Definition
Customer Identification Program (CIP)
A required part of every broker-dealer's anti-money-laundering compliance program, mandated by the USA PATRIOT Act, that verifies who is opening an account before the firm accepts business. The CIP collects and verifies four pieces of identifying information for every customer: full legal name, date of birth, a physical street address (a P.O. Box alone is never enough), and a taxpayer identification number (a Social Security number for U.S. individuals or an EIN for entities). The firm compares the customer against government watch lists (including the OFAC list) and keeps CIP records for five years after the account closes.
A new customer walks into a branch to open an account. Before the firm accepts business, it collects the customer's full legal name, date of birth, physical street address (not a P.O. Box), and Social Security number, and verifies identity through an unexpired government-issued photo ID. The firm also checks the customer against the OFAC watch list and keeps the CIP file for five years after the account closes.
Students often confuse CIP with Know Your Customer (KYC). CIP is the identity-verification front door required by the USA PATRIOT Act. KYC is the ongoing FINRA suitability duty to know essential facts about the customer, including investment objectives, risk tolerance, and financial situation. CIP happens once at account opening; KYC continues for the life of the relationship.
How is Customer Identification Program (CIP) tested on the exam?
- Recognizing the four required CIP data points (name, DOB, physical address, TIN)
- Knowing that a P.O. Box alone is not an acceptable address
- Distinguishing CIP (identity) from KYC (ongoing suitability)
- Applying the CIP watch-list check, including OFAC
- Applying the 5-year retention period for CIP records after the account closes
Regulatory limits
Regulatory Limits
| Description | Limit | Notes |
|---|---|---|
| Required data points | Name, date of birth, physical street address, taxpayer identification number | A P.O. Box alone is not an acceptable address. |
| Legal basis | USA PATRIOT Act (2001) | Section 326 of the USA PATRIOT Act imposes CIP requirements on broker-dealers and other financial institutions. |
| Watch-list screening | OFAC and other government lists | - |
| Record retention | 5 years after the account closes | - |
CIP = Can I Prove identity? Four data points: Name, Birthday, Physical address (never a P.O. Box), and TIN. Check OFAC, keep records for 5 years after the account closes.
Practice questions
Test your understanding with the questions below. Pick an answer to reveal the explanation.
Which of the following pieces of information is NOT required under the Customer Identification Program at account opening?
D is correct. CIP requires four data points: name, date of birth, physical street address, and taxpayer identification number. Annual income and net worth belong to the suitability (KYC) rules, not CIP. A, B, and C are required CIP data points.
Exams routinely test the four CIP data points and the distinction from suitability inputs. Do not add income or investment objectives to the CIP list.
A prospective customer offers a P.O. Box as her only address at account opening. What is the correct treatment under CIP?
C is correct. CIP requires a physical street address; a P.O. Box alone is never sufficient. The firm may keep the P.O. Box on file in addition to a residential or business street address.
The P.O. Box rule is a classic exam distractor. Physical street address is the required CIP data point.
How long must a broker-dealer retain Customer Identification Program records after the customer's account is closed?
C is correct. CIP records must be kept for 5 years after the account closes. The 5-year retention period aligns with several other AML recordkeeping requirements.
Retention periods differ across FINRA and BSA rules. The CIP retention is 5 years after account closure.
What concepts relate to Customer Identification Program (CIP)?
This term is part of this cluster :
Where does Customer Identification Program (CIP) appear on the Series 6 exam?
This term is tested in the following FINRA Series 6 topic areas: