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#194451 - 05/26/04 06:23 PM Is this a new account?
HR Banker Offline
Diamond Poster
Joined: Oct 2002
Posts: 1,027
When we put together the CIP last year we decided to identify existing customers when they get a new product just the same as new customers. That way we have it documented that they were identified. Here's the question: A pre-CIP customer has a CD that is now renewing. They want to change the term to get a better rate. Is this considered a new account since there are new terms and a new account number and they would now have to be identified per CIP? If the CD had automatically renewed at the same rate and term we wouldn't consider that a new account.

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#194452 - 05/26/04 06:28 PM Re: Is this a new account?
Skittles Offline
10K Club
Joined: Sep 2002
Posts: 13,963
From what you have stated concerning your policy, this would be a new account. You're correct, if they let the CD automatically roll over, nothing would happen. In this instance they're cashing in one certificate and purchasing another so your CIP procedures would be to identify them.
My Opinions Only

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#194453 - 05/26/04 11:13 PM Re: Is this a new account?
Tisa Offline
Platinum Poster
Joined: Jun 2003
Posts: 938
Do you know the way to ...
From FDIC FIL 4-2004 covering CIP:


1. A loan and a time deposit are each an “account” for purposes of the CIP rule. How do the requirements of the CIP rule apply to a loan that is renewed, or a certificate of deposit that is rolled over?

The CIP rule applies to a “customer,” generally, “a person that opens a new account.” 31 C.F.R. § 103.121(a)(3)(i). “Account” means a formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. 31 C.F.R. § 103.121(a)(1)(i). For purposes of the CIP rule, each time a loan is renewed or a certificate of deposit is rolled over, the bank establishes another formal banking relationship and a new account is established. However, the rule provides that the term “customer” does not include a person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person. (Emphasis added.) 31 C.F.R. § 103.121(a)(3)(ii)(C). In each of these cases, the customer has an existing account. Therefore, as long as the bank has a reasonable belief that it knows the person’s true identity, the bank need not perform its CIP when a loan is renewed or certificate of deposit is rolled over. However, if a new customer is added to the loan or deposit account, the bank would need to satisfy the CIP rule with respect to that new account relationship.

Just a lowly 1st Year Law Student ("1L"), so don't take anything I say seriously!

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