From 31 CFR 103.121(a)(3)(ii):
"Customer does not include:
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(B) A person described in ยง 103.22(d)(2)(ii)-(iv);"
From 31 CFR 103.22(d)(2)(ii) and (iii):
"For purposes of this section, an exempt person is:
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(ii) A department or agency of the United States, of any State, or of any political subdivision of any State;
(iii) Any entity established under the laws of the United States, of any State, or of any political subdivision of any State, or under an interstate compact between two or more States, that exercises governmental authority on behalf of the United States or any such State or political subdivision;"
If the customer that you're looking at falls within 103.22(d)(ii) or (iii), the CIP regulation considers that customer exempt (it's not a customer for the purposes of the rule).
However, if your bank's board-approved CIP doesn't describe the customer as exempt, you have to comply with the bank's rule and do the ID verification routine.
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John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8