What is a Customer Identification Programme?
A CIP is a process for confirming customer information, such as name, address, date of birth, and other information, and validating it with independent, legal identification documents. These processes are necessary for any business to avoid being sued or penalised for accepting money from unregistered individuals. They also ensure that a company’s money laundering compliance is up to date with anti-money laundering regulations. The global amount of money that is laundered each year is estimated at many trillions of dollars. Unfortunately, the problem has only grown, and regulations are a necessity to protect the integrity of any business.
Using a Customer Identification Programme to verify a customer’s identity is mandatory for certain financial institutions. Such regulations were originally intended for financial institutions, but now apply to online businesses as well. New customer identification programmes were implemented and have been around since the start of the 21st century. In the meantime, banks, credit card firms, and other financial institutions have been required to implement CIPs to ensure that they adhere to the Know Your Customer guidelines. For information on the AML ID Check, visit W2 Global Data
The term “customer” can mean any legal entity, including a business. Therefore, it’s critical for banks to implement a CIP that identifies their customers in the most accurate way possible. A CIP needs to include procedures for edge cases, such as customers who don’t show up to a branch or are unable to provide their identity documents. The programme must also address other high-risk situations, such as suspicious activity and account closures, for example.