Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
-
A community college has been a customer of our bank for several years and now is opening a new account. Do we need to obtain a Certification of Beneficial Ownership Form?
—
by
Whether a community college is exempt from FinCEN’s customer due diligence requirements, including the requirement to collect a certification form, depends on the specific community college. If the community college is a public institution that has the power to tax (for example, some community colleges in Illinois have the power to levy property taxes), we…
-
What are the record retention rules for lock boxes in Illinois, including customer’s statements, logs, and any other type of information related to the lock box? Also, what are the record retention requirements for email, either between bank staff and customers, or internally among bank staff related to a transaction?
—
by
Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We are not aware of any specific legal requirements in Illinois that apply to the…
-
We are a national bank, and we recently moved our wealth and farm management groups into a separate, state-chartered trust company that will be regulated by the IDFPR and the Federal Reserve. Which compliance regulations apply to a trust company? Do the following apply? BSA, OFAC, AML, CIP, USA Patriot Act, FACT Act, Elder Financial Abuse, UDAAP, and GLBA.
—
by
Trust companies are subject to all the laws mentioned in your question. Broadly speaking, there are no exemptions for trust companies in the laws and regulations that generally apply to banks, bank holding companies, and their subsidiaries. Also, you mention in your question that the trust company will be regulated by the IDFPR and the…
-
Our trust department serves as trustee for various escrow accounts as a holder of documents, not funds. In a typical transaction, we receive paperwork to hold from an attorney’s office for the sale of a property either to a business or individual. We release the documents once the sale is completed. Do we need to collect beneficial ownership information related to these escrow accounts and if so, for whom?
—
by
Yes, we believe your bank should collect beneficial ownership information from the attorney’s office that is opening the escrow accounts, provided the attorney’s office is a “legal entity customer” as defined in FinCEN’s customer due diligence (CDD) final rule. However, your bank is not required to obtain beneficial ownership information regarding the clients whose documents…
-
We have a potential customer that is a video gaming parlor. Our understanding is that the video game machines receive money used for gambling as ACH payments. Would this be a money transmitter subject to the requirements for a money services business?
—
by
We do not believe that a video gaming establishment operating under Illinois law would meet the definition of “money transmitter,” unless the terminals or the establishment offer ancillary services that would trigger the money services business requirements. The definition of a money transmitter includes a business that accepts funds and transfers those funds to a…
-
We recently signed an agreement to purchase two bank branches. The selling bank has agreed to provide us with two years’ worth of documents related to the acquired accounts. However, we are aware that Illinois law requires some documents to be retained for seven years. Are there any special exceptions to record retention requirements that apply to branch acquisitions? What are our record retention obligations for these acquired accounts?
—
by
We are not aware of any special record retention exceptions that apply when acquiring branches from another institution. As such, we believe your bank will be held to the same record retention requirements as if it had originated the acquired accounts. There are several record retention provisions that will require more than two years’ worth…
-
One of our customers sold its business. The CPA advised the buyer (which is keeping the business account at our bank) to retain its EIN but change the corporate name. We have obtained amended articles of incorporation, letters sent to the IRS regarding the name change using the same EIN, and an Illinois Secretary of State filing for the amended business name. We don’t have confirmation from the IRS. Should we obtain any additional documents from the customer?
—
by
We recommend treating the account as a new business account and documenting the business’ new ownership and name by collecting any documents prescribed by your policies and procedures when opening a new business account. This may include the business’ articles of incorporation, bylaws, a corporate resolution authorizing the organization to open an account, etc. The…
-
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 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…