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 broker-dealers to implement a Customer Identification Program to verify the identity of anyone opening an account. This involves collecting identifying information and verifying it through documentary or non-documentary methods. The purpose is to help prevent money laundering, terrorist financing, and other financial crimes, not to assess credit, investing experience, or margin eligibility.
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.
Spot an error in this question or explanation? Tell us — we fix these fast.
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:
- The Office of Foreign Assets Control (OFAC) maintains a list of individuals and entities subject to economic sanctions.…
- Under the Customer Identification Program, what must a brokerage firm do before opening a new account?
- What is a broker-dealer's obligation if suspicious activity is detected in a retirement account?
- Which is NOT a disciplinary action SROs may take against a member firm?