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The USA Patriot Act states that each financial institution shall establish anti-money laundering programs, including, at a minimum; (i) the development of internal policies, procedures, and controls; (ii) the designation of a compliance officer; (iii) and ongoing employee training program; and (iv) an independent audit function to test programs. A firm, as part of its anti-money laundering program, should adopt a broad statement that clearly sets forth the firm's policy against money laundering and any activity which facilitates money laundering or the funding of terrorist or criminal activities. This policy should emphasize the responsibility of every employee and should set forth the consequences of non-compliance.
The Patriot Act puts special emphasis on the importance of financial institutions knowing their customers. According to the act, for each account opened, a firm must undertake reasonable efforts to obtain and maintain certain information to ascertain the identity of its prospective client. Therefore, all financial institutions must develop a Customer Identification Program (CIP) to combat money laundering. The form of this program is dependent on the size of the firm, its location, and the nature of its business activities and it must be incorporated into the institution's BSA.
According to the Patriot Act, a financial institution's CIP must include procedures for verifying the identity of each customer, to the extent reasonable and practicable, based on the bank's assessment of certain risk. These procedures must enable the bank to form a reasonable belief that it knows the true identity of the customer. Sentinel is an ideal tool in assisting community banks in making this identity and risk assessments on potential clients.
The CIP must contain procedures that specify the identifying information the bank must obtain from a customer. At a minimum, the bank must obtain, prior to opening an account: (i) the customer's name; (ii) the customer's residential/business address and mailing address (if different from previous); (iii) the date of birth of the customer; and (iv) and identification number. The Sentinel fulfills these requirements of the CIP. For the purpose of validating the customer's identity, the system collects general applicant data, employer information, and information on the documents used to open the account. The general applicant data consists of the customer's name, address, date of birth, and social security number. The employer information consists of the company's name and location. Finally, the document information consists of the type of ID, the ID number and the place of issue, which are all required by the Patriot Act.
