Q: Where a bank is entitled to “rely” on another financial institution to perform its CIP, whose CIP must the relied-upon financial institution implement?
A: The reliance provision does not impose on the other financial institution the obligation to duplicate the procedures in the bank’s CIP. The reliance provision permits a bank to rely on another financial institution to perform any of the procedures of the bank’s CIP, meaning, any of the elements that the CIP rule requires to be in a bank’s CIP: (1) identity verification procedures, which include collecting the required information from customers and using some or all of that information to verify the customers’ identities; (2) keeping records related to the CIP; (3) determining whether a customer appears on a designated list of known or suspected terrorists or terrorist organizations; and (4) providing customers with adequate notice that information is being requested to verify their identities.
Note that a bank can only use the reliance provision when the other financial institution is regulated by a Federal functional regulator and is subject to a general BSA compliance program rule, they share the customer, the bank can show its reliance upon the other financial institution’s performance of an element of the bank’s CIP was reasonable under the circumstances, and the requisite contract is signed and certifications provided. (January 2004)