Topic: Account Opening
-
What is the best way to identify a new customer as a nonresident alien? Our customer identification program (CIP) policy requires foreign customers to provide an Illinois driver’s license and credit card statement for identification purposes, and we obtain their social security numbers. However, these documents do not indicate whether the customer is a resident or nonresident alien, which we need to know for IRS reporting and other purposes.
—
by
To identify which of your customer are nonresident aliens for tax reporting purposes, we recommend asking the customer whether or not they are a U.S. person (which would include U.S. citizens and resident aliens) as part of your account opening process. As you noted, collecting a social security number or driver’s license will not help…
-
We have a deceased customer who had an IRA with her three sons named as beneficiaries. We need to open inherited IRAs for the sons, one of whom is incarcerated. Our Customer Identification Program (CIP) requires a primary and secondary form of identification. What steps do we need to take to verify the identity of an incarcerated individual? We were able to pull up a photograph of the incarcerated son on the Department of Corrections website using his inmate identification number. What more should we do? Our CIP does not cover this situation.
—
by
We believe you may rely on the information posted on the Illinois Department of Corrections’ (IDOC) website, which is drawn from government records on file with the IDOC, for one form of government-issued identification for purposes of your customer identification program (CIP). Since your CIP policy requires two forms of government-issued identification, you may wish…
-
We have a potential business customer that would like to set up a deposit account and line of credit. The company sells point of sale (POS) solutions for businesses, by providing equipment for processing POS transactions (they use a third-party vendor to process the transactions). They employ several salespeople in many different states to sell this equipment, and they want to deposit checks by having salespeople take pictures of their checks on their phones and send them to the business owner, who would use our consumer mobile remote deposit capture (RDC) system to deposit the checks, rather than our business RDC system. What are the risks of allowing a customer to use RDC to deposit copies of checks? Does the restrictive endorsement “for mobile banking deposit only” provide sufficient protections?
—
by
Based on the information provided, it is likely that this customer’s deposit methods will increase the risk of fraud. However, it may be possible to reduce the risk of fraud by requiring the customer’s salespeople to apply a restrictive endorsement on the checks before forwarding photos of the checks to the customer’s owner for deposit.…
-
We have a potential customer who wants to open a business account for an investment club for virtual currency. The club currently has three members, and they would purchase virtual currency through Coinbase. Would the individual opening the account be considered an administrator of virtual currency? What if the individual opened a business account for the same purpose? Also, is the club a money services business (MSB)?
—
by
We do not believe that the individual or business operating an investment club for virtual currency would be considered an “administrator” of virtual currency under FinCEN’s standards, but they might be an “exchanger” — which could qualify as an MSB, depending on the club’s activities. FinCEN has issued guidance defining an “administrator” of virtual currency…
-
Under CIP rules and regulations, would an Illinois Firearm Owners Identification (FOID) card be an acceptable document for verification of identity?
—
by
Yes, we believe that FinCEN’s customer identification program (CIP) requirements would allow your bank to rely on an Illinois FOID card to verify a customer’s identity, although whether you choose to accept this card for CIP purposes remains a business decision for your bank. When verifying a new individual customer, banks must obtain the person’s…
-
The trustee of a revocable living trust recently set up a savings account and checking account. The trust’s attorney told us to title the accounts in the name of the trust but that any checks should be imprinted with the individual grantors’ names, without reference to the trust. Shouldn’t the checks be titled exactly as the account is titled?
—
by
Yes, we believe that the checks for these accounts should reflect the exact account names. While we do not recommend that a bank interject itself into a trustee’s decisions when merely providing deposit accounts for a trust, we do recommend printing account checks that show the account owner’s name. In this case, the account owner…
-
A healthcare facility pools its residents’ social security insurance proceeds into one single “resident trust” deposit account. Is this account subject to FinCEN’s new legal entity customer due diligence (CDD) requirements? Or would the account be exempt as a trust account? Or as a pooled investment vehicle? The account funds are not invested in anything. The healthcare facility provided us with evidence of a surety bond regarding the account funds, but no evidence of a trust agreement.
—
by
We recommend treating the healthcare facility as the ”legal entity customer” when opening this account, unless the facility can provide additional information demonstrating that it is a trustee opening the account on behalf of a trust (in which case it would be exempt from FinCEN’s new CDD rule). The account that you have described appears…
-
We originate our first lien mortgage loans through a subsidiary. Can we require those borrowers to open a checking account with us?
—
by
Yes, we believe that your bank can require borrowers to open a deposit account at your bank — provided that the requirement is applied consistently to avoid any fair lending implications. There is no prohibition against tying a loan product offered through a subsidiary to a deposit account product at your bank. Illinois and federal…
-
Should our bank require the entire trust agreement when opening a trust deposit account? This would be for our deposit side, not our trust department (which requires the entire trust agreement when acting as trustee for a trust).
—
by
No, we do not recommend requiring a full trust instrument when opening a trust account, subject to the discussion below. Neither Illinois nor federal law requires your bank to obtain a full copy of a trust instrument when opening a trust account. In fact, Illinois law requires banks to accept a Certification of Trust form…
-
Do the beneficial ownership requirements in the new customer due diligence final rule that takes effect May 11, 2018, include any new signage requirements for banks? Our forms vendor called to promote signs that describe the rule’s requirements, but we were not aware that we needed new signs.
—
by
No, the final customer due diligence rule that takes effect on May 11, 2018, does not include new signage requirements for banks, and it does not revise the existing customer identification program (CIP) signage requirements. Whether you wish to purchase and post signs regarding the new beneficial ownership requirements is a business decision for your…