Topic: Customer Identification Program (CIP)
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How can we comply with customer identification program (CIP) and customer due diligence (CDD) beneficial ownership requirements when purchasing shares of participation loans, sometimes years after their origination? We typically wait ninety or more days before receiving Bank Secrecy Act-related documentation, which we sometimes do not receive at all.
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We do not believe that FinCEN’s CIP and CDD beneficial ownership requirements apply when purchasing a participation interest in loans that have already been originated, but we recommend confirming this conclusion after sharing all relevant information and documents with your bank counsel. FinCEN’s CIP regulations require banks to obtain certain information from a customer before…
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Our customer due diligence form asks for a customer’s job title, place of employment, and length of employment. Are we required to collect this information, and is it necessary for both consumer and business accounts?
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No, we do not believe you must ask for a customer’s job title, place of employment, and length of employment before opening a consumer or business account, but we believe it is common to collect this information for certain customer risk profiles and for purposes of filing suspicious activity reports (SARs) and currency transaction reports…
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Could it be considered discriminatory to refuse accounts for nonresident aliens because they do not have a social security number (SSN) or individual tax identification number (ITIN)? Are you aware of any sample forms or guidance related to conducting enhanced due diligence on nonresident aliens?
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Opening accounts for nonresident aliens is a business decision dependent on the amount of risk that your institution is willing to accept. FinCEN’s Customer Identification Program (CIP) requirements for non-U.S. persons include the collection of (among other things) either a customer’s “taxpayer identification number; passport number and country of issuance; alien identification card number; or…
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For Customer Identification Program (CIP) purposes, how should we describe a person’s occupation if they are a stay-at-home mom? We believe FinCEN prefers the term “homemaker,” but we typically use “stay-at-home mom.” “Occupation” also appears as a field on items such as FinCEN’s Currency Transaction Report (CTR), and we want to make sure we are using the correct terminology.
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We recommend setting a policy or procedure to ensure that you are using the terms “homemaker” and “stay-at-home parent” consistently for all customers who fit those labels and are not otherwise employed. Additionally, you should monitor such customers’ activities and “pay particular attention” if they “continually make large cash deposits,” as suggested in FinCEN’s guidance…
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We originated a consumer mortgage loan to joint borrowers, who recently informed us that they have legally changed their names. Is there anything we need to do other than document this in the loan file? Should we be concerned that the borrowers’ names now do not match the loan documents?
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No, we do not believe you need to take any additional action to address a consumer customer’s name change after updating your internal loan file and verifying the name change, as your promissory note, mortgage, and current lien position would not be affected by a name change (subject to the caveat for blanket UCC financing…
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We want to extend five separate loans to five different series established under a single-member LLC. Each series wants to use the master LLC’s tax ID number. We have received a certificate of designation for each series and a certificate of good standing for the master LLC listing each of the series’ names. However, the master LLC’s Articles of Organization do not indicate the establishment of any series. Can these series take out their loans using the master LLC’s tax ID number, or do they each need to have their own tax ID number?
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No, we do not believe that your bank needs to require separate employer identification numbers (EINs) for each series of an LLC established under Illinois law. We believe that your bank can accept the master LLC’s EIN for the loans, provided that the series have not obtained their own EINs (in which case your bank…
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How should we title an account for a general partnership that obtained an assumed name certificate from the county in the name of two unmarried individuals and a business? They did not present partnership papers or an employer identification number (EIN). Should we require partnership papers and an EIN to title the account in the assumed business name, or can we open the account in the name of the individuals doing business as (DBA) the assumed name and use one of the individual’s social security numbers? Also, would the partners have been required to present a partnership agreement to the county to obtain the assumed name certificate?
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We recommend requiring an EIN to open a partnership account, since the IRS requires partnerships to obtain an EIN for purposes of filing partnership tax returns. Whether you should require the partnership to present a partnership agreement or other documentation depends on your bank’s customer identification program (CIP), which should specify what documentation you need…
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Are we required to confirm that our business customers are registered with the Secretary of State? Are there any concerns if we allow a business to maintain a deposit account after it has been voluntarily or involuntarily dissolved, or if a business loan customer is voluntarily or involuntarily dissolved?
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No, we are not aware of any law or regulation requiring your bank to determine whether a business customer is in good standing with the Illinois Secretary of State or the secretary of state of any other state. However, you may wish to review your commercial account agreements and loan agreements to determine if they…
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What trust paperwork should we collect when opening a revocable living trust account when the bank is not a trustee? Is it better to collect only certain pages, or should we collect the entire trust? Does having the entire trust put us at a greater risk of liability for not following stipulations of the trust?
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We recommend that you request a certification of trust from the trustee instead of the entire trust instrument when opening a trust account (given that your bank is not serving as trustee), unless you have specific BSA/AML concerns or otherwise are required by law to inspect the entire trust instrument. There is no law that…
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When a customer changes their name (most often in the case of marriage), is it a requirement that they sign a new signature card? If we have their new signature on another document, such as their new ID, would that suffice for signature verification, or must the new signature be captured on the signature card?
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We are not aware of any Illinois laws or regulations that would require you to update signature cards after a customer changes their name (for example, after a marriage, divorce, or adoption), nor do FinCEN’s Customer Identification Program (CIP) regulations require specific procedures for memorializing name changes (which of course you should verify as provided…