Have discovered that occupation/employer information for a co-borrower isn't always recorded on residential mortgage applications when the co-borrower's income isn't necessary to service the debt. Having a very difficult time trying to convince Sr Mortgage Officer that we need this info for CDD purposes and that it would be difficult to defend our CDD efforts to our regulator if we don't obtain it, especially from a mortgage applicant. With all other mortgage-lending regs that must be adhered to, Sr Officer doesn't want to add to his requirements. I've already quoted FFIEC BSA Exam manual about importance of ongoing CDD including occupation, etc, to no avail. Have a conference call on this subject tomorrow and would appreciate any useful, objective guidance anyone can provide to support my position.

See Post 768039

The thread that Ken directed you to indicates that a guarantor would not be considered a customer under the CIP regulations. Of course, that is correct, and accordingly, your efforts to document the identity of a loan guarantor should focus on the reasonable assumption that the bank needs to know the true identity of a guarantor to protect the status of the guarantee. Put another way, a guarantee given by an ID thief is worthless because it cannot be enforced.

For a co-borrower, however, the CIP rule does apply, and failure to collect at least the four elements of the co-borrower's identity (name, address, DOB, SSN or other Taxpayer ID) and then confirm that identity to the bank's satisfaction using documentary or nondocumentary resources would be a direct violation of the FinCEN regulation.

And if the bank's board-approved CIP calls for application of CIP standards to a guarantor, failure to do so would be a direct violation of bank policy on BSA/AML.

Your senior officer doesn't get to waive the rules to avoid "adding them to his/her requirements."

Ken/John, thank you both for your responses. Unfortunately, this is not a CIP issue, but rather a CDD one. Compliance with the Bank's CIP Policy isn't a problem. Unfortunately, occupation and employer information aren't CIP components. Unless/until CDD becomes a regulatory requirement, the SLO has decided that collecting that type of information isn't necessary if the co-borrower's income isn't needed to support the debt service.

The second half of the post I linked was about CDD, not CIP:

In addition to CIP, guarantors might also need to be subjected to due diligence. From page 235 of the current manual:

All loans are considered to be accounts for purposes of the Customer Identification Program (CIP) regulations. For loans that may pose a higher risk for money laundering and terrorist financing, including the loans listed above, the bank should complete due diligence on related account parties (i.e., guarantors, signatories, or principals).

The comment is clearly in reference to situations where BSA/AML risk is identified. Evidence of creditworthiness would fall under the heading of due diligence.

I did not look to see if the current Manual contains the same language, but it's clear the FFIEC believes due diligence is clearly triggered if BSA/AML risk is perceived. FWIW, I think it's triggered if the guarantor's signature is necessary to make the argument that the loan worth 100 cents on the dollar; i.e. it's a safety and soundness issue whether or not it's a BSA issue.

Wow- since when can you only analyze a joint mortgage credit application on one of the applicant's information? I haven't seen that practice in twenty years.