We have an overdraft protection program that includes an application process. Would overdraft protection be considered an account (since it is an extension of credit) for CIP? I'm concerned about existing accounts that apply for overdraft protection and have not been through our CIP program.

If you are referring to an OD Line of Credit attached to a checking account, then any new customer opening the checking account and line would require CIP ID verification. If you are adding an OD Line to an existing checking account, the person is already a customer of yours. CIP requirements would not apply, unless you have a reason to question customer's identity.

Upstate,

I guess I was looking at it this way. If we have an existing customer that comes in to obtain a loan, after Oct 1 that would be considered a new account and, they would need to go through our CIP since they had never been through it before. I wondered if account overdraft protection would be considered a new account for CIP thus triggering the ID process?

I think what Upstate was getting at was that customers that have an existing account with you are exempt from CIP requirements as long as you have a reasonable belief that you know who they are. Your CIP policy could certainly require you to check them anyway, but as far as the reg goes you wouldn't necessarily have to.

Perplexed,
I would consider it a new relationship for an existing customer. The regulation does allow flexibility for existing customers opening new relationships, and this situation would fall under that. I would treat the application for overdraft protection from a pre-Oct 1 customer the same as I would treat an existing customer's application to obtain any other loan or account from your bank.

I was still unsure on this one so I ran it by the OCC. Since it is an existing customer, if we have a "reasonable basis" to know the true identity of our customer they do not have to go through CIP. Understanding that "reasonable basis" has not been defined yet we are expanding on our "basis" in the policy.