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#2137142 - 07/06/17 06:40 PM CDs and BO certification form
Nova Offline
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It is my understanding that when a CD automatically renewals, the bank/customer is establishing a "new" account and as such the BO certification form needs to be filled out by the customer. Firstly am I correct? Secondly, how are other financial institution going to handle this will their customers. We have business customers that renew every 30 days, this is going to get ugly.

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#2137159 - 07/06/17 07:55 PM Re: CDs and BO certification form Nova
rlcarey Offline
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I don't believe an automatic renewal of an existing CD is a "new account".
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#2137164 - 07/06/17 08:00 PM Re: CDs and BO certification form Nova
Elwood P. Dowd Offline
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Question 1 on page 8 of the CIP FAQ's generates this discussion. It made perfect sense for getting existing customers under the CIP umbrella, but no sense in terms of CDD.

FinCEN is working on a 2nd FAQ on the CDD regulation. They are well aware that this will generate significant problems for information that is of marginal utility at best. Your patience will generate the same result or better than hand wringing.

P.S. I did hear that one presenter says its a "risk based" decision. On that, I'll unequivocally say: "road apples."
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#2159963 - 01/10/18 06:10 PM Re: CDs and BO certification form Nova
CML LHS Offline
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I realize that we are still waiting on the 2nd set of FAQs, but while further discussing CDD and Beneficial owners, the auto-renewal Certificates of Deposit keep coming up. If the account number does not change, and the customer does not sign anything at renewal (only signs at account opening to indicate an auto-renewal is requested), what would anyone recommend to comply with the certification of beneficial ownership for the auto-renewal? Would it be sufficient to send a request for updated certification with the maturity notice to the customer? Could we indicate in our notification that non-receipt of an updated form indicates there were no changes in Beneficial ownership since the COD was first opened, or last updated?

Thanks in advance!

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#2159987 - 01/10/18 07:44 PM Re: CDs and BO certification form Nova
CoSmIc GoPhEr Offline
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Are we there yet?
Came across this just this morning:

Q,: We are hearing differing thoughts on renewals of certificates of deposits that are held by legal entities covered under beneficial ownership. One group is saying no you do not have to have a new certification when the CD is renewed—another says you have to have a new certification when a CD is renewed.

A:. This is currently a grey area. I would say that you need to make a policy decision as an institution and stick to it until further guidance comes down. It would make sense to obtain a form from an existing customer from which you have not obtained a form from at renewal - especially for higher risk customers. However, that doesn't mean you have to obtain a new one every time the CD renews going forward. If you don't, you need to have a policy around the appropriate timeframes for ensuring the information you have remains appropriate and up to date.

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#2160021 - 01/10/18 09:27 PM Re: CDs and BO certification form Nova
#Just Jay Offline
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What is the source of this snippet?
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#2160029 - 01/10/18 09:43 PM Re: CDs and BO certification form Nova
rlcarey Offline
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Probably the same source as they quoted here: https://www.bankersonline.com/forum/ubbt...ans#Post2159988
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#2160089 - 01/11/18 02:55 PM Re: CDs and BO certification form Elwood P. Dowd
Elwood P. Dowd Offline
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I've read or heard 3 different Helpline responses. They were grossly inconsistent and one had no connection to reality, but was, perhaps more firmly tethered than the one quoted above.

Quote:
Your patience will generate the same result or better than hand wringing.
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#2160403 - 01/12/18 09:18 PM Re: CDs and BO certification form Nova
CoSmIc GoPhEr Offline
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Are we there yet?
Yes, that document has been placed in my shred bin. smile

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#2161551 - 01/23/18 07:42 PM Re: CDs and BO certification form Nova
Mel in WA Offline
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We are actively implementing procedures to comply with BO.....Do we just wait until FinCEN decides to issue an updated FAQ in order to move forward on CD and loan renewals??

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#2161552 - 01/23/18 07:57 PM Re: CDs and BO certification form Nova
#Just Jay Offline
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Up to you... either apply the rule as written, or make an executive decision not to. It's four months away still, so we have no desire to implement any sooner than any other peer, so we will wait until we hear more from FinCEN before making any decisions contrary to how the rule is currently written.
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#2161612 - 01/24/18 12:36 PM Re: CDs and BO certification form #Just Jay
Elwood P. Dowd Offline
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Quote:
we have no desire to implement any sooner than any other peer


As implied, "early" implementation:

1) puts you at a competitive disadvantage until your competitors come online and
2) robs you of the ability to truthfully blame it on the government and
3) requires you to answer open questions that may ultimately be answered differently by FinCEN, forcing you to retrain employees or even go back to the board and revise your policy.

There will be no plaque for early implementation of a regulation that's a farce to begin with.
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#2162375 - 01/30/18 03:00 PM Re: CDs and BO certification form #Just Jay
Madawaska Offline
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Is the CD and loan renewal "new account" directive in the Rule, and if so, can someone please provide me the page and section from the Federal Register.

Or was this only a question that came up in a Q&A?

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#2162376 - 01/30/18 03:02 PM Re: CDs and BO certification form Nova
BrianC Offline
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The final rule states that the bank must obtain a certification each time a legal entity opens a "new account." Ken already provided a link to the CIP Q & A from 2005 where FinCEN defines a "new account." Look for the link in post #2137164.
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#2162378 - 01/30/18 03:11 PM Re: CDs and BO certification form Nova
Madawaska Offline
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Thank you.

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#2162394 - 01/30/18 04:17 PM Re: CDs and BO certification form Nova
Madawaska Offline
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VA
I went and reviewed the Q&A relating to the CIP rule regarding the definition of "new account". If the definition of "new account" in the CDD Rule is based upon the definition of "new account" in the CIP rule, then I will be making a risk-based decision based on the statement below that is bolded. Therefore, as long as the account number does not change or a new customer added, the rollover or renewal WILL NOT trigger as a new account and will not require another certification form. Remember the KISS method.

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.
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. (January 2004)

I will document in my Policy and move on.

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#2162398 - 01/30/18 04:34 PM Re: CDs and BO certification form Nova
rlcarey Offline
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Good luck with that logic. That is taken from the definition of a "customer" and not a "new account".
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#2162399 - 01/30/18 04:35 PM Re: CDs and BO certification form Nova
bcompliance Offline
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I was told by FinCEN representative that this will be addressed in the second set of FAQs which are due to be released at any time.
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#2162424 - 01/30/18 06:22 PM Re: CDs and BO certification form Nova
BrianC Offline
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Illinois
Yep so we do not need to perform CIP on the customer (which is the legal entity), but since the beneficial ownership rule is covered under CDD which has an ongoing monitoring requirement, there is no current exclusion for obtaining beneficial ownership for an existing legal entity customer opening a new account. Although the identity of the business has not changed, its ownership structure may have since the last time it opened a new account and the final rule requires a new certification at that time unless the alleged FAQs tell us different.

Needless to say, I am looking forward to continuing this conversation at Top Gun in a month.
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#2162429 - 01/30/18 06:45 PM Re: CDs and BO certification form Nova
RockChucker, CAMS Offline
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The Country
I find that there is a lot of confusion in this area because people keep trying to combine CIP and CDD which is not the correct idea. Yes they touch many of the same aspects but there are separate rules for each.
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