Topic: Customer Identification Program (CIP)
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Our bank is preparing to allow customers to use electronic signatures to open accounts and make changes to accounts in all areas of our bank, including deposits, loans, and trusts. Is there any reason to continue to obtain a customer’s wet ink signature on a signature card? Are wet ink signatures required for mortgage documents or for certification of beneficial ownership forms? Also, is there a method of identification authentication for customers opening accounts using electronic signatures that is better than other methods when it comes to catching synthetic identity fraud?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021.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. As a general rule, we believe your bank may accept a customer’s electronic signature on…
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We have a deceased customer who had held a CD and an IRA with three beneficiaries, two of whom have come to the bank to open inherited IRAs. The third beneficiary lives out-of-state and does not want to travel to the bank to set up his inherited IRA in person. This beneficiary’s attorney told us that all he must do is provide the bank with a notarized letter of direction. Is this accurate? The CD also has a payable on death (POD) beneficiary who lives out-of-state and does not want to travel to our bank. What are our options for these beneficiaries?
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We are not aware of any laws or regulations that would prevent your bank from remotely opening an inherited IRA or remotely distributing the proceeds of a POD account. Since the out-of-state IRA beneficiary will be a customer of your bank, you should follow your customer identification program (CIP) procedures for verifying the identity of…
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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?
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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 are not aware of any specific legal requirements in Illinois that apply to the…
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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.
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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…
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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?
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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…
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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?
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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…
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Are we required to obtain both signatures on a certificate of deposit (CD) when two people open an account jointly? This could be for married or unmarried individuals. Is one signature sufficient as long as we have the necessary CIP information for both individuals?
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We are not aware of any rules requiring signatures from all co-owners when opening a joint certificate of deposit (CD) account. The FDIC expressly excludes CDs from the general rule in its deposit insurance regulations that requires all co-owners of a joint deposit account to sign a signature card. Nonetheless, we do recommend obtaining all…
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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.
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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…
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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.
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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…