We agree that the Customer Identification Program (CIP) regulations do not require you to obtain the social security number of payable on death (POD) beneficiaries. Under those rules, your CIP procedures must (at a minimum) collect and verify certain identifying information about your customers, including taxpayer identification numbers. 31 CFR 1020.220(a)(2). However, the term “customer” is defined as a “person who opens a new account,” and that definition would not include the beneficiary on a POD account. 31 CFR 1020.100(c)(1). Because the POD beneficiaries are not your customers, you do not need to identify them or verify their identities, and thus you do not need their social security numbers.

Once the POD account owner dies, the Illinois Trust and Payable on Death Accounts Act requires that you distribute the proceeds to the beneficiary or beneficiaries. You may refuse to distribute the proceeds until you receive legal evidence of the owner’s death, identification from the beneficiaries, and a written direction from each beneficiary to close the account and distribute the proceeds “in a form acceptable to the institution.” 205 ILCS 625/10. If the beneficiaries decide to use the proceeds to open a new account at your bank, at that point you would have to comply with the CIP requirements to collect and verify the customer’s information.  

Note that for FDIC insurance purposes, customers may want you to name the POD beneficiaries in the account title (though social security numbers are, again, unnecessary). Under the FDIC insurance regulations, in order to receive additional insurance for a POD beneficiary, the beneficiary must be specifically named in your account records. 12 CFR 330.10(b). However, the rules specifically state that you do not need to list a beneficiary on the account’s signature card — naming the beneficiary in your electronic deposit record will suffice. 12 CFR 330.10(b)(1).