A registered representative opens a new account for a client who is a U.S. citizen residing abroad. The client provides their foreign address, but not a U.S. residential address. The representative must ensure compliance with FINRA rules regarding customer identification. Which of the following is the MOST appropriate action for the registered representative?
- ADecline to open the account as a U.S. residential address is mandatory for all U.S. citizens.
- BObtain a U.S. Army Post Office (APO) or Fleet Post Office (FPO) address if the client is affiliated with the military.
- CObtain a U.S. Post Office Box (PO Box) or other temporary mailing address as the U.S. residential address.
- DAccept the foreign address as the primary address and proceed with opening the account.
Show answer & explanationAnswer & explanation
Correct answer: B. Obtain a U.S. Army Post Office (APO) or Fleet Post Office (FPO) address if the client is affiliated with the military.
For U.S. citizens residing abroad, FINRA rules (specifically related to PATRIOT Act requirements for customer identification) permit the use of an APO or FPO address as a U.S. residential address if the client is affiliated with the military. A foreign residential address is generally acceptable, but if a U.S. address is required for certain internal or regulatory purposes, an APO/FPO is a valid option. A PO Box is generally not considered a valid residential address for customer identification.
Why the other options are wrong
- A. Declining the account is too extreme; there are permissible alternatives for U.S. citizens abroad.
- C. A PO Box is typically not considered a valid residential address for customer identification under AML regulations, as it does not indicate a physical location.
- D. While a foreign address is acceptable as a mailing address, a U.S. residential address or suitable alternative (like APO/FPO for military) is often required for regulatory or internal purposes for U.S. citizens.
Customer Identification Program (CIP) - U.S. Citizens Abroad
The PATRIOT Act requires financial institutions to implement a Customer Identification Program (CIP) to verify the identity of customers, including U.S. citizens residing abroad.
- Requires collection of name, date of birth, address, and identification number.
- For U.S. citizens abroad, a foreign residential address is generally acceptable as their physical address.
- APO/FPO addresses are acceptable for military personnel as a U.S. residential address.
- PO Boxes are generally not sufficient as a physical residential address for CIP purposes.
Memory trick: Overseas citizens need address proof, military has a special roof.