Federal Banking Agencies (FBAs) and the Financial Crimes Enforcement Network (FinCEN) have issued an order exempting banks from customer identification program requirements for loans granted by these banks. This exemption is intended to ease people into buying property and casualty insurance policies, also known as premium finance loans.
Under CIP rules, banks must perform risk-based verification procedures to identify their customers. When opening a bank account for a customer, a bank must collect all applicable identifying information such as name, date of birth, address, identification number etc.
However, FinCEN has found that premium finance loans pose a low risk of money-laundering because of their underlying objective. This makes the exemption in line with the Bank Secrecy Act. Moreover, this exemption does not interfere with the safety standards of banking. Therefore, insurance personnel members who grant premium finance loans do not need to collect customer information for CIP requirements.
Source name: Financial Crimes Enforcement Network