User:Tennisha/sandbox

Know Your Customer Requirements
The Financial Industry Regulatory Authority (FINRA) Rule 2090 states that financial institutions must use reasonable diligence to identify and retrain the identity of every customer and ever person acting on behalf of those customers. In enforcing this rule these organizations are expected to collect all information essential to knowing their customers. Information deemed necessary for enforcing Know Your Customer Requirements include the Customer Identification Program (CIP), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD).

Customer Identification Program
Section 326 of the USA Patriot Act requires banks and other financial institutions to have a Customer Identification Program (CIP). Financial institutions must collect four pieces of identifying information about its customers including:


 * Name
 * Date of Birth
 * Address
 * Identification Number

Customer Due Diligence
The Bank Secrecy Act, the common name for the Currency and Foreign Transaction Reporting Act of 1970 and its amendments and other statutes established the Customer Due Diligence (CDD) rule as part of their efforts to improve financial transparency and deter money laundering. The CDD Rule enhances CDD requirements for "U.S. banks, mutual funds, brokers or dealers in securities, futures commission merchants, and introducing brokers in commodities. " The CDD rule requires that financial institutions identify and verify the identity of customers associated with open accounts. The CDD Rule has four core requirements :


 * 1) Identify and verify the identify of customers
 * 2) Identify and verify the identity of the beneficial owners of companies opening accounts
 * 3) understand the nature and purpose of customer relationships to develop customer risk profiles
 * 4) conduct ongoing monitoring to identify and report suspicious transactions, and on a risk basis, to maintain and update customer information

Beneficial owner information is required for any individual who owns 25 percent or more of a legal entity and an individual who controls the legal entity.

Enhanced Due Diligence
Enhanced Due Diligence is required when initial identity checks have been completed and high-risk factors have been identified for an individual or a business. When these requirements have been met "enhanced" or additional due diligence above and beyond CDD is conducted which identifies the following information :


 * Source of wealth and funds check
 * Additional identity research
 * Risk identification and assessment