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#2160814 - 01/17/18 09:39 PM
Loan Renewals and Beneficial Ownership
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Platinum Poster
Joined: Oct 2009
Posts: 604
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Just wondering how others are looking at loan renewals and the BO? Do you plan on renewals and extensions to have a new BO form completed? I am not sure what the ‘normal monitoring’ really means. We plan on the original form being scanned into each file. At renewal pull it out (original) and ask if this is still correct, then have them initial and date?
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#2160826 - 01/18/18 12:35 AM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Jul 2007
Posts: 1,022
Pac NW
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A renewal, extension or other change in terms is not, in my opinion an account opening. Therefore, I don't think a new Certification would need to be completed.
A refinance (in which the indebtedness is being extinguished and replaced) would be an account opening.
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#2160827 - 01/18/18 03:00 AM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Power Poster
Joined: Nov 2004
Posts: 6,842
Illinois
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fmissle, the FinCEN CIP FAQ's disagrees with you. "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." Unless FinCEN publishes updated guidance, I would consider a loan renewal a new account and obtain a new certification form.
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#2160865 - 01/18/18 02:53 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Platinum Poster
Joined: Oct 2009
Posts: 604
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Thank you all, hoping for an updated FAQ that gives different guidance.
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#2160875 - 01/18/18 03:31 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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We're all hoping for some clarification on this question and the issue of auto-rollover time deposits.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2160894 - 01/18/18 05:00 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Jul 2007
Posts: 1,022
Pac NW
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Sorry for the incorrect guess!
Thanks Brian and Ken for the information.
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#2167169 - 03/08/18 02:19 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Dec 2015
Posts: 1,109
Midwest
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I was just curious if an updated FAQ has been released yet? I attended a seminar yesterday where the instructor basically told us that we would have to obtain BO information on loan and CD auto renewals. We are getting ready to finalize our policy and procedures and was just curious if anything had changed on this or not?
Thanks!
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#2167172 - 03/08/18 02:23 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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10K Club
Joined: Jul 2001
Posts: 84,360
Galveston, TX
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Nope - Nada - Nothing
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2167199 - 03/08/18 03:50 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Dec 2015
Posts: 1,109
Midwest
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I guess asking "what are they waiting on" would be futile........ :-P
Thanks Randy!
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#2167295 - 03/08/18 08:48 PM
Re: Loan Renewals and Beneficial Ownership
BrianC
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100 Club
Joined: Jul 2005
Posts: 134
Mississippi
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What Bryan stated is the OCC's interpretation of the regulation as it stands as well. Not happy about it either !!!
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“The strongest of all warriors are these two—Time and Patience.†— Leo Tolstoy Russian Author
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#2167297 - 03/08/18 08:50 PM
Re: Loan Renewals and Beneficial Ownership
MollyM
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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Please don't let the OCC know, but they are not empowered to interpret the Bank Secrecy Act, FinCEN is. The OCC is the deputy, but FinCEN is the sheriff.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#2167371 - 03/09/18 12:43 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Apr 2013
Posts: 2,267
The West
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I was thinking about this all night because I am ready to go on this with the exception of this renewal issue.
With a loan renewal the borrower has to sign a NEW agreement.
With an auto-renew CD the initial disclosure/agreement with the customer PROVIDES FOR THE RENEWAL IN ADVANCE. We don't meet with or have contact with the customer each time the CD renews.
I'm sure others have thought of this as well; however, I couldn't locate anything in the threads. It simply doesn't make any sense and is impractical to require a CBO for auto-renew CDs.
Am I risking too much by using this thought process?
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TryingToComply CRCM
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#2167372 - 03/09/18 01:02 PM
Re: Loan Renewals and Beneficial Ownership
TryingtoComply
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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With an auto-renew CD the initial disclosure/agreement with the customer PROVIDES FOR THE RENEWAL IN ADVANCE. We don't meet with or have contact with the customer each time the CD renews. I'm not going to quote the Helpline as saying anything, anything at all because they have said slightly different things to others. However, my contacts with them have suggested that the presence or absence of customer contact in connection with automatically renewable time deposits will be mentioned in the FAQ as a deciding factor. Ask them.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#2167376 - 03/09/18 01:17 PM
Re: Loan Renewals and Beneficial Ownership
Elwood P. Dowd
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Power Poster
Joined: Sep 2010
Posts: 2,670
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[quote] my contacts with them have suggested that the presence or absence of customer contact in connection with automatically renewable time deposits will be mentioned in the FAQ as a deciding factor. I really hope this is included in a new FAQ as this approach would be (somewhat) reasonable form a logistical perspective.
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Adam Witmer, CRCM All statements are my opinion, not those of my employer, and should not be taken as legal advice. www.compliancecohort.com
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#2167400 - 03/09/18 03:09 PM
Re: Loan Renewals and Beneficial Ownership
Adam Witmer
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Diamond Poster
Joined: Sep 2014
Posts: 1,309
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[quote=Ken_Pegasus] my contacts with them have suggested that the presence or absence of customer contact in connection with automatically renewable time deposits will be mentioned in the FAQ as a deciding factor. I really hope this is included in a new FAQ as this approach would be (somewhat) reasonable form a logistical perspective. This was the same response I received from FinCEN.
