If your bank reasonably believes that you know the true identity of the signer on the representative payee account, we believe they can be treated as an existing customer who would not be subject to your CIP requirements when they open an account for themselves. However, in our view the person should be treated as a new customer for purposes of Regulation CC’s new account exception hold.
FinCEN’s CIP rules require that you collect certain identifying information from every new customer. The definition of “customer” includes individuals who open accounts for an “individual who lacks legal capacity, such as a minor” but does not include “[a] person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person.” Consequently, if the signer on the representative payee account opened that account on behalf of a beneficiary lacking legal capacity, the signer should have been treated as a new customer at that time for CIP purposes. Accordingly, we do not believe that you need to treat the person as a “new customer” when opening their personal account — again, provided you have a reasonable belief as to the signer’s true identity.
For purposes of Regulation CC’s new account exception hold, “[a]n account is not considered a new account if each customer on the account has had, within 30 calendar days before the account is established, another account at the depositary bank for at least 30 calendar days.” The commentary to Regulation CC provides several examples of what constitutes a “new account” and states that “[[i][/i]i]f a person that is authorized to sign on a corporate account (but has no other relationship with the bank) opens a personal account, the personal account is subject to the new account exception.” By analogy, we believe that if a person with no prior relationship with your bank — other than as a signer on a representative payee account — opens a personal account, the new personal account would be subject to the new account exception.
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: . . .”)
- FinCEN regulations, 31 CFR 1020.100(c) (“For the purposes of § 1020.220: (1) Customer means: (i) A person that opens a new account; and (ii) An individual who opens a new account for: (A) An individual who lacks legal capacity, such as a minor
- FinCEN regulations, 31 CFR 1020.100(c) (“(2) Customer does not include: . . . (iii) A person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person.”)
- Regulation CC, 12 CFR 229.13(a)(1) (“New accounts. . . . A deposit in a new account . . . (ii) Is subject to the requirements of § 229.10(c)(1) (i) through (v) and § 229.10(c)(2) only with respect to the first $5,000 of funds deposited on any one banking day; but the amount of the deposit in excess of $5,000 shall be available for withdrawal not later than the ninth business day following the banking day on which funds are deposited; and (iii) Is not subject to the availability requirements of §§ 229.10(c)(1)(vi) and (vii) and 229.12.”)
- Regulation CC, 12 CFR 229.13(a)(2) (“An account is considered a new account during the first 30 calendar days after the account is established. An account is not considered a new account if each customer on the account has had, within 30 calendar days before the account is established, another account at the depositary bank for at least 30 calendar days.”)
- Regulation CC, Commentary, 229.13(a), Comment 1(a)(b) (“The following are examples of what constitutes, and does not constitute, a new account: . . . iv. If a person that is authorized to sign on a corporate account (but has no other relationship with the bank) opens a personal account, the personal account is subject to the new account exception.”)