FACT Act procedures vs. CIP
Question: If we have followed CIP procedures for a customer, what more do we have to do if that customer later files an identity theft report? Are the standards for the FACT Act identification different from CIP?
Answer: The short answer is that if you have a good Customer Identification Program, it should serve as the foundation for any other identification program or procedure you will need to follow. While the FACT Act regulations for determining the customer's true identity are different from CIP criteria, the difference is largely that FACT Act procedures are less comprehensive than CIP. Thus, by complying with CIP and having a good knowledge foundation about your customers, the steps required by the FACT Act to determine whether you are dealing with the bona fide customer or the thief should be relatively straight forward. In this respect, you might think of the FACT Act identification procedures as "CIP Lite."
Even though CIP should cover the ground required by the FACT Act and then some, it is no reason to treat CIP lightly. One of the dangers here is that the lesser requirements of the FACT Act will cause us to look less seriously at CIP. Instead, we should never lose sight of the elements and goals of CIP. We should use CIP to set a higher standard for any other identification programs rather than the other way around.
Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 13, 11/04
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