USA PATRIOT Act
On Oct. 26, 2001, Congress passed the USA PATRIOT Act to respond to the terrorist acts of 9/11. Its name literally means "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism," and it applies to the U.S. Treasury's very broad definition of financial institutions.
Section 326 of the act strengthens the Bank Secrecy Act (BSA) by requiring that all financial institutions implement a Customer Identification Program (CIP) in order to reasonably and practicably verify the identity of customers who are opening accounts.
Section 326 compliance requires that CIP procedures should:
- Verify the identity of any person seeking to open an account using documentary and non-documentary verification
- Maintain records of that CIP verification process for five years after the account is closed
- Compare the customer’s name against the government’s list of known or suspected terrorists
- Provide customers with adequate notice of the requirements for customer identification
The U.S. Treasury Department considers Section 326’s customer identification and record keeping requirements as vital tools in its fight against such criminal enterprises as terrorism and the growing threat from identity theft. Financial institutions play a significant role in that fight through their CIP compliance.
Find out the adequacy of your CIP program and if you are in compliance with the USA PATRIOT Act.