Would there be a problem with obtaining a BO certification from existing CD customers now vs at CD maturity and having them sign an agreement to notify us of any changes? All of our CDs are rollovers.

The 'loan renewals' part of this is making me itchy. Our 'renewals' are technically always 'refinances' in that we always obtain new loan documents and extinguish the old ones. There may or may not be any changes in the terms/borrowers with each new note. We've got a consultant telling us we can use the same little "we will notify you of any future changes" statement for both our rollover CDs and our loans. Does anybody here agree that would be OK?

I am of the opinion you need a new certification for each refinance and the statement from the borrower to notify you of any future changes is a moot point