CIP FAQs - A bank is an agent for a (bank) credit card issuer. The cards are co-branded, the two banks share in the revenue from the cards issued. Is a person who obtains a credit card a customer of the agent bank or the card issuer?

Compliance > BSA > FinCEN FAQs - CIP
Q:  A bank is an agent for a (bank) credit card issuer. The cards are co-branded, the two banks share in the revenue from the cards issued. However, the issuer approves the credit card applications and handles collections. Is a person who obtains a credit card a customer of the agent bank or the card issuer?
 
A:  A person who receives a credit card is receiving an extension of credit from, and therefore is establishing an account with, the issuing bank. The agent bank is compensated by the issuing bank and not by the customer. For these reasons, the issuing bank is responsible for ensuring that its CIP applies to the customer. However, the agent bank may perform parts of the CIP on
behalf of the issuing bank. As with any other responsibility performed by an agent, the issuing bank ultimately is responsible for the agent’s compliance with the requirements of the CIP rule.  See 68 FR 25090, 25104 (May 9, 2003). Alternatively, the issuing bank may rely upon the agent bank to perform elements of its CIP, provided that the issuing bank is able to satisfy the
requirements of the reliance provision, 31 C.F.R. § 103.121(b)(6), including the requirement that the person be a customer of both the issuing and agent bank. (January 2004)

 
ADDITIONAL INFORMATION
This FAQ was excerpted from the Interagency Interpretive Guidance on CIP Requirements that can be found at the following link:  https://www.fincen.gov/sites/default/files/guidance/faqsfinalciprule.pdf
 

 

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