Pre-USA PATRIOT ACT Verification of ID Required?
Answer by Hussam Al-Abed and Ken Golliher, BOL Gurus Question: Prior to the passing of the USA Patriot Act, what was the responsibility of a national bank in verifying the "new account" customer's identification before opening a new account? I know in the USA Patriot Act, Section 326 clearly addresses the current requirements. I am wondering what regulations were in place as of 1/2002.
According to: Comptroller’s Handbook (Bank Secrecy Act/Anti-Money Laundering) -- Opening and Maintaining Accounts and Customer Relationships
It encourages banks to adopt policies that determine the true identity of customers and help to detect suspicious activity promptly.
Identifying the Customer
Banks are encouraged to adhere to the following principles when establishing customer relationships, including those initiated via the Internet. The OCC urges banks to exercise caution and due diligence when opening accounts via the Internet. Internal systems and controls should consider the higher-risk nature of those accounts and include evaluation of appropriate customer documentation within a reasonable period of time. Regardless of the method of account opening, banks should establish identification standards depending upon the risk posed by the customer.
Personal Accounts
Require satisfactory identification, such as a driver’s license with a photograph, a U.S. passport, or alien registration card to open an account. Other acceptable secondary forms of identification include a college photo identification card, a major credit card (verify the current status), an employer identification card and/or a current utility bill (i.e., gas, electricity, telephone) from the customer’s present residence.
Consider the proximity of the customer’s residence or place of business to the bank office or branch location. If it is inconvenient, the bank should determine why the customer is opening an account at that location.
Call the customer’s residence or place of employment to thank him or her for opening the account. Discovery of disconnected phone service or no records of employment warrant further investigation.
Consider the source of funds used to open the account. Large deposits, especially cash, should be questioned.
For large accounts, ask the customer for a prior bank reference and, if appropriate, write to that bank and request a customer reference.
Consider using:
Third-party references, such as credit bureaus, banks, or other references.
Hussam has provided you with the most distinct statement offered by the OCC, "guidance" from the examination handbook. Prior to CIP, there were no requirements that rose to the level of a regulation.
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