Section of the USA PATRIOT Act added 31 USC A to the BSA, which authorizes the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain special measures against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts of primary money laundering concern. Section provides the Secretary of the Treasury with a range of options that can be adapted to target specific money laundering and terrorist financing concerns. Section is implemented through various orders and regulations that are incorporated into 31 CFR Chapter X. As set forth in sectioncertain special measures may be imposed by an order without prior public notice and comment, but such orders must be of limited duration and must be issued together with a Notice of Proposed Rulemaking.
All banks must have a written CIP. The implementation of a CIP by subsidiaries of banks is appropriate as a matter of safety and soundness and protection from reputational risks. Domestic subsidiaries other than functionally regulated subsidiaries subject to separate CIP rules of banks should comply with the CIP rule that applies to the parent bank when opening an account within the meaning of 31 CFR The CIP is intended to enable the bank to form a reasonable belief that it knows the true identity of each customer.
The CIP must include account opening procedures that specify the identifying information that will be obtained from each customer. It must also include reasonable and practical risk-based procedures for verifying the identity of each customer.
Banks should conduct a risk assessment of their customer base and product offerings, and in determining the risks, consider: The types of accounts offered by the bank. The types of identifying information available. Pursuant to the CIP rule, an "account" is a formal banking relationship to provide or engage in services, dealings, or other financial transactions, and includes a deposit account, a transaction or asset account, a credit account, or another extension of credit.
An account also includes a relationship established to provide a safe deposit box or other safekeeping services or to provide cash management, custodian, or trust services.
An account does not include: Products or services for which a formal banking relationship is not established with a person, such as check cashing, funds transfer, or the sale of a check or money order. Any account that the bank acquires.
This may include single or multiple accounts as a result of a purchase of assets, acquisition, merger, or assumption of liabilities. Accounts opened to participate in an employee benefit plan established under the Employee Retirement Income Security Act of The CIP rule applies to a "customer.
A customer does not include a person who does not receive banking services, such as a person whose loan application is denied. Alternative means include showing that the bank has had an active and longstanding relationship with a particular person, as evidenced by such things as a history of account statements sent to the person, information sent to the Internal Revenue Service IRS about the person's accounts without issue, loans made and repaid, or other services performed for the person over a period of time.
However, the comparable procedures used to verify the identity detailed above might not suffice for persons that the bank has deemed to be higher risk. Excluded from the definition of customer are federally regulated banks, banks regulated by a state bank regulator, governmental entities, and publicly traded companies as described in 31 CFR Customer Information Required The CIP must contain account-opening procedures detailing the identifying information that must be obtained from each customer.
In contrast, when an account is opened by an agent on behalf of another person, the bank must obtain the identifying information of the person on whose behalf the account is being opened.
At a minimum, the bank must obtain the following identifying information from each customer before opening the account: Date of birth for individuals. For a "person" other than an individual such as a corporation, partnership, or trust: Based on its risk assessment, a bank may require identifying information in addition to the items above for certain customers or product lines.
Customer Verification The CIP must contain risk-based procedures for verifying the identity of the customer within a reasonable period of time after the account is opened.
The verification procedures must use "the information obtained in accordance with [31 CFR A bank need not establish the accuracy of every element of identifying information obtained, but it must verify enough information to form a reasonable belief that it knows the true identity of the customer. The CIP rule gives examples of types of documents that have long been considered primary sources of identification.
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. For a "person" other than an individual such as a corporation, partnership, or trustthe bank should obtain documents showing the legal existence of the entity, such as certified articles of incorporation, an unexpired government-issued business license, a partnership agreement, or a trust instrument.
An individual is unable to present an unexpired government-issued identification document that bears a photograph or similar safeguard; the bank is not familiar with the documents presented; the account is opened without obtaining documents e.
For example, a bank may need to obtain information about and verify the identity of a sole proprietor or the principals in a partnership when the bank cannot otherwise satisfactorily identify the sole proprietorship or the partnership.
Lack of Verification The CIP must also have procedures for circumstances in which the bank cannot form a reasonable belief that it knows the true identity of the customer. These procedures should describe: Circumstances in which the bank should not open an account.
When the bank should file a SAR in accordance with applicable law and regulation.This memo provides an overview of the USA-PATRIOT Act and its provisions that will expire at the end of Overview.
Major provisions of the USA-PATRIOT Act included: Enhanced surveillance procedures for law enforcement, including amendments to the Foreign Intelligence Surveillance Act (FISA). Specifically, the Patriot Act gave federal. The USA PATRIOT Act: A Sketch Charles Doyle Senior Specialist American Law Division Summary Congress passed the USA PATRIOT Act (the Act.
An overview of the PATRIOT Act The PATRIOT Act, officially the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, was quickly developed and passed . The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of (USA PATRIOT Act), signed into law on .
The Patriot Act is a U.S. law passed in the wake of the September 11, terrorist attacks. Its goals are to strengthen domestic security and broaden the powers of law-enforcement agencies with regards to identifying and stopping terrorists.
The passing and renewal of . Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of - Title I: Enhancing Domestic Security Against Terrorism - Establishes in the Treasury the Counterterrorism Fund.