CIP and Identifying Address

Issue/Inquiry

The Bank’s CIP policy states the following:

Accounts may use a Post Office Box (P. O. Box) as a mailing address only, but a residential or business street address must be provided by the individual or business and recorded and verified by the employee.

For CIP purposes, could a customer use a business address instead of a residential address? Could this address be a post office box?

Response Summary

For CIP purposes, the identifying address must be that of the physical location of the customer, though exceptions are made for APO or FPO numbers or for rural route numbers. There is nothing, however, that would prohibit the Bank from using a post office box for communication purposes. The Bank’s policy statement, therefore, is compliant with CIP requirements.

Response Detail

As required by the USA PATRIOT Act, a Customer Information Program (“CIP”) is intended to enable a 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 customers. It must also include reasonable and practical risk-based procedures for verifying their identity.

When an individual opens a new account for an entity that is not a legal person or for another individual who lacks legal capacity, the identifying information for the individual opening the account must be obtained. 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: (For credit card customers, the bank may obtain identifying information from a third-party source before extending credit.)

• Name
• Date of birth for individuals
• Address

·With regards the use of an address, a residential or business street address may be used for an individual, or if the individual does not have such an address, an Army Post Office (“APO”) or Fleet Post Office (“FPO”) box number, the residential or business street address of next of kin or of another contact individual, or a description of the customer's physical location. For a “person” other than an individual (such as a corporation, partnership, or trust), a principal place of business, local office, or other physical location must be used. FFIEC, Bank Secrecy Act Anti-Money Laundering Examination Manual, Customer Information Program – Overview.Identification number

For individuals, the requirement for an address shall be satisfied by the following:

• For an individual, a residential or business street address
• For an individual who does not have a residential or business street address, an Army Post Office (“APO”) or Fleet Post Office (“FPO”) box number, or the residential or business street address of next of kin or of another contact individual.  12 CFR §103.121(b)(2)(i)(A)(3)(i),(ii)

This means that the Bank is not required to obtain the physical address of an individual’s residence, but can use the individual’s business address instead.

For a “person” other than an individual, such as a corporation, partnership, or trust, the principal place of business, a local office, or other physical location must be used. FFIEC, Bank Secrecy Act Anti-Money Laundering Examination Manual, Customer Information Program – Overview.

What this rule indicates is that the Bank must establish that its customer has a physical location. This is borne out by the commentary permitting the use of the number on the roadside mail box on rural routes as an address:

A rural route number, unlike a post office box number, is a description of the approximate area where the customer can be located. FinCEN, FAQs: A Final CIP Rule, 31 C.F.R. §103.121(b)(2)(i), Information Required – 1.31 C.F.R. §103.121(b)(2)(i) – Information Required – 1.

While the address used for identifying the customer must be a physical address, there is nothing in the CIP rules that would prohibit the use of a complementary post office box address for communication purposes. The Bank’s statement of policy, therefore, is compliant with the regulatory requirements. Since it is stricter than what is permitted by CIP requirements, the Bank may wish to broaden it, as in allowing the use of APO, FPO, or rural route numbers. In the alternative, the Bank may keep the policy statement the same and use APO or rural route numbers as an exception to policy, which would be appropriately documented.

The Bank should not use a post office box as the identifying address for CIP purposes, either for an individual or a business customer.

This entry was posted on Monday, November 9th, 2015 at 2:00 pm.