A Customer Identification Program (CIP) is a mandatory regulatory requirement that financial institutions and certain other businesses must implement to verify the identity of individuals and entities before establishing a formal business relationship. The goal of a CIP is to ensure that institutions “know” their customers, thereby preventing identity fraud, money laundering, terrorist financing and other forms of financial crime.

CIP is a foundational element of the broader Know Your Customer (KYC) framework and is required under regulations such as the USA PATRIOT Act in the United States. At a minimum, a compliant CIP must include procedures for collecting and verifying four key pieces of identifying information: the customer’s full legal name, date of birth (for individuals), address and an identification number (such as a taxpayer identification number or government-issued ID number).

Verification may be conducted using documentary methods, such as reviewing passports, driver’s licenses or business registration documents - or non-documentary methods, such as checking independent databases or performing background checks. The level of verification required depends on the institution’s risk-based approach and the type of customer being onboarded.

A strong Customer Identification Program is essential for regulatory compliance and serves as the first line of defense in identifying suspicious activity and protecting the financial system from abuse. Institutions must also maintain records of the verification process and have procedures in place to handle situations where a customer's identity cannot be verified.