Customer Identification Programs Now Required by Federal Law
You have been asked to provide additional proof of your identity to PayFlex. Do you have to give them the identification requested?
Customer Identification Programs (CIPs) are now required by federal law through the USA Patriot Act of 2001 as a means to prevent financing of terrorist operations and money laundering. The requirements go beyond just verifying your identity. Banks must now keep records of identifying information and check customer names against terrorist lists. This applies to anyone who opens a new account. Certain individuals may be asked to provide proof of identity. For example, if you have changed your name, moved or show a Post Office Box for your address you will be asked to provide certain documents before you can open an account.
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, (USA PATRIOT Act), Pub.L. 107-56, was signed by the President on Oct. 26, 2001. The Patriot Act also includes measures to undercut terrorist financing and combat money laundering. Customer identification programs for financial institutions are required by §326 of the PATRIOT Act, with the details spelled out in regulations published by multiple federal agencies.
The Patriot Act requires CIPs for a broad category of companies that fall under the definition of “financial institution,” a term defined by the Bank Secrecy Act. A partial list of business sectors that qualify as “financial institutions” was published along with the final CIP Rule. The list includes:
- Commercial banks
- Agencies and branches of foreign banks in the United States
- Thrifts (savings and loan institutions)
- Credit unions
- Private banks
- Trust companies
- Investment companies
- Brokers and dealers in securities
- Futures commission merchants
- Insurance companies
- Travel agents
- Pawnbrokers
- Dealers in precious metals
- Check cashers
- Casinos
- Telegraph companies
The CIP rules establish the minimum identification information a financial institution must collect from you before opening a new account. Proof for four data items may be required for all new accounts. These are:
- Name
- Date of birth (for an individual)
- Address
- Identification number (Social Security number)
