Opening Accounts & CIP
To open an account a firm collects the four CIP essentials — name, date of birth, residential address, and SSN/TIN — verifies identity under the USA PATRIOT Act, and gathers the suitability profile (objectives, finances, risk tolerance).
The exam loves to make you separate what is required to OPEN an account from what is required to TRADE or RECOMMEND. A firm collects identity up front but may verify within a reasonable time before or after the account is opened — so a customer can sometimes transact while verification is still pending, and an incomplete suitability profile blocks recommendations, not the opening itself. Watch the documentary vs. non-documentary distinction: a driver’s license or passport is documentary, while cross-checking a credit bureau or public database is non-documentary, and a firm may use either or both.
Don’t confuse CIP triggers with Reg BI, which fires only on a recommendation to a retail customer, or with discretionary accounts, which need separate prior written authorization. CIP is the identity gate that lives inside the firm’s AML program, while OFAC sanctions screening runs alongside it — so a name hitting the OFAC/SDN list blocks the account regardless of how clean the paperwork looks. Memory hook: CIP catches WHO you are; Reg BI governs WHAT you’re told to buy.
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