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#2167414 - 03/09/18 04:09 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Apr 2013
Posts: 2,267
The West
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Great! I left a message for FinCEN yesterday. Hoping to receive a call back today.
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TryingToComply CRCM
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#2167457 - 03/09/18 06:36 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Apr 2013
Posts: 2,267
The West
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I left a message for FinCEN yesterday. This is the transcribed message they left for me today. Seems to be different from what Ken stated above.
"This message is in response to your call on March 8th asking for clarity regarding renewals of loans and auto-renewing certificates of deposit. To answer your question, each time a loan is reviewed or a certificate of deposit rolls over, the bank establishes another formal banking relationship and a new account. So for financial services established before, but renewed after May 11, 2018, covered financial institutions must obtain certified beneficial ownership information of the legal entity customer of such products and services; however, to the extent that the legal entity customer or the financial service or product, in this case a rollover CD remains the same, and the beneficial ownership information obtained previously remains accurate and up-to-date the financial institution would not be required to collect the beneficial ownership information again. In this situation the financial institution may use existing information on the legal entity customer and its beneficial owners to renew a financial service or product provided the legal entity customer certifies or otherwise confirms that such information is up-to-date and accurate and the financial institution does not have information of any facts that would call into question the reliability of the information. In this particular scenario, i.e., a renewal of a loan or a revolving CD, the covered financial institution and the legal entity customer may enter into an arrangement that reasonably ensures that the covered financial institution will have up-to-date and accurate beneficial ownership information at each renewal or rollover. The arrangement will be considered the certification or confirmation from the customer and should be documented and maintained as such."
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TryingToComply CRCM
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#2167463 - 03/09/18 06:48 PM
Re: Loan Renewals and Beneficial Ownership
TryingtoComply
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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Please note, Ken went out of his way not to say anything... No matter what I attributed to them, me telling you what the Helpline said is worthless to you. They need to say it to you for you to responsibly incorporate it into your decision making. If this is the final wording, it's a place to start. Assuming you have the customer's beneficial ownership information, thereafter include a piece of paper with the maturity notice asking them to let you know if there has been a change in beneficial ownership. Or, more tightly focused, asking them to sign and send something back to you saying there are no changes or providing you with an updated copy. (If it's a legal entity customer's account you are not required to send a maturity notice, but I'm guessing your system spits them out anyway.) Selling only single maturity time deposits to legal entity customers also works... The automatically renewable time deposits would have to be significant to my ALM for me to do anything dramatic to keep them.
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#2167468 - 03/09/18 07:09 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Diamond Poster
Joined: Apr 2013
Posts: 2,267
The West
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I agree with you Ken. Anyone can call and receive a different response. My point was that what they told me was different from what others were told. We receive an email with a .wav attachment when we receive a voice mail. I will be keeping it.
I was hoping to hear that the presence or absence of customer contact would be a deciding factor so that I could rely on it and move forward with that approach. I was not expecting this.
For most of us, it's not likely that we have the BO information on existing LECs with renewing CODs.
I like the idea of only selling single maturity time deposits to legal entities.
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TryingToComply CRCM
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#2167473 - 03/09/18 07:43 PM
Re: Loan Renewals and Beneficial Ownership
TryingtoComply
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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the covered financial institution and the legal entity customer may enter into an arrangement that reasonably ensures that the covered financial institution will have up-to-date and accurate beneficial ownership information at each renewal or rollover. The arrangement will be considered the certification or confirmation from the customer and should be documented and maintained as such." Hmmm, maybe (for auto renewals) I can have the customer sign an Appendix A wherein the customer agrees to give the bank notice of any change in beneficial ownership and I can just include a copy of that with each renewal notice as a reminder. Note: This isn't real. It's like lying in the grass and saying what clouds look like. When they publish something substantive, move. Otherwise... Oh an elephant!
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#2174768 - 04/23/18 09:16 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Junior Member
Joined: Mar 2015
Posts: 31
Kentucky
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I have a follow up question. I know you need the beneficial ownership information on a loan renewal. What about a 90 day extension on a commercial loan where the borrower is signing a document extending the maturity date for 90 days based on the same terms as the original note. I feel the information needs to be collected, what is your opinion?
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"If at first you don't succeed, try doing what your Compliance Officer told you to do the first time."
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#2174773 - 04/23/18 09:56 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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10K Club
Joined: Jul 2001
Posts: 84,360
Galveston, TX
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Renewal/Extension - no different in my mind.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#2174779 - 04/24/18 03:18 AM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Gold Star
Joined: Apr 2015
Posts: 351
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We asked FinCEN because this is a practice of ours. Yes, the certification is required. If you expect to make future extensions while the loan is active, also get the signed statement they will notify you of any changes to keep from having to get the certification on every extension.
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#2174843 - 04/24/18 02:37 PM
Re: Loan Renewals and Beneficial Ownership
JobSecurity
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Junior Member
Joined: Mar 2015
Posts: 31
Kentucky
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Thanks for you help!
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"If at first you don't succeed, try doing what your Compliance Officer told you to do the first time."
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