Topic: Customer Identification Program (CIP)
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Are we required to CIP a guarantor of a loan?
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We do not believe that the Customer Identification Program (CIP) rules require your organization to collect identifying information for guarantors, though it may be advisable for some loan transactions. The CIP rules apply only to customers opening new accounts. The term “customer” means “a person that opens a new account,” and the term “account” means…
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Can we set up a joint checking account owned by two businesses? Should we get Employer Identification Numbers (EIN) from both businesses?
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We are not aware of any laws or regulations that would prevent you from opening a joint checking account owned by two businesses. The Illinois Joint Tenancy Act provides that two or more persons may enter into a joint deposit account. 765 ILCS 1005/2(a). The Illinois Statute on Statutes defines the term “person” to include…
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We have been reporting driver’s license discrepancies as red flags on our annual reports, even if they are resolved after obtaining proof of the customer’s current address. However, one of our sister institutions does not report resolved discrepancies on its annual report. Which is the correct approach?
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We do not believe that the Interagency Guidelines on identity theft “red flags” require that your annual board reports include every instance of a discrepancy between the addresses provided on an account application and the applicant’s driver’s license. Of course, this type of instance would be considered a “red flag” under Supplement A to the…
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How do we title a checking/deposit account for beneficiaries of a land trust and who would be the authorized signer? Also, do we actually need to obtain a Tax Identification Number for a land trust?
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We are not aware of any specific legal restrictions regarding titling deposit accounts for land trusts. The IRS has requirements for name controls, which require banks to establish name controls using the first four letters of a customer’s name. The IRS has stated that “[t]he name control for a trust or fiduciary account is developed…
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When a customer opens a deposit account for a trust, should we obtain a copy of the entire trust agreement? Some trustees wish to provide only a letter of opinion, in lieu of the trust agreement.
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Whether you require an entire trust agreement before opening a deposit account for the trust is up to your institution (given that your institution is not acting as trustee for the trust). We are not aware of any laws or regulations that would require you to obtain the entire trust agreement before opening a deposit…
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What requirements apply when a customer opens a “doing business as” (d/b/a) account?
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Your procedures may differ for “unregistered businesses” (such as sole proprietorships and certain partnerships) that use an assumed name compared to registered business entities (corporations, limited liability companies, etc.) that use an assumed name. Unregistered businesses are not required to register with the Secretary of State, including sole proprietorships and general partnerships. Types of business entities…
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For a mortgage loan, do we need to have CIP information & a tax ID number for an insurance company before we pay the company from an escrow account?
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We do not believe that your CIP would apply to an insurance company that simply receives checks from the bank. The CIP rules apply only to “customers,” defined as an individual or person that “opens a new account.” 31 CFR 1020.100(c)(1)(i). However, you may be required to obtain a tax identification number for purposes of…
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If we open a deposit account for an Illinois Land Trust, is a tax ID number required? Can we use an individual’s social security number instead?
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We believe that you would have to obtain a tax ID number for a land trust, as you would for any other type of trust. The Customer Identification Program (CIP) rules require that you obtain a tax ID number from all customers, including trusts. 31 CFR 1020.220(a)(2)(i). A “customer” includes any person opening a new…