CIP for Armed Force member ordered to active duty

[Appleby]

Someone asked me about waiver of customer identification procedures (CIP) for active members of the armed force. I have searched high and low and can’t find anything that provides a waiver of these (CIP) rules for these individuals.

Are we aware of any? If you are involved in the account opening process at your firm, do you have special provisions for active members of the armed force?

Denise

[John G]

From the responses to comment period on SEC rules.....

http://www.sec.gov/rules/final/34-47752.htm

103.122(b)(2)(i) Customer information required.

The proposed rule would have required a broker-dealer's CIP to require the firm to obtain certain identifying information about each customer, including, at a minimum: (1) name; (2) date of birth, for a natural person; (3) certain addresses;55 and (4) identification number.56 The NPRM further stated that in certain circumstances a broker-dealer should obtain additional identifying information, and that the CIP should set forth guidelines regarding those circumstances and the additional information that should be obtained.57

Three commenters submitted comments on the required information component of the proposed rule. One commenter pointed out that certain persons may not have permanent residential addresses because they are military personnel living overseas or are living on boats. This commenter suggested the rule only require that a mailing address be obtained. Another commenter suggested that the rule permit broker-dealers to open an account even if all the minimum identifying information is not obtained, provided the broker-dealer has a reasonable belief that it knows the customer's true identity. The final commenter suggested the rule be risk-based with respect to the required minimum information. This commenter also stated that the rule should require a mailing address only.

We are adopting the customer information provisions substantially as proposed with changes to accommodate individuals who may not have physical addresses.58 We believe the minimum required information is collected by most broker-dealers already, is necessary for the verification process and serves an important law enforcement function. Accordingly, prior to opening an account, a broker-dealer must obtain, at a minimum, a customer's (1) name; (2) date of birth, for an individual; (3) address; and (4) identification number.59 The address must be (1) for an individual, a residential or business street address, or for an individual who does not have a residential or business street address, an Army Post Office or Fleet Post Office box number, or the residential or business street address of next of kin or another contact individual; or (2) for a person other than an individual, a principal place of business, local office or other physical location.60

We are adopting the identification number requirement substantially as proposed.61 For a customer that is a U.S. person, the identification number is a taxpayer identification number (social security number or employer identification number).62 For a customer that is not a U.S. person, the identification number is one or more of the following: a taxpayer identification number, passport number and country of issuance, alien identification card number, or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.63 This provision provides a broker-dealer with some flexibility to choose among a variety of information numbers that it may accept from a non-U.S. person.64 However, the identifying information the broker-dealer accepts must permit the firm to form a reasonable belief that it knows the true identity of the customer.65

The proposed rule included an exception from the requirement to obtain a taxpayer identification number from a customer opening a new account.66 The exception would have allowed a broker-dealer to open an account for a person that has applied for, but has not yet received, an employer identification number (EIN).67 We are adopting an expanded version of this exception in the final rule.68 As proposed, the exception was limited to persons that are not natural persons.69 On further consideration, we have determined that it is appropriate to expand the exception to include natural persons who have applied for, but have not received, a taxpayer identification number.70 We also have modified the exception to reduce the recordkeeping burden. The proposed rule would have required the broker-dealer to retain a copy of the customer's application for a taxpayer identification number.71 The final rule permits the broker-dealer to exercise discretion to determine how to confirm that a person has filed an application.72

I also found footnote [4] on another document (which I can't cut and paste) which said that previous exemption for the military was inconsistent with the new rule. Page 48 of the SEC response to comments.

[Appleby]

John,

Thanks very much.

Denise

[Guest scarletrose]

wow thats a lot of info in that page