According to the Customer Identification Program, when must broker-dealers verify a customer's identity?

The correct answer highlights that broker-dealers are required to verify a customer's identity within a reasonable period after the account is opened. This requirement is part of the Customer Identification Program (CIP), which is mandated by the USA PATRIOT Act to prevent financial crimes, such as money laundering and fraud.

The rationale behind verifying identity within a reasonable timeframe allows broker-dealers to begin the account-creation process and facilitate certain transactions while ensuring that identity verification is not unduly delayed. This balance helps improve customer service and operational efficiency without compromising security. Verification typically involves collecting key information such as the customer's name, date of birth, address, and identification number, and it must be completed as part of the due diligence process after the account has been established.

Other options imply different timings for identity verification that are not consistent with regulatory practices. For instance, verifying a customer's identity before the account is opened would pose logistical challenges, while verifying before the first trade might not capture all necessary details. Lastly, the notion of doing so before giving a privacy notice does not align with the intention of the CIP, which focuses specifically on identity verification as a regulatory requirement.