Q: When a longstanding customer of another financial institution (including an affiliate) opens a new account at the bank, can a bank rely on the other financial institution’s verification of the identity of the customer performed before a CIP procedure was required?
A: A bank that is subject to the CIP rule may rely on another financial institution’s verification of the identity of the customer if the requirements of the reliance provision are satisfied. The bank would have to be able to demonstrate that such reliance upon the other financial institution’s verification of the identity of the customer is reasonable under the circumstances. For example, the bank could do so by reviewing the relied-upon institution’s procedures to ensure that they were adequate although the institution was not yet subject to a CIP rule when it verified the customer’s identity.
In addition, even when a bank is relying on the verification of identity performed by another institution, the bank would continue to be responsible for complying with all remaining requirements of the CIP rule, namely, the requirement that it keep records, provide customer notice, and as soon as a section 326 list has been designated, check the list when a new account is opened. (January 2004)