When we sell loans to Fannie and Freddie, we retain the servicing rights for life of loans. Our BSA guys have always included these loans as our "accounts" as we have a formal banking or business relationship established to provide ongoing services, dealing or other financial transactions. We closed the loan in our name and we've continued a financial relationship. In other words, we consider them customers. This is being questioned now and I was wondering if my BOL friends could shed some light. Passed many a BSA exam calling these folks customers. Now my BSA Officer is frantically reading the exam manual and old FAQs looking for insight.

Thanks for the help you can lend.

I was always told if you make the credit decision for CIP it is your customer.

Why would there even be an issue if they CIPed a non-customer anyway?

Funny, ed, that was one of my first questions..... can we not keep CIP info on a FNMA customer? How would it be FNMA's CIP requirement when the loan has been sitting on our books? Wouldn't we have retention requirements for FNMA anyway? Sigh.

Turns out the question is about our need to re-CIP the customer. Example...couple buys home in November. We sell to FNMA in December. They come back in the following spring and want a checking account. Per our procedures, we have been relying on the existing CIP documentation in our files. That is under question now. The story is that the FNMA customers don't have an existing relationship with us, so we should be collecting and re-documenting for the DDA. I think those folks coming in every month with a payment or getting a collection call from us would think they are customers.

I'm not the BSA expert here so thought I would ask the group. Appreciate the thoughts.

https://www.fincen.gov/statutes_regs/guidance/pdf/finalciprule.pdf

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Of no help

But if you are providing a bank service (loan servicing) for them would make them a customer?

What about the definition of "established customer" in the BSA?

1010.100 (p)
(p) Established customer. A person with an account with the financial institution, including a loan account or deposit or other asset account, or a person with respect to which the financial institution has obtained and maintains on file the person's name and address, as well as taxpayer identification number (e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, and to which the financial institution provides financial services relying on that information.

or the actual CIP citation...

1020.220 (2)
(2) Identity verification procedures. The CIP must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable. The procedures must enable the bank to form a reasonable belief that it knows the true identity of each customer. These procedures must be based on the bank's assessment of the relevant risks, including those presented by the various types of accounts maintained by the bank, the various methods of opening accounts provided by the bank, the various types of identifying information available, and the bank's size, location, and customer base. At a minimum, these procedures must contain the elements described in this paragraph (a)(2).

I'd have a hard time arguing you don't know the true identity of your customer, even if I could somehow successfully argue they don't meet the definition of an established customer.

A person with an account with the financial institution

The dispute is if there is an account with the financial institution since they only service it.

And since there is a dispute of the status of an account and if they have a customer for CIP once the initial "account" is closed and sold to Fanny (they no longer own the account).

Fair enough, but what about the BSA Exam Manual stating an established customer is not to be included in the definition of "customer." If the Bank has a reasonable belief they know the identity of the person, in this case they seem to, and maintains the person's required info on file, would they then be considered an established customer and exempt from CIP? Asking more for myself at this point because that seems to fit the requirements of the law and exam manual, but perhaps I am misunderstanding.

The claim is that since the loan was sold they are no longer an established customer (between the time of sale and time of service)