SIE practice questioneasyCustomer Identification Program
Under the USA PATRIOT Act, broker-dealers must implement a Customer Identification Program (CIP). What is the primary purpose of this requirement?
- ATo verify the identity of customers opening accounts to prevent money laundering and terrorist financing✓ Correct answer
- BTo determine the customer's creditworthiness
- CTo determine whether the customer qualifies for margin trading
- DTo assess the customer's investment experience
Explanation
Why A — To verify the identity of customers opening accounts to prevent money laundering and terrorist financing
The USA PATRIOT Act requires financial institutions, including broker-dealers, to implement a CIP to verify the identity of anyone opening an account. This involves collecting identifying information (name, date of birth, address, ID number) and verifying it through documents or non-documentary methods. The purpose is to prevent money laundering, terrorist financing, and other financial crimes — not to assess credit (A), experience (C), or margin eligibility (D).
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Anti-Money Laundering & Reporting questions
- Under the Bank Secrecy Act, broker-dealers must file a Suspicious Activity Report (SAR) when they detect transactions…
- 529 plans are classified as municipal fund securities and are regulated by:
- A customer makes multiple cash deposits of $9,500 each over several days to avoid the $10,000 Currency Transaction…
- Under the Bank Secrecy Act, a Currency Transaction Report (CTR) must be filed for cash transactions exceeding: