Customer Identification Program (CIP)

In the context of compliance, CIP ensures that financial institutions “know who they’re doing business with” by establishing the identity of their customers at the point of account opening. The goal is to deter criminals from exploiting the financial system for illegal purposes.

A strong CIP helps institutions meet regulatory expectations, avoid penalties, and reduce exposure to fraud, sanctions violations, and reputational risk.

At a minimum, a Customer Identification Program must collect and verify the following customer data before opening an account:

• Full legal name
• Date of birth (for individuals)
• Residential or business street address (no P.O. boxes)
• Identification number:
  • For U.S. persons: a Social Security Number (SSN)
  • For non-U.S. persons: a passport number or other government-issued ID number

The institution must also verify the information using documentary (e.g., ID card, passport) or non-documentary methods (e.g., credit bureau databases, utility bills, or digital ID verification services).

A compliant CIP must include the following four core elements:

1. Identity Collection: Gathering required customer information during the onboarding process.
2. Identity Verification: Validating the collected information through reliable sources or documents.
3. Recordkeeping: Maintaining records of the identification process and verification steps for at least five years.
4. Comparison with Government Lists: Screening customers against government watchlists (e.g., OFAC’s SDN List) to ensure they are not on sanctions or terrorism-related lists.

Each institution must tailor its CIP to its risk profile, customer base, and product offerings.