We are a $400 million family-owned community bank (XYZ Bank) and offer Medallion Signature guarantees ($100k limit) to our customers. We have a investment rep with our affiliate, XYZ Investments. Same owners of the bank own the investment company. To process investment transactions we are obviously go through 3rd-party broker-dealer. The investment rep is a dual employee of both the bank and the broker-dealer. The investment rep does not do Medallion Signature guarantees.

Occasionally, the investment rep will ask Bank employees that are authorized signature guarantors to guarantee the signature of a customer of XYZ Investments and that person is NOT a customer of the bank. When I reviewed the definition of "customer" is some signature guarantee rules I note the statement, "The endorser should have an account or continuing relationship with your firm". Technically, the customer has the relationship (and account) with the affiliate, but not the bank.

I am not sure if it is ok for Bank employees to complete these signature guarantees for the investment rep as they may not be customers of the bank itself. If it is absolutely prohibited to provide a signature guaranty for customers of XYZ Investments (affiliate), I will have it stopped. Or is considered a "best practice"? We can manage the risk (via identification, the normal documentation, retention, etc.).

Any responses would be much appreciated!

Update:

After further research it appears that the signature can be guaranteed if the individual you are doing the signature for has a continuing customer relationship, meaning a relationship in which the institution provides the individual financial products or services that are primarily for personal, family or household purposes in a continuing manner and not on an isolated or one-time basis.