Will someone please tell me if there is a difference between "Know Your Customer" and "Customer Identification Program?" To me, these seem liek the same thing. The BSA requires CIP...is KYC just a different name?

KYC, which is now customer due diligence, enhanced due diligenced, or whatever the flavor of the day is, really goes beyond getting ID to understanding your customer. If a business, it is understanding what they do (product lines, domestic vs. international, customer base, management, annual revenues, any problems, etc.) - things that should be part of good commercial underwriting anyway. If you do not have good indepth knowledge of your customer it will be difficult to have a comfort level that transactions make sense.

For individuals, it means understanding the individual...how they earn their living, their financial needs, what products they use or could use, do they have any international transactions and why?

The information gathered for KYC is also information that is needed to cross-sell products and can and should be used that way.

CIP is only the beginning of KYC.

CIP means that you have identified your customer.

KYC means you UNDERSTAND your customer:

What they do, why they do it, what's normal, what's not normal, and most importantly, WHAT IS SUSPICIOUS!

Dip: There is a very concise description of CDD on page 37 of the BSA Exam Manual that answers your question. It says:

"The cornerstone of a strong BSA/AML compliance program is the adoption and implementation of comprehensive CDD policies, procedures, and processes for all customers, particularly those that present a high risk for money laundering and terrorist financing. The objective of CDD procedures should be to enable the bank to predict with relative certainty the types of transactions in which a customer is likely to engage. These procedures assist the bank in determining when transactions are potentially suspicious. The concept of CDD begins with verifying the customer’s identity and assessing the risks associated with that customer. Procedures should also include enhanced CDD for high-risk customers and ongoing due diligence of the customer base ."

thanks so much guys-- very helpful!