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April 24
BSA/AML Compliance: Writing the SAR Narrative
Ken Golliher

April 29
HSA Basics
Whitney Johnson

April 29
Required Training for Loan Originators
Mary Beth Guard and Jack Holzknecht

May 13
Overdraft Practices in Today's Regulatory Environment
John Burnett

May 14
Reg E Claims - Allocating Liability Correctly
Andy Zavoina

May 15
Managing Electronic Information - From A to Zettabyte
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#1875286 - 12/02/13 02:57 PM Is a Minor a Customer for CIP purposes?
devsfan Offline
Diamond Poster

Registered: 06/25/04
Posts: 1754
Loc: NYC
Please settle an internal disoute that we are having. The CIP definition of Customer seems to exclude a minor but I don't see any situation in which we could not obtain the name, address, DOB and Identifying Number of a minor; what do your CIP policies state for minors?

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BSA/AML/CIP/OFAC
#1875288 - 12/02/13 03:01 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 48565
Loc: Galveston, TX
The CIP definition of Customer seems to exclude a minor

Where????
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#1875292 - 12/02/13 03:05 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
EdAudit Online
Power Poster

Registered: 07/18/08
Posts: 2620
Loc: You are here
6. Does the CIP rule prohibit a minor from opening an account?
No, the CIP rule does not bar a minor from opening an account. It merely states that the bank’s “customer” is the individual who opens the account for an individual who lacks legal capacity, such as a minor. In other words, if a parent opens an account for a minor, the bank’s customer is the parent. If, however, a minor opens the account, then the minor is the bank’s customer. For example, where a bank sends its employees to elementary schools so that students may open savings accounts as part of a program to promote financial literacy, a student opening an account is the bank’s customer. In this situation, as for all customers, the bank should get the name, address, date of birth, and taxpayer identification number of the student. Since verification procedures are risk-based, banks can use any reasonable documentary or non-documentary method to verify a student’s identity. In this case, the bank might verify a student’s identity using a student identification card or by having the student’s teacher confirm the student’s identity. (April 2005)

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CCkQFjAA&url=http%3A%2F%2Fwww.fincen.gov%2Fstatutes_regs%2Fguidance%2Fpdf%2Ffaqsfinalciprule.pdf&ei=5uacUvuGGpS_sQS_1IDYAQ&usg=AFQjCNHSRBuPhcLfJdWcNescgBgUs39ECw



Edited by EdAudit (12/02/13 03:06 PM)
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#1875295 - 12/02/13 03:06 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
devsfan Offline
Diamond Poster

Registered: 06/25/04
Posts: 1754
Loc: NYC
I was referring to the statement quoted by EdAudit above in which the adult opens a UGMA account for the minor.

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#1875303 - 12/02/13 03:12 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 48565
Loc: Galveston, TX
Then a minor is irrelevant from a CIP standpoint on a UGMA account. However, you are going to need at least a TIN for tax reporting purposes.
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#1875309 - 12/02/13 03:18 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16705
Loc: Another trip around the sun
The custodian in a UTMA account is acting on behalf of a person under a disability; i.e. the minor. That's why the custodian is the "customer."

As highlighted in the Q & A: If your bank allows a minor to open an account in his own name then he is the "customer" for the purposes of CIP. Your CIP could establish somewhat different identification requirements for minors, but CIP is not waived.
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#1875311 - 12/02/13 03:19 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 29464
Loc: Cape Cod
In the case of a UTMA account (is there any state other than Vermont that still has the UGMA on its books?) the minor is not the customer; not only does the minor not contract with the bank, but also the minor is not legally capable of opening an UTMA account for himself or anyone else.
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#1875312 - 12/02/13 03:20 PM Re: Is a Minor a Customer for CIP purposes? [Re: rlcarey]
*W*W* Offline
Platinum Poster

Registered: 02/10/10
Posts: 626
Originally Posted By: rlcarey
Then a minor is irrelevant from a CIP standpoint on a UGMA account. However, you are going to need at least a TIN for tax reporting purposes.


What do you do when your minor wasn't born in the U.S. and doesn't have a SSN?
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#1875315 - 12/02/13 03:22 PM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
John Burnett Offline
10K Club

Registered: 10/27/00
Posts: 29464
Loc: Cape Cod
If you aren't able to obtain a valid taxpayer ID for the minor, I think you are left with two options: (1) Don't open an interest-bearing account; or (2) apply backup withholding.

My choice would be (1).
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#1875319 - 12/02/13 03:26 PM Re: Is a Minor a Customer for CIP purposes? [Re: *W*W*]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16705
Loc: Another trip around the sun
We've gone from a BSA issue to an IRS issue...

First, review your state's version of the UTMA to see if it's appropriate to accept a non U.S. person as a beneficiary or if it is acceptable, whether you want to.

Second, if you decide to proceed, then you get the kid's identifying number to fulfill CIP requirements and a W8-BEN, then prepare to do 1042S reporting.

I doubt that if would be worth your time and trouble...
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#1877024 - 12/09/13 10:14 AM Re: Is a Minor a Customer for CIP purposes? [Re: devsfan]
BSA_Jay Offline
Member

Registered: 03/03/10
Posts: 54
Loc: New York
We do collect as much required CIP for a minor as possible.

We also use third party verification, but since a minor's info won't pop up using the third party we exclude them.

We do however run the minor against OFAC at account opening.
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