We have a potential customer that wants to open an account jointly with a relative in another state. He has a valid POA for the person. According to him, he does investments for the relative since they are in a nursing home out of state. He has ivestment companiy checks that he will be depositing to this account which will be payable to both of them. How would you do CIP on the family member that lives in the other state? Or would you have to since the POA is the person transacting and you would have that since he is also a joint owner?

Joint account with the principal for whom he holds a POA? Regardless of what he says he's going to do, he can deposit checks payable to either of them into a joint account.

Any joint account will have survivorship provisions of some type. If it's his relative's money then when the relative dies he will inherit half or all of it; i.e. a joint account may effectively rewrite the relative's will.

CIP is not the issue here, particularly if this guy is not already known to you.