(1) In general. Each futures commission merchant and introducing broker must implement
a written Customer Identification Program (CIP) appropriate for its
size and business that, at a minimum, includes each of the requirements
of paragraphs (a)(1) through (a)(5) of this section. The CIP must
be a part of each futures commission merchant’s and introducing broker’s
anti-money laundering compliance program required under 31 U.S.C.
5318(h).
(2) Identity verification procedures. The CIP
must include risk-based procedures for verifying the identity of each
customer to the extent reasonable and practicable. The procedures
must enable each futures commission merchant and introducing broker
to form a reasonable belief that it knows the true identity of each
customer. The procedures must be based on the futures commission merchant’s
or introducing broker’s assessment of the relevant risks, including
those presented by the various types of accounts maintained, the various
methods of opening accounts, the various types of identifying information available, and the futures commission merchant’s
or introducing broker’s size, location and customer base. At a minimum,
these procedures must contain the elements described in paragraph
(a)(2) of this section.
(i) (A) Customer information required. The CIP
must include procedures for opening an account that specify identifying
information that will be obtained from each customer. Except as permitted
by paragraph (a)(2)(i)(B) of this section, each futures commission
merchant and introducing broker must obtain, at a minimum, the following
information prior to opening an account:
(1) Name;
(2) Date of birth, for an individual;
(3) Address, which shall be:
(i) For an individual, a residential
or business street address;
(ii) For an individual who does not have a residential or
business street address, an Army Post Office (APO) or Fleet Post Office
(FPO) box number, or the residential or business street address of
a next of kin or another contact individual; or
(iii) For a person other than an individual
(such as a corporation, partnership or trust), a principal place of
business, local office or other physical location; and
(4) Identification
number, which shall be:
(i) For a U.S. person, a taxpayer identification number; or
(
ii) For a non-U.S.
person, one or more of the following: A taxpayer identification number,
a passport number and country of issuance, an alien identification
card number, or the number and country of issuance of any other government-issued
document evidencing nationality or residence and bearing a photograph
or similar safeguard.
*(B) Exception for persons applying for a taxpayer
identification number. Instead of obtaining a taxpayer identification
number from a customer prior to opening an account, the CIP may include
procedures for opening an account for a customer that has applied
for, but has not received, a taxpayer identification number. In this
case, the CIP must include procedures to confirm that the application
was filed before the customer opens the account and to obtain the
taxpayer identification number within a reasonable period of time
after the account is opened.
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(ii) Customer verification. The CIP must contain
procedures for verifying the identity of each customer, using information
obtained in accordance with paragraph (a)(2)(i) of this section, within
a reasonable time before or after the customer’s account is opened.
The procedures must describe when the futures commission merchant
or introducing broker will use documents, non-documentary methods,
or a combination of both methods, as described in this paragraph (a)(2)(ii).
(A) Verification through documents. For a futures commission merchant or introducing broker relying
on documents, the CIP must contain procedures that set forth the documents
the futures commission merchant or introducing broker will use. These
documents may include:
(1) For an individual, an unexpired government-issued identification
evidencing nationality or residence and bearing a photograph or similar
safeguard, such as a driver’s license or passport; and
(2) For a person other
than an individual (such as a corporation, partnership or trust),
documents showing the existence of the entity, such as certified articles
of incorporation, a government-issued business license, a
partnership agreement, or a trust instrument.
(B) Verification through non-documentary methods. For a futures
commission merchant or introducing broker relying on non-documentary
methods, the CIP must contain procedures that set forth the non-documentary
methods the futures commission merchant or introducing broker will
use.
(1) These methods may
include contacting a customer; independently verifying the customer’s
identity through the comparison of information provided by the customer
with information obtained from a consumer reporting agency, public
database, or other source; checking references with other financial
institutions; or obtaining a financial statement.
(2) The futures commission merchant’s
or introducing broker’s non-documentary procedures must address situations
where an individual is unable to present an unexpired government-issued
identification document that bears a photograph or similar safeguard;
the futures commission merchant or introducing broker is not familiar
with the documents presented; the account is opened without obtaining
documents; the customer opens the account without appearing in person
at the futures commission merchant or introducing broker; and where
the futures commission merchant or introducing broker is otherwise
presented with circumstances that increase the risk that the futures
commission merchant or introducing broker will be unable to verify
the true identity of a customer through documents.
(C) Additional verification for certain customers. The CIP must
address situations where, based on the futures commission merchant’s
or introducing broker’s risk assessment of a new account opened by
a customer that is not an individual, the futures commission merchant
or introducing broker will obtain information about individuals with
authority or control over such account in order to verify the customer’s
identity. This verification method applies only when the futures commission
merchant or introducing broker cannot verify the customer’s true identity
after using the verification methods described in paragraphs (a)(2)(ii)(A)
and (B) of this section.
(iii) Lack
of verification. The CIP must include procedures for responding
to circumstances in which the futures commission merchant or introducing
broker cannot form a reasonable belief that it knows the true identity
of a customer. These procedures should describe:
(A) When an account
should not be opened;
(B) The terms under which a customer may conduct transactions while
the futures commission merchant or introducing broker attempts to
verify the customer’s identity;
(C) When an account should be closed after
attempts to verify a customer’s identity have failed; and
(D) When the futures commission
merchant or introducing broker should file a Suspicious Activity Report
in accordance with applicable law and regulation.
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(3) Recordkeeping. The CIP must include procedures for making and
maintaining a record of all information obtained under procedures
implementing paragraph (a) of this section.
(i) Required records. At a minimum, the record
must include:
(A) All identifying information about a customer
obtained under paragraph (a)(2)(i) of this section;
(B) A description of any document that was
relied on under paragraph (a)(2)(ii)(A) of this section noting the type
of document, any identification number contained in the document,
the place of issuance, and if any, the date of issuance and expiration
date;
(C) A description
of the methods and the results of any measures undertaken to verify
the identity of a customer under paragraphs (a)(2)(ii)(B) and (C)
of this section; and
(D)
A description of the resolution of each substantive discrepancy discovered
when verifying the identifying information obtained.
(ii) Retention of records. Each futures commission
merchant and introducing broker must retain the records made under
paragraph (a)(3)(i)(A) of this section for five years after the account
is closed and the records made under paragraphs (a)(3)(i)(B), (C),
and (D) of this section for five years after the record is made. In
all other respects, the records must be maintained pursuant to the
provisions of 17 CFR 1.31.
(4) Comparison
with government lists. The CIP must include procedures for determining
whether a customer appears on any list of known or suspected terrorists
or terrorist organizations issued by any Federal government agency
and designated as such by Treasury in consultation with the Federal
functional regulators. The procedures must require the futures commission
merchant or introducing broker to make such a determination within
a reasonable period of time after the account is opened, or earlier
if required by another Federal law or regulation or Federal directive
issued in connection with the applicable list. The procedures also
must require the futures commission merchant or introducing broker
to follow all Federal directives issued in connection with such lists.
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(5) (i) Customer notice. The CIP must include procedures for providing
customers with adequate notice that the futures commission merchant
or introducing broker is requesting information to verify their identities.
(ii) Adequate notice. Notice is adequate if
the futures commission merchant or introducing broker generally describes
the identification requirements of this section and provides such
notice in a manner reasonably designed to ensure that a customer is
able to view the notice, or is otherwise given notice, before opening
an account. For example, depending upon the manner in which the account
is opened, a futures commission merchant or introducing broker may
post a notice in the lobby or on its Web site, include the notice
on its account applications or use any other form of written or oral
notice.
(iii) Sample notice. If appropriate, a futures
commission merchant or introducing broker may use the following sample
language to provide notice to its customers:
Important Information About Procedures
for Opening a New Account
To help the government fight the funding
of terrorism and money laundering activities, Federal law requires
all financial institutions to obtain, verify, and record information
that identifies each person who opens an account.
What this means for you: When you open
an account, we will ask for your name, address, date of birth and
other information that will allow us to identify you. We may also
ask to see your driver’s license or other identifying documents.
(6) Reliance on another financial institution. The CIP may include procedures specifying when the futures commission
merchant or introducing broker will rely on the performance by another
financial institution (including an affiliate) of any procedures of
its CIP, with respect to any customer of the futures commission merchant
or introducing broker that is opening an account, or has established
an account or similar business relationship with the other financial
institution to provide or engage in services, dealings, or other
financial transactions, provided that:
(i) Such reliance is
reasonable under the circumstances;
(ii) The other financial institution
is subject to a rule implementing 31 U.S.C. 5318(h), and is regulated
by a Federal functional regulator; and
(iii) The other financial institution
enters into a contract requiring it to certify annually to the futures
commission merchant or introducing broker that it has implemented
its anti-money laundering program, and that it will perform (or its
agent will perform) specified requirements of the futures commission
merchant’s or introducing broker’s CIP.
