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#2159988 - 01/10/18 07:48 PM BO Information New Accounts / Loans
CoSmIc GoPhEr Offline
Junior Member
Joined: Apr 2013
Posts: 31
Are we there yet?
I have been working under the premise that any new account opened or loan closed requires a new BO form to be completed. Then today I run across this. Am I losing my mind?

Q: I understand that we need to complete the certification form when an existing member opens a new account. Once we have a certification on file, do we need to continue to complete one each time a new account is opened? Or is that when a risk based approach comes into effect?

A: No, there is no expectations to have the form completed at each customer touchpoint or account opening. However, you do need to make a policy decision around triggering events for ensuring the information remains correct as it is written in the 5th pillar that you must keep this information up to date. Opening a new account is a great opportunity to ensure the information on file is current. Higher risk customers may justify more frequent touchpoints/ensuring the information is up to date more frequently.

Q: We reside in an area that is supported by agriculture and farmers. Many farmers have organized their operation as corporations, partnerships, or LLC’s. It is not uncommon for one farming operation to have ten – fifteen loans created during the course of a year. Does this mean that we are required to identify and verify beneficial owners, in this case, fifteen times each year? I understand the spirit of the law but this is ridiculous. How can we comply without making this so burdensome?

A: No, you do not need to obtain the form at each new account opening. There is an initial expectation to obtain the form from existing customers when they open a new account. Additionally, you do have to keep this information up to date. However, you do not need to get the form updated ten to fifteen times a year. You will need to include in policy and procedure how you as an agricultural institution will comply and what triggering points will require a new form or a confirmation the information remains correct.

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#2159999 - 01/10/18 08:10 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
rlcarey Online
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rlcarey
Joined: Jul 2001
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Galveston, TX
What source is that? I hope it wasn't something you paid for??
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#2160001 - 01/10/18 08:18 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,658
No, you aren't loosing your mind.

From the final rule:

"Several commenters sought clarification as to whether a financial institution must identify and verify a legal entity customer's beneficial owners each time it opens a new account at the institution after the rule's compliance deadline, or whether the requirement applies only the first time it opens a new account at such institution. FinCEN has concluded that, while it is not requiring periodic updating of the beneficial ownership information of all legal entity customers at specified intervals, the opening of a new account is a relatively convenient and otherwise appropriate occasion to obtain current information regarding a customer's beneficial owners. Accordingly, FinCEN has added to the final rule as § 1010.230(g) a definition for “new account”.

Also, the definition of a new account:
"(g) New account. For the purposes of this section, new account means each account opened at a covered financial institution by a legal entity customer on or after the applicability date.
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#2160027 - 01/10/18 09:42 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
CoSmIc GoPhEr Offline
Junior Member
Joined: Apr 2013
Posts: 31
Are we there yet?
I found the Q&A doing a Google search so it was free. Nothing lost.

Glad to see I am not losing my mind. Considering I was going down that path of obtaining it all along I didn't want to have to change course right before the storm.

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#2161150 - 01/19/18 08:51 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
New Manager Offline
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Joined: Jan 2004
Posts: 136
I’m honestly really confused by the information I’m reading in various places over the last few months. The information posted at the beginning of this thread looks almost exactly like the Q&A from a paid webinar I attended in December. Up until I read that Q&A, it was my understanding that for every new account opened we would get a form because it’s an account-level requirement. So if an entity opened three new accounts in one day, we would have to get three forms. Once I read that Q&A, as well as a few other resources (not paid!), I’m not so sure. It sounds like my first thought is correct…?

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#2161160 - 01/19/18 09:17 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
ahkcompliance Offline
Diamond Poster
Joined: Sep 2008
Posts: 2,474
Midwest
I have actually posed some questions to FinCen and they have told me that they have drafted Q&A's that will be released soon. They are in there last revision stage and should be released shortly after that.

Hopefully they will address this question.

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#2161198 - 01/19/18 10:40 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
Cape Codder Offline
Gold Star
Joined: Jul 2011
Posts: 413
New Manager - we customized our Certification to record the account number(s) being opened. If multiple accounts (e.g., operating & payroll) are opened at the same time we'll only require one certification.
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#2161210 - 01/20/18 03:28 PM Re: BO Information New Accounts / Loans New Manager
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Quote:
it was my understanding that for every new account opened we would get a form because it’s an account-level requirement.


Your bank is required to get the information, not the form. If the customer opens three accounts in one day and you get one appendix A; i.e. the information and the certification, you are covered. (Good idea to incorporate the account numbers with the certification.) The record retention requirement for the identifying information begins to run when the last of those three accounts closes.

If the customer opens a fourth account the next day you will obtain another Appendix A.
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#2161214 - 01/20/18 06:41 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
#Just Jay Offline
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#Just Jay
Joined: Oct 2006
Posts: 14,390
Cheeseheadland
Do be sure to take into account though your record retention and destruction procedures when considering how or how many Appendix A's you will obtain at account opening. Do you have a mechanism to ensure that the Appendix A certification can exist to the end of the retention period of the last account closed of the group opened? Or could it potentially disappear after the retention period for the first account closed, leaving no evidence of such for the accounts that remain open? Don't forget about the back end of the account life cycle...
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#2161319 - 01/22/18 06:30 PM Re: BO Information New Accounts / Loans CoSmIc GoPhEr
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Originally Posted By CoSmIc GoPhEr
I have been working under the premise that any new account opened or loan closed requires a new BO form to be completed. Then today I run across this. Am I losing my mind?

Q: I understand that we need to complete the certification form when an existing member opens a new account. Once we have a certification on file, do we need to continue to complete one each time a new account is opened? Or is that when a risk based approach comes into effect?

A: No, there is no expectations to have the form completed at each customer touchpoint or account opening. ......


First rule of compliance --- When you read a "resource" from other than a regulator with content that disagrees with a resource issued by a regulator, trust the regulatory source. You will never have to answer to that other source, and you're regulator isn't going away.
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