Topic: Customer Identification Program (CIP)
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An Illinois bill was introduced as HB 2526 to adopt the Uniform Trust Code (UTC). Has that bill been enacted? If Illinois has not adopted the UTC, can or should Illinois financial institutions use the Certification of Trust without obtaining copies of the trust instrument or portions of the trust instrument?
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No, Illinois House Bill 2526, based on the Uniform Trust Code, has not been enacted. As in the past few years, this bill was filed to enact an Illinois version of the UTC, but it failed to advance out of the House Rules Committee. However, Illinois has separately enacted certification of trust provisions in the…
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We have a deposit customer who is no longer competent. The customer’s daughter has come to us with a trust document naming the customer as the beneficiary and the daughter as the trustee, together with a power of attorney for the healthcare of the customer. The daughter would like us to retitle the accounts as trust accounts so that she can transact on them as the trustee. Can we make that change?
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No, we do not recommend making that change based on the documentation described. We do not believe the customer’s daughter has the necessary authority to have the accounts retitled or to transfer the funds into a trust account. The daughter’s power of attorney for healthcare allows her to make medical decisions for the customer but…
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Under CIP rules and regulations, would an Illinois Firearm Owners Identification (FOID) card be an acceptable document for verification of identity?
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Yes, we believe that FinCEN’s customer identification program (CIP) requirements would allow your bank to rely on an Illinois FOID card to verify a customer’s identity, although whether you choose to accept this card for CIP purposes remains a business decision for your bank. When verifying a new individual customer, banks must obtain the person’s…
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A beneficial owner of a legal entity customer presented a Global Entry card as their identification. Our BSA policy states that our bank will accept an unexpired, government-issued driver’s license, identification card, or passport containing a photo as identification for a beneficial owner. Can we use the Global Entry card as a form of identification to verify the identity of a beneficial owner?
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In our view, FinCEN’s identification requirements would not prevent your bank from using a Global Entry Card to verify a beneficial owner’s identity, but whether you accept the card is a business decision for your bank. The new identification and verification procedures for beneficial owners are the same as the existing customer identification program (CIP)…
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A healthcare facility pools its residents’ social security insurance proceeds into one single “resident trust” deposit account. Is this account subject to FinCEN’s new legal entity customer due diligence (CDD) requirements? Or would the account be exempt as a trust account? Or as a pooled investment vehicle? The account funds are not invested in anything. The healthcare facility provided us with evidence of a surety bond regarding the account funds, but no evidence of a trust agreement.
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We recommend treating the healthcare facility as the ”legal entity customer” when opening this account, unless the facility can provide additional information demonstrating that it is a trustee opening the account on behalf of a trust (in which case it would be exempt from FinCEN’s new CDD rule). The account that you have described appears…
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Should our bank require the entire trust agreement when opening a trust deposit account? This would be for our deposit side, not our trust department (which requires the entire trust agreement when acting as trustee for a trust).
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No, we do not recommend requiring a full trust instrument when opening a trust account, subject to the discussion below. Neither Illinois nor federal law requires your bank to obtain a full copy of a trust instrument when opening a trust account. In fact, Illinois law requires banks to accept a Certification of Trust form…
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A nonprofit corporation maintains custodial accounts for several mentally incapacitated individuals. The nonprofit corporation uses the accounts to accept deposits and pay bills on behalf of the individuals, who do not have access to the accounts. For the purposes of our customer identification procedures, we treat the nonprofit as our customer. Under the new customer due diligence final rule, are we required to obtain information regarding the individuals who control the nonprofit?
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Yes, your bank is required to obtain information about the individuals who control the nonprofit corporation. Under the new customer due diligence final rule, banks are required to obtain and verify information at account opening about the beneficial owners of legal entity customers, which typically includes information about both those who own (the “ownership prong”)…
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Do the beneficial ownership requirements in the new customer due diligence final rule that takes effect May 11, 2018, include any new signage requirements for banks? Our forms vendor called to promote signs that describe the rule’s requirements, but we were not aware that we needed new signs.
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No, the final customer due diligence rule that takes effect on May 11, 2018, does not include new signage requirements for banks, and it does not revise the existing customer identification program (CIP) signage requirements. Whether you wish to purchase and post signs regarding the new beneficial ownership requirements is a business decision for your…
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We are updating our customer due diligence (CDD) processes. Do the new beneficial ownership requirements cover Interest on Lawyer Trust Accounts (IOLTAs)?
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Yes, IOLTAs are covered by FinCEN’s new beneficial ownership requirements. But FinCEN has clarified that these accounts are treated as “intermediated accounts,” meaning that you need only obtain beneficial ownership information on the law firm or attorney holding such an account (the “intermediary”). Financial institutions are not required to obtain beneficial ownership information regarding the…