CIP Rules

[Guest Frankie]

Does anyone know if the new CIP rules in the anti-terrorism legislation would apply to non-erisa 403(b) plans ?

[mbozek]

Could you please explain what is CIP.

[E as in ERISA]

"Customer Identification Program" under Section 326 of the USA Patriot Act? There is an exclusion for accounts established for ERISA benefit plans. I'm not aware of an exclusion for non-ERISA Section 403(b). And maybe the same logic doesn't apply -- because the broker-dealers etc. create the account for the individual and track the info for the individual. Whereas in the case of a qualified plan, the recordkeeping for the individual accounts is done by the plan's recordkeeper.

[E as in ERISA]

§ 103.131 of the joint final regs says:

Customer identification programs for mutual funds.

(a) Definitions. For purposes of this section:

(1)(i) Account means any contractual or other business relationship between a person and a mutual fund established to effect transactions in securities issued by the mutual fund, including the purchase or sale of securities.

(ii) Account does not include:

(A) An account that a mutual fund acquires through any acquisition, merger, purchase of assets, or assumption of liabilities; or

(B) An account opened for the purpose of participating in an employee benefit plan established under the Employee Retirement Income Security Act of 1974.

I don't see an exception that would apply to non-ERISA Section 403(b)s.

[mbozek]

The CIP program also applies to SEPs and IRAs. But it only applies to new accounts. The CIP requires that the financial institution obtain the account holder's home address, not busines address for its records.