Retread - we also use it as a sound business practice, and voluntarily apply CIP-like procedures, to the extent practicable, to such sales. However, there is a difference between that and being required to apply CIP. I'm sure any reasonable issuer is gathering name, address, and as much identifying information as possible. But when we say "apply CIP" I take that to mean going to the level of obtaining and verifying all (or a sufficient number of ) elements of CIP, the same as we would when opening a deposit account or extending credit.
Failing to do it 1% of the time when doing it voluntarily still represents a great effort. Failing to do it 1% of the time when it is required by the regulations (or regulator) can be an entirely different level of problem. Right now we are trying to get our systems in place before the regulations are issued, but, when regulators come in and ask me for the CIP on SVCs (as they did in the beginning of 2008), I can currently still tell them, "CIP does not apply" and refer them to the regulation (only because my institution is not regulated by the OTS).
I agree - it is just a matter of time before there are some new rules, and I have been working with our third party software provider for over a year in trying to convince them of this inevitability. The problem I am still having is that the third party thinks it is okay for the CIP-related questions to be "optional" in their software, as in, the user is not required to fill out the fields in order to issue the cards - and they currently have no plans to change that. This allows some percentage of cards to be sold with some data that would be a CIP problem if CIP was mandatory, i.e., a P.O. Box listed in the physical address field, or an initial in the first name field rather than a first name. It also allows for the possibility that a teller, in spite of his/her training, could issue a card with a blank ID number or a blank date of birth. We can't have that happen, if CIP is or becomes mandatory.
The difference currently is that the problems can be uncovered through my own reviews and addressed internally, rather than being a sore source of criticisms in examinations.
"It is natural to give a clear view of the world after accepting the idea that it must be clear." - Albert Camus