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CIP & OFAC Record Retention Guidelines

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Question: 
I have been posed with a record retention question regarding documentation that both a CIP and OFAC was completed on. These are internal procedures that our operations department have set up themselves and is above and beyond what I can find the regulation actually stating. Is there any guideline as to how long we need to keep such extra documentation?
Answer: 

Customer Identification Program:

A bank must maintain a record of all information it obtains under its procedures for implementing its Customer Identification Program (CIP). At a minimum, these records must include the following:

  • All identifying information about a customer (e.g., name, date of birth, address and TIN).
  • A description of the document that the bank relied upon to identity of the customer.
  • A description of the nondocumentary methods and results of any measures the bank took to verify the identity of the customer.
  • A description of the bank’s resolution of any substantive discrepancy discovered when verifying the identifying information obtained.

A bank must retain the identifying information about a customer for a period of five years after the date the account is closed, or in the case of credit card accounts, five years after the account becomes closed or dormant. A bank must retain the information relied on, methods used to verify identity, and resolution of discrepancies for a period of five years after the record is made.

OFAC:

There are no specific requirements for the length of retention of OFAC records regarding checks you make on customers, however, guidance does state that banks should maintain documentation of its OFAC checks on new accounts, the existing customer base and specific transactions. Banks must keep a full and accurate record of each rejected transaction for at least five years after the date of the transaction. For blocked property (including blocked transactions) records must be maintained for the period the property is blocked and for five years after the date the property is unblocked.

If you deal with these type of customers, OFAC recommends that banks consider maintaining copies of customer's OFAC licenses on file. This will allow the bank to verify whether a customer is initiating a legal transaction. Banks should also be aware of the expiration date on the license. If it is unclear whether a particular transaction is authorized by a license the bank should confirm with OFAC. Maintaining copies of licenses will also be useful if another bank in the payment chain requests verification of a license’s validity. Copies of licenses should be maintained for five years, following the most recent transaction conducted in accordance with the license.

First published on BankersOnline.com 9/25/06

First published on 09/25/2006

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