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#1114180 - 01/21/09 04:42 PM CIP and the "Customer"
PeeWee Offline
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Wading through the definitions in CIP, a customer is a person and a U.S. person includes:

A person other than an individual (such as a corporation, partnership, or trust), that is established or organized under the laws of a State or the United States.

I'm aware that the regulation states: "Additional verification for certain customers. This verification method applies only when the bank cannot verify the customerís true identity using the verification methods described in paragraphs (b)(2)(ii)(A) and (B) of this section."

In researching opinions on what a bank should obtain from a trust (from a legal perspective), there appears to be a split among opinions on whether the bank should obtain copies of any of the pages of the trust documents. If a bank chooses not to obtain copies, could the bank's CIP be written that we would obtain the name, EIN and physical address of the trust, but verification of identity would be performed on the individuals opening the account?

Or would we be deemed to have missed the mark on verification since a trust is included in the list of "customer" and in reality the trust does have documents we just may not want to obtain them.

Thanks in advance for any input.

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#1114420 - 01/21/09 06:57 PM Re: CIP and the "Customer" PeeWee
BrendaC Offline
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Sweet Home AL
Even if you don't obtain the actual trust document, you would still obtain some evidence of the existence of the trust such as a trust synopsis. There are several things you routinely need to determine such as legal name of trust, trustee(s), and successor trustee(s).

In my previous life, we required specific pages of the trust outlining these issues along with the signature page or a trust synopsis from the trustee(s).
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#1114438 - 01/21/09 07:20 PM Re: CIP and the "Customer" BrendaC
PeeWee Offline
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Posts: 254
We currently have a four page internal document ("Certificate of Trust") that was developed by our legal counsel that is signed by the trustee and captures the name of the trust, names of grantor, settlor, etc., date of trust, whether it's a living, revocable or irrevocable trust and beneficiary information. The trustee(s) sign under an indemnification paragraph (i.e. trust isn't revoked, etc.) and the document is notorized.

Is this what you would call a trust synopsis? I just didn't know if we could rely on this document alone for verification since it's an internal form.

Thank you so much for the input!

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#1114472 - 01/21/09 07:57 PM Re: CIP and the "Customer" PeeWee
BrendaC Offline
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Sweet Home AL
Duplicate post deleted.
Last edited by BrendaC; 01/21/09 09:53 PM.
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#1114637 - 01/21/09 10:04 PM Re: CIP and the "Customer" BrendaC
BrendaC Offline
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BrendaC
Joined: Sep 2001
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Sweet Home AL
A trust synopsis, aka declaration of trust, is a form provided by the trustee outlining the type issues you reference. It is very common for an irrevocable trust; but I have also seen them used for revocable trusts as well.

IMHO The primary issue with many revocable trusts is that they are often being used by individuals with very little knowledge of trusts (other than what they got in the trust package they just purchased at a seminar). The grantor trustee is looking to the bank to provide guidance on how to operate the trust. The bank should not be providing such guidance outside of its Trust Department.

Sorry, back to the issue...the form would likely serve the purpose if it is completely filled out and signed by the trustee(s). Don't neglect to document the successor trustee(s). You need to know who can represent the trust in the event the current trustee(s) become unable to do so.

To comply with CIP rules, I would think that you would need to see the trust document to verify its existence and then retain the Certificate of Trust in your file. I'm sure our gurus will chime to confirm or set me straight.
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