Supervision and Regulation Letters
Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Access Cards
SUPERVISION AND REGULATION
|SUBJECT:||Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Access Cards|
The Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the U.S. Department of Treasury’s Financial Crimes Enforcement Network are issuing the attached interagency guidance to clarify that a bank’s Customer Identification Program (CIP)1 should apply to the cardholders of general purpose prepaid cards that have the features of an account and are issued by a bank. This guidance states that general purpose prepaid cards should be treated as an account if it provides a bank’s customer with (1) the ability to reload funds or (2) access to credit or overdraft features. The guidance applies to these cards even if they are sold, distributed, promoted, or marketed by third-party program managers.
The CIP rule, set forth in Section 326 of the USA PATRIOT Act,2 requires a bank to obtain information sufficient to form a reasonable belief regarding the identity of each “customer,” including, at a minimum, obtaining the customer’s name, date of birth, address, and tax identification number and to establish risk-based procedures to verify the identity of new customers. To determine if CIP requirements apply to purchasers of prepaid cards, the issuing bank should first determine whether the issuance of a prepaid card results in the creation of an account; and if so, ascertain the identity of the holder of that card.
Reserve Banks are asked to distribute this letter to the supervised organizations in their districts and to appropriate supervisory staff. Questions regarding this letter, and the Customer Identification Program rule in the USA PATRIOT Act should be directed to the following individuals in Division of Banking Supervision and Regulation’s BSA/AML Section: Koko Ives, Manager, at (202) 973-6163; or Lee Davis, Supervisory Financial Analyst, at (202) 912-4350. In addition, institutions may send questions via the Board’s public website.3
Division of Banking
Supervision and Regulation
- The CIP rule is codified at 31 CFR 1020.220 and, for Board supervised entities, at 12 CFR 208.62(b)(2) and 211.24(j)(2). In addition, SR letter 05-9, “Frequently Asked Questions Relating to Customer Identification Program Rules,” provides interagency guidance on common questions regarding the CIP Rule. Return to text
- 31 U.S.C. 5318(l). Return to text
- See http://www.federalreserve.gov/apps/contactus/feedback.aspx. Return to text