The USA PATRIOT Act, implemented through Bank Secrecy Act regulations, establishes explicit legal requirements for Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures before account opening or extending credit. These Customer Identification Program (CIP) requirements represent mandatory federal obligations across covered financial institutions.
Federal regulation 31 CFR § 1020.220 clearly establishes that financial institutions cannot establish new accounts without first verifying customer identity. This requirement encompasses all account types, including credit facilities and extensions of credit, making compliance essential across financial services operations.
Parallel CIP requirements apply to various financial entities under corresponding regulations in the Code of Federal Regulations. Organizations may fall under these requirements based on their regulatory status, licensing, or operational structure within the financial services ecosystem.
The regulations mandate specific information collection including name, date of birth, address, and identification numbers, along with verification through documentary or non-documentary methods. This comprehensive framework ensures covered institutions maintain robust identity verification processes before establishing formal customer relationships.