Defining the customer for non-profit organization accounts
Question: When we open an account for a non-profit organization, who is the customer for the purposes of CIP requirements?
Answer:
Under the Customer Identification Program (CIP) rules at 31 CFR 103.121, your customer is either the organization or the individual or individuals opening the account for the organization [§ 103.121(a)(3)(i)]. If the organization is an entity with its own legal existence under state law, the organization is your customer, and you must obtain three elements of identity -- name, a street address (or other physical location) and the organization’s identifying number (for a U.S. person, that’s a taxpayer identification number, and in this case it would be an IRS-issued Employee Identification Number (EIN)). If the organization is not a separate legal entity, your customer is the individual or individuals opening the account, and you would have to obtain from each such individual four elements of identification -- name, street address (with certain exceptions), date of birth, and identifying number (for U.S. persons, a taxpayer identification number).
Note that even if the organization is not a separate legal entity, it should have its own taxpayer identification number, and you must obtain that to comply with IRS regulations (it’s the Tax Identification Number (TIN) that should appear on any W-9 completed on behalf of the organization).
It’s possible -- even likely -- that your institution’s board-approved Customer Identification Program includes a broader definition of “customer” for such organizations’ accounts. In that case, you have to adhere to the policy and apply the CIP requirements to the larger list of persons.
For each customer, whether prescribed by the regulatory definition or a broader definition in your institution’s CIP, you must apply “risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable.” Those procedures will be spelled out in your institution’s CIP policy or procedures.
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