WASHINGTON (3/22/16)--The National Credit Union Administration (NCUA) is among federal regulators that released guidance Monday clarifying the applicability of the Customer Identification Program (CIP) rule to prepaid cards issued by financial institutions. The guidance applies to credit unions, banks, savings associations and U.S. branches and agencies of foreign banks.
The guidance clarifies that an institution’s CIP should apply to the holders of certain prepaid cards issued by the institution, as well as holders of such prepaid cards purchased under arrangements with third-party program managers that sell, distribute, promote, or market the prepaid cards on the institution’s behalf.
In order to determine if CIP requirements apply to purchasers of prepaid cards, the institution should first determine whether the issuance of a prepaid card to a purchaser results in the creation of an account; and if so, ascertain the identity of the institution’s customer.
These determinations depend on the functionalities of the prepaid card issued, and those are highlighted within the guidance.
It also describes when, in accordance with the CIP rule, the institution should obtain information sufficient to reasonably verify the identity of the cardholder, including at a minimum, obtaining the name, date of birth, address and identification number, such as the Taxpayer Identification Number of the cardholder.
For a deeper look into the guidance, see the entry on the Credit Union National Association's CompBlog.