Topic: Customer Identification Program (CIP)
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When acquiring customers who have decided to move their account from another bank, what documentation should we require to open a sole proprietorship account for a customer “doing business as” an assumed name who started the business before assumed name certificates were required? Is using the business’s employer identification number (EIN) sufficient? What should we do if the customer wants to use their social security number for the account?
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When opening a new sole proprietorship account, we recommend following the guidance in FinCEN’s CIP Rule FAQs, which describe how to verify a sole proprietorship’s identity. Using a fictitious or assumed name certificate is one documentary method for verifying a sole proprietorship’s identity, but you may use non-documentary methods described in the CIP rules as…
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Is a sole proprietorship resolution required to open a sole proprietorship account?
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No, you are not required to obtain a sole proprietorship resolution to open a sole proprietorship account. When documenting a new sole proprietorship account, you should follow your Customer Identification Program (CIP) procedures. FinCEN’s CIP Rule guidance provides that when opening a sole proprietorship account, you may use the sole proprietorship’s fictitious or assumed name…
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We are updating our account risk rating procedures. Do you have a sample risk rating matrix that can be used for consumer and business accounts?
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We recently received a Customer Identification Program (CIP) Risk Assessment Matrix from one of the members on our Compliance Division Advisory Committee. It has been added to our Forms Library, and you can access it at the link in the resources below. For resources related to our guidance, please see: Customer Identification Program (CIP) Risk…
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A community of Mennonite people moved to our area from another state. Select members of the community have driver’s licenses, but not all, and we are having difficulty verifying addresses — particularly for women who do not have driver’s licenses and are not listed on utility bills. What are the best CIP practices for this community?
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A bank’s Customer Identification Program (CIP) “must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable.” Consequently, we recommend reviewing your CIP to determine whether you could accept non-documentary methods of verifying the identities of customers who lack common forms of identification. At a minimum, your CIP must…
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Our bank is purchasing the custodial rights for a portfolio of brokered certificates of deposit (CDs) from a bank that previously was the deposit broker for the CDs. Our bank will become the deposit broker and custodian of the CDs, which have individual owners and are deposited at a separate bank. However, the CD accounts at the depository bank will be held in our name with our EIN, and we will receive a percentage of the interest from the CDs. Along with the portfolio, we will receive one year’s worth of physical records for the CDs and all prior records for the CDs in electronic form. The records will include the identifying information for the owners of the CDs that the selling bank obtained as part of its Customer Identification Program (CIP). We will not conduct our own CIP for these accounts. What are the record retention requirements for these documents?
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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 believe that your bank should retain any identifying information for the individual owners of…
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We are reviewing our beneficial ownership procedures and considering requiring evidence of control for all nonprofits, since almost all seem to either be incorporated or registered as 501(c)(3) corporations. In Illinois, can a nonprofit exist without being incorporated or filing organizational documents with the state? Do you foresee any issues with requiring evidence of control from an organization that doesn’t meet the definition of a “legal entity” for beneficial ownership purposes?
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Yes, a nonprofit organization can exist in Illinois without being incorporated or filing organizational documents with the state. Consequently, you may have some nonprofit customers that are incorporated as not-for-profit corporations, which are only partially subject to FinCEN’s beneficial ownership requirements, while other nonprofit customers organized informally may be fully exempt from FinCEN’s beneficial ownership…
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Our BSA Officer does not want to open new trust accounts until we have tax ID numbers for every beneficiary of the trust, as well as other information — such as the legal fees and our own trust fees that we will charge to the trust. Delaying these account openings until we have collected this information is causing operational difficulties, for example when we urgently need to pay bills using trust funds, and it can be difficult to track down beneficiaries’ tax IDs, particularly for minors. Our preferred practice would be to open the trust accounts with the trust’s tax ID, in addition to other identifying information, and to obtain the beneficiaries’ lDs as soon as possible thereafter (while ensuring that we do not make any distributions to the beneficiaries in the meantime without obtaining their taxpayer IDs and running OFAC checks).
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We believe that FinCEN’s customer identification program (CIP) rules permit your bank to establish a procedure in which trust accounts are opened with the trust’s taxpayer ID, and you collect the beneficiaries’ taxpayer IDs “within a reasonable time” after the account has been opened — particularly given the safeguards your institution is taking before making…