Our BSA Officer does not want to open new trust accounts until we have tax ID numbers for every beneficiary of the trust, as well as other information — such as the legal fees and our own trust fees that we will charge to the trust. Delaying these account openings until we have collected this information is causing operational difficulties, for example when we urgently need to pay bills using trust funds, and it can be difficult to track down beneficiaries’ tax IDs, particularly for minors. Our preferred practice would be to open the trust accounts with the trust’s tax ID, in addition to other identifying information, and to obtain the beneficiaries’ lDs as soon as possible thereafter (while ensuring that we do not make any distributions to the beneficiaries in the meantime without obtaining their taxpayer IDs and running OFAC checks).

We believe that FinCEN’s customer identification program (CIP) rules permit your bank to establish a procedure in which trust accounts are opened with the trust’s taxpayer ID, and you collect the beneficiaries’ taxpayer IDs “within a reasonable time” after the account has been opened — particularly given the safeguards your institution is taking before making distributions to the trust beneficiaries.

Under FinCEN’s CIP rules, your bank must collect a trust’s taxpayer ID (along with other identifying information) “prior to opening an account.” This requirement applies only to the trust itself and not to its beneficiaries. If your bank’s CIP policy does not require you to obtain beneficiary IDs before account opening, your bank is not required to collect the beneficiaries’ taxpayer IDs before opening the trust account.

FinCEN’s CIP rules do impose additional requirements when verifying a trust’s identity that may involve a trust’s beneficiaries. The rules state that banks may need to collect “information about individuals with authority or control over [an] account, including signatories” when verifying a trust or other non-individual customer’s identity. FinCEN guidance specifies that for trust accounts, this verification process may include gathering information about a trust’s “settlor, grantor, trustee, or other persons with the authority to direct the trustee, and who thus have authority or control over the account.” However, these additional steps are part of the identity verification process, which may take place “within a reasonable time after the account is opened.” And notably, beneficiaries who are minors are unlikely to have authority or control over the trust account.

Consequently, if your bank wishes to verify a trust’s identity by gathering information on all its beneficiaries, we believe it would be permissible to obtain this information after opening the trust account, with the minimum identifying information specified above. Additionally, we are not aware of any BSA/AML requirement to obtain information about legal fees or bank fees before opening an account as part of the CIP process.

For resources related to our guidance, please see:

FinCEN regulations, 31 CFR 1020.220(a)(2)(i) (“Except as permitted by paragraphs (a)(2)(i)(B) and (C) of this section, the bank must obtain, at a minimum, the following information from the customer prior to opening an account: (1) Name; (2) Date of birth, for an individual; (3) Address, which shall be: . . . (iii) For a person other than an individual (such as a corporation, partnership, or trust), a principal place of business, local office, or other physical location; and (4) Identification number, which shall be: (i) For a U.S. person, a taxpayer identification number; . . .”)

FinCEN regulations, 31 CFR 1020.220(a)(2)(ii)(C) (“The CIP must contain procedures for verifying the identity of the customer, using information obtained in accordance with paragraph (a)(2)(i) of this section, within a reasonable time after the account is opened. . . . (C) Additional verification for certain customers. The CIP must address situations where, based on the bank's risk assessment of a new account opened by a customer that is not an individual, the bank will obtain information about individuals with authority or control over such account, including signatories, in order to verify the customer's identity. . . .”)

FFIEC BSA/AML Examination Manual, Trust and Asset Management Services—Overview (“For purposes of the CIP, the bank is not required to search the trust, escrow, or similar accounts to verify the identities of beneficiaries, but instead is only required to verify the identity of the named accountholder (the trust). . . . However, the CIP rule also provides that, based on the bank’s risk assessment of a new account opened by a customer that is not an individual, the bank may need ‘to obtain information about’ individuals with authority or control over such an account, including signatories, in order to verify the customer’s identity. For example, in certain circumstances involving revocable trusts, the bank may need to gather information about the settlor, grantor, trustee, or other persons with the authority to direct the trustee, and who thus have authority or control over the account, in order to establish the true identity of the customer.”)

Interagency FAQs, Customer Identification Program Rule (April 28, 2005) (“9. Who is the ‘customer’ for purposes of trust accounts? Does it make a difference whether the bank or a third party is trustee for the trust? In the case of a trust account, the “customer” is the trust whether or not the bank is the trustee for the trust. ‘A bank will not be required to look through trust, escrow, or similar accounts to 6verify the identities of beneficiaries and instead will only be required to verify the identity of the named accountholder.’ See 68 FR 25090, 25094 (May 9, 2003). However, the CIP rule also provides that, based on the bank’s risk assessment of a new account opened by a customer that is not an individual, the bank may need ‘to obtain information about’ individuals with authority or control over such an account, including signatories, in order to verify the customer’s identity. See 31 C.F.R. § 103.121(b)(2)(ii)(C). For example, in certain circumstances involving revocable trusts, the bank may need to gather information about the settlor, grantor, trustee, or other persons with the authority to direct the trustee, and who thus have authority or control over the account, in order to establish the true identity of the customer. (April 2005).”)