A joint release from several federal financial institution regulatory agencies Monday clarified how the customer identification program rule will pertain to prepaid cards issued by financial institutions.
Credit unions, banks and savings associations, among others, fall under the guidance that calls for a financial institution's CIP to apply to prepaid cards provided by the institution. Under the guidance, the institution's CIP would also apply to prepaid cards that are sold, distributed, promoted or marketed by third-party programs on its behalf.
Additionally, financial institutions would be required to gather identifying information for the cardholder, including a minimum of the name, the date of birth, the address and an identification number, such as the taxpayer identification number of the cardholder.
According to the guidance, the cardholder should also be treated as the financial institution's customer under the CIP rule, even if the cardholder is not the named account holder and obtained the card from an intermediary that uses a pooled account with the institution to fund institution-issued cards.
Further, third-party program managers should be treated as agents of the institution for purposes of the CIP rule, rather than as the institution's customer. The institution is ultimately responsible for compliance with the requirements of its CIP rule as performed by that agent or other contracted third party, the guidance said.
The NCUA, Federal Deposit Insurance Corporation, Federal Reserve Board, FinCEN and the Office of the Comptroller of the Currency collectively issued the joint release.
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