The Office of the Comptroller of the Currency, the Federal Reserve Board, the FDIC and the National Credit Union Administration, with the concurrence of FinCEN, granted banks and bank subsidiaries an exemption from the requirements of the customer identification program ("CIP") rules for premium finance lending.
Premium finance loans provide short-term financing to businesses to help facilitate purchases of property and casualty insurance policies. The CIP rules require a bank to implement "risk-based verification procedures" to ensure that it can "form a reasonable belief" that it knows the true identity of customers.
According to the Order, the exemption was granted to banks and bank subsidiaries because (i) the structural characteristics of premium finance lending present a low risk for money laundering and terrorist financing (in accordance with the purposes of the Bank Secrecy Act) and (ii) the practices permitted by the exemption will be consistent with safe and sound banking.
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