What is Customer Identification Program?
CIP is a due diligence practice that financial institutions must perform to meet KYC obligations. To know more about its purpose & requirementS, click here
CIP, or customer identification program, has now become a crucial part of KYC programs in several organizations within the USA. Wait, don't know what CIP is? We got you covered. This blog briefly explains Customer Information Program (CIP) meaning, its purpose, and a lot more to help businesses understand its true importance.
What is CIP or Customer Identification Program?
The customer identification program is a due diligence practice that financial institutions must perform to meet KYC obligations. Every organization within the U.S. or associated with an organization in the U.S. needs to perform CIP during the customer onboarding process. CIP considers government-verified documents for authenticating consumers before they’re onboarded with the merchant or business.
Now that the CIP meaning is clear, let's learn about its purpose.
What is CIP's Purpose?
CIP was made a mandatory component of the Bank Security Act (BSA), through the Patriot Act amendment in 2003. The primary purpose of this program is to verify the customers' identities and ensure that they are actually who they claim to be.
Customer identification programs help financial entities detect and prevent money laundering conducted through financial transactions via insurance firms, crypto exchanges, online gaming companies, and, most importantly, banks.
Requirements Of CIP
Here are the main requirements or components of the customer identification program:
- Collecting consumer information: The financial organizations need to collect the date of birth, name, and address along with the taxpayer identification number as minimum requirements. The social security number serves as the taxpayer identification number for individuals residing in the USA. However, individuals from outside the U.S. need to present government-issued I.D. proof that bears a photograph and has the required details
- I.D. verification procedures: Although there aren’t any specific procedures that need to be used for I.D. verification, financial institutions must ensure that their processes accurately verify the consumer identity.
For instance, organizations should be able to verify the information shared by the consumer against online government-based records.
- Comparison with government lists: Organizations need to ensure that the customers aren’t included in sanction lists or lists of suspected money launderers, terrorists, or criminals.
- Record-keeping requirements: Businesses need to follow written procedures for collecting and maintaining all the records for the data obtained during the identity verification process. It usually includes a brief description of the document used during I.D. verification, the methods used, and any discrepancies uncovered while verifying the information.
- Record retention: Businesses are required to maintain the entire customer data for at least five years after the date of account closure. And in the case of credit card accounts, the data needs to be stored for the same duration in case the account becomes dormant or gets closed.
- Customer Notice: The customer needs to be notified, especially in the case of banks, that their information is required for identity verification.
How does HyperVerge Help?
HyperVerge is an end-to-end identity verification solution that helps businesses verify identities during consumer onboarding. We use artificial intelligence to compare the documents uploaded by the consumer against government records to offer the utmost accuracy. Our proprietary A.I. models work in real-time, even if there’s a low bandwidth connection.
In addition, with HyperVerge’s single-image passive liveness technology, businesses can verify the liveness of the customer with a selfie. This adds a layer of security and makes Id verification more seamless for the consumer and the business.
Reach out to us now, and let’s help you make customer identity verification easier and your business compliant with federal requirements.