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#1771203 - 12/31/12 01:59 PM CIP - purchased loans
ComplyWithMeToo Offline
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Joined: Feb 2007
Posts: 225
Recently I took on a new job which added direct BSA duties (BSA officer) to my other compliance responsibilities. As such I've been spending the majority of my day "drilling down" on BSA subject matters.

Today I'm researching what our CIP responsibilities are for purchased loans. I'm aware of the FAQs which address that "purchase of assets" are not an account under CIP. And want to make sure that I'm interpreting this correct.

We are purchasing commercial loans which are made by a "group" that specialize in health care loans (the "group" is not acting as our agent and they are not a bank). The master agreement doesn't address BSA/CIP responsibilities. Most of the time we are unable to get anything from the "group" regarding the business and/or signers (example no business docs such as articles of incorporation etc; no IDs on signers).

Am I correct that we do not have to conduct CIP on purchased loans? Or does this exception only apply if we are purchasing loans from another financial institution?

If we can expempt this loan from CIP, should our Customer Identification Program include reference which would excluded these loans? (Which if ours had I wouldn't be asking this question!)

Thanks for the help.

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#1771206 - 12/31/12 02:05 PM Re: CIP - purchased loans ComplyWithMeToo
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
You are describing an asset purchase which would be exempt from CIP. I would recommend that this be addressed withing your CIP, but technically it is probably not required in order to take advantage of the exemption.

However, why a bank would agree to purchase any type of loan without full documentation of the business entity to which the loan was made, including appropriate resolutions supporting the borrowing authority is a little beyond me. The safety and soundness examiners are not going to be very impressed.
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#1771226 - 12/31/12 02:43 PM Re: CIP - purchased loans ComplyWithMeToo
ComplyWithMeToo Offline
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Joined: Feb 2007
Posts: 225
Thanks for the response.

Regarding your safety and soundness issue - from what I can understand - the group we are purchasing the loan from acts as the guarantor of the loan.

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#1771241 - 12/31/12 03:08 PM Re: CIP - purchased loans ComplyWithMeToo
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
I don't think CIP is an issue either, but there are others. On your books you are showing a loan to Ken, but you are totally reliant on Randy's (the guarantor's) identity as well as his ability to repay. Even if the saftey and soundness examiners never mentioned it before, they could question the underwriting practice. The examiner who is most thoughtful might suggest it would be an excellent way to launder money through sham borrowers.
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#1771242 - 12/31/12 03:08 PM Re: CIP - purchased loans ComplyWithMeToo
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Then I would presume that group has been fully vetted.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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