FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationOpening and Maintaining Customer Accounts and Investment RecommendationsHard
A client, a U.S. citizen residing abroad, wishes to open a new brokerage account with a U.S.-based firm. Which of the following is required under the Customer Identification Program (CIP) for this client?
- AThe firm must obtain a foreign government-issued identification document.
- BThe firm must obtain a U.S. taxpayer identification number (e.g., Social Security Number) and a physical address, even if it's a foreign one.
- CThe firm must only obtain the client's name and address, as traditional identification is difficult to verify internationally.
- DThe firm is exempt from CIP requirements for U.S. citizens residing abroad.
Show answer & explanationAnswer & explanation
Correct answer: B. The firm must obtain a U.S. taxpayer identification number (e.g., Social Security Number) and a physical address, even if it's a foreign one.
Under the CIP rules of the USA PATRIOT Act, financial institutions must obtain specific identifying information for all customers, including U.S. citizens residing abroad. This includes a U.S. taxpayer identification number (like an SSN) and a physical address, which can be a foreign residential or business address.
Why the other options are wrong
- A. While foreign ID might be used for verification, the primary requirement is for U.S. taxpayer ID and a physical address, not necessarily a foreign government ID.
- C. Simply a name and address is insufficient. A U.S. taxpayer identification number is a critical piece of information required by CIP.
- D. There is no exemption from CIP requirements for U.S. citizens, regardless of their residency. The rules apply to all customers.
CIP for U.S. Citizens Abroad
Customer Identification Program requirements for U.S. citizens living outside the U.S., mandating a U.S. taxpayer ID and a physical (foreign) address.
- USA PATRIOT Act mandates CIP.
- Requires U.S. taxpayer identification number (SSN/ITIN).
- A foreign physical address is acceptable.
Memory trick: PATRIOT Rules: US Tax ID Abroad