Topic: Customer Identification Program (CIP)
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In Illinois, can the sole member of a limited liability company (LLC) change the LLC’s ownership or add an additional member at any time without notifying their bank? We are concerned about our potential liability if a sole member of an LLC adds a member without notifying us and doesn’t wish to allow them to make transfers between a personal account and the business account using internet banking.
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Under the Illinois Limited Liability Company Act, a single-member LLC may agree to admit new members at any time. We are not aware of any laws or regulations that would require an LLC to notify their bank whenever they add a new member. However, you may require your customers to provide such notification if they…
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Can you provide any guidance on opening a checking account for a non-U.S. citizen? We have a prospective customer with an ID and a foreign passport but no social security number.
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We recommend following your bank’s customer identification program (CIP) regarding its requirements for opening bank accounts for non-U.S. citizens. If your current CIP does not specifically address the identification requirements for non-U.S. citizens, you may wish to update your CIP to include this information, and any revisions to your CIP must be approved by your…
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We have an account for a corporation that has been on our records for many years. We recently learned that this corporation (Customer, Inc.) was merged and consolidated into another corporation years ago, and the acquiring corporation subsequently opened a limited liability company (LLC) with a similar name (Customer, LLC). We have maintained the original account and have been accepting checks made payable to the name of the original corporation, the new LLC, and the acquiring corporation. Obviously, some of these checks are wrongly endorsed. Could we request that someone with authority provide us with a statement that would allow this practice to continue without recourse? Additionally, do we need to go through the process of closing and reopening a new account for this customer and conduct Bank Secrecy Act due diligence again? And, could this practice potentially present an issue with filing future Suspicious Activity Reports (SARs)? Finally, is it possible for a tax identification number to remain the same after a merger? We currently only have an Employer Identification Number (EIN) on file from the original corporation and are not sure whether this would be the same for the LLC.
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Yes, we believe it is possible to enter into a written agreement with the new LLC that would protect you from liability for the incorrectly endorsed checks (that have been endorsed in the name of the original corporation, presumably by an individual identified by the original corporation as its authorized signer). However, an agreement between…
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An examiner noted that we have an older account for a customer with a doing business as (DBA) name that is very similar to the name of a corporation where the customer is an employee or owner. The corporation does not have an account with our bank, and we do not have an assumed name certificate for the DBA account. What is our potential liability if our customer fraudulently deposits checks made out to their DBA name that are intended for the corporation? Would we be liable to the corporation if they claim the checks were stolen? If we are unable to obtain an assumed name certificate, could we have the corporation sign an indemnification agreement authorizing the customer to deposit checks made out to their DBA name?
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At the outset, we believe it would be prudent to ask your customer to establish a new account in the name of the corporation, since it appears that your customer is depositing checks payable to the corporation’s name. We recommend following your account opening procedures for corporate accounts, which should include obtaining a corporate resolution…
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Are we required to delete copies of driver’s license images used to verify customer identities for online account openings? Are there any exceptions that apply under the Bank Secrecy Act (BSA)? If we are required to delete them, can we request that customers provide us with another image after account opening that we can retain? The retention of licenses or identification is currently part of our BSA policy.
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Yes, we believe that you are required to delete images of driver’s licenses or personal identification cards used to verify customer identity for the purposes of online account opening. Further, we do not believe that you may request and retain those images again after account opening. The 2018 Economic Growth, Regulatory Relief and Consumer Protection…
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Are there any Illinois laws that address what must be included on the form we use for customer name changes when the name change is due to certain life events such as marriage, divorce, or adoption? Also, do we need to issue new account agreements reflecting a customer’s updated name?
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We are not aware of any Illinois laws or regulations that dictate what must be included on banking forms used to document customers’ name changes due to marriage, divorce, or adoption. The federal Customer Identification Program (CIP) regulations require only that your CIP “include risk-based procedures for verifying the identity of each customer to the…
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A customer with a campaign account under his name and social security number would like to change the account type from “individual” to “non-profit, political organization,” as he now has a non-profit entity with an employer identification number (EIN). The customer currently holds a political office and has a handful of employees, each of whom he would like to be issued a debit card for the account. Are there any Illinois guidelines we must follow for this type of account, and what type of FDIC insurance is available for this type of account?
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We recommend closing the campaign account under the customer’s name and social security number and opening a new account for the non-profit entity using its EIN. We also recommend following your Customer Identification Program (CIP) procedures for non-profit organizations, since your customer’s organization technically is a new customer for your bank. The Illinois Election Code…
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We do not currently provide a copy of a signature card to an account owner or business owner unless they request it. Should we be providing a copy of the signature card at account opening and when any changes are made? Our signature cards contain the information we collect as part of our Customer Identification Program (CIP), including tax identification numbers. Could there be any issues associated with providing this information to all authorized signers on an account?
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We recommend providing signature cards to customers at account opening and when changes are made to the signature card, but this decision does depend on whether your signature cards incorporate contractual language that your customer is agreeing to. We are not aware of any laws or regulations that would require you to provide copies of…
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Are we required to obtain the social security number of a beneficiary on a payable on death (POD) account?
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No, you are not required to obtain the social security number of a POD beneficiary. Under the Customer Identification Program (CIP) regulations, your CIP procedures must, at a minimum, include obtaining and verifying certain identifying information about a customer, including the customer’s taxpayer identification number. However, since the CIP regulations define a “customer” as a…
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Are we required to obtain a business customer’s Articles of Incorporation before opening an account if the Illinois Secretary of State’s CyberDrive database indicates the business is currently active?
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No, we do not believe that you are required to obtain a business customer’s Articles of Incorporation if your Customer Identification Program (CIP) procedures allow you to independently verify customers’ identities by comparing information provided by your customer with information obtained from a public database. At a minimum, your bank’s CIP must contain procedures for…