpayer identification number?

No, the bank cannot unless the customer has applied for a taxpayer identification number, the bank confirms that the application was filed before the customer opened the account, and the bank obtains the taxpayer identification number within a reasonable period of time after the account is opened. Note, however, that a bank does not need to obtain a taxpayer identification number when opening a new account for a customer that has an existing account, as long as the bank has a reasonable belief that it knows the true identity of the customer. A bank may also open an account for a person who lacks legal capacity with the identifying information, including taxpayer identification number, of an individual who opens an account for that person.

31 C.F.R. ' 103.121(b)(2)(ii) -- Customer verification

1. Must a bank verify the accuracy of all of the identifying information it collects in connection with 31 C.F.R. ' 103.121(b)(2)(i)?

The final rule provides that a bank's CIP must contain procedures for verifying the identity of the customer, "using the information obtained in accordance with paragraph (b)(2)(i)," namely the identifying information obtained by the bank. 31 C.F.R. ' 103.121(b)(2)(ii). A bank need not establish the accuracy of every element of identifying information obtained but must do so for enough information to form a reasonable belief it knows the true identity of the customer. See 68 FR 25090, 25099 (May 9, 2003).

2. Can a bank use an employee identification card as the sole means to verify a customer's identity?

A bank using documentary methods to verify a customer's identity must have procedures that set forth the documents that the bank


 

will use. The CIP rule gives examples of types of documents that have long been considered primary sources of identification and reflects the Agencies' expectation that banks will obtain government-issued identification from most customers. However, other forms of identification may be used if they enable the bank to form a reasonable belief that it knows the true identity of the customer. Nonetheless, given the availability of counterfeit and fraudulently obtained documents, a bank is encouraged to obtain more than a single document to ensure that it has a reasonable belief that it knows the customer's true identity.

3. Can a bank use an electronic credential, such as a digital certificate, as a non-documentary means to verify the identity of a customer that opens an account over the Internet or through some other purely electronic channel?

A bank may obtain an electronic credential, such as a digital certificate, as one of the methods it uses to verify a customer's identity. However, the CIP rule requires the bank to have a reasonable belief that it knows the true identity of the customer. Therefore, for example, the bank is responsible for ensuring that the third party uses the same level of authentication as the bank itself would use. See also FFIEC guidance titled "Authentication in an Electronic Banking Environment" (July 30, 2001).

4. How should a bank verify the identity of a partnership that opens a new account when there are no documents or non-documentary methods that will establish the identity of the partnership?

A bank opening an account for such a partnership must undertake additional verification by obtaining information about the identity of any individual with authority or control over the partnership account, in order to verify the partnership's identity, as described in 31 C.F.R. ' 103.121(b)(2)(ii)(C).


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