Section 326: Patriot Act Compliance

Section 326 Patriot Act Compliance

What is Section 326?

Currently there are billions of dollars being spent on Patriot
Act compliance. Just as the Y2K bug made businesses small and large alike
scurry around updating their systems so has the Patriot Act. Section 326 of
the USA PATRIOT Act requires financial institutions to develop a risk-based
approach to a Customer Identification Program (CIP).

What is a Customer Identification Program (CIP)?

A CIP is a piece of software installed onto a financial system, onto which
the information you provide to that system is sent back to a nationally monitored
list. In short, information you provide to any financial Institution is not
only instantaneously checked and crossed reference with other personal information
such as, your social security number, telephone and drivers license; But is
stored and used for later reference. Section 326, with the help of CIP’s,
records and monitors every American citizen’s financial transactions
without any suspicion of wrong doing.

Collecting information:

As part of a Customer Identification Program (CIP), financial institutions
will be required to develop procedures to collect relevant identifying information
including a customer’s name, address, date of birth, and a taxpayer
identification number – for individuals, this will likely be a Social
Security number. Foreign nationals without a U.S. taxpayer identification
number could provide a similar government-issued identification number, such
as a passport number.

Maintaining records:

As part of a CIP, financial institutions must maintain records including customer
information and methods taken to verify the customer’s identity.

Why should the Average American Citizen worry?

Under the Patriot Act conducting any type of monetary transaction with a terrorist
or suspected terrorist is in itself a terrorist crime. Meaning that you are
accountable for the actions of who ever you do business with, even if you
are completely unaware of them doing any wrong doing. Failure to comply with
section 326 can result in upwards of a million dollar fine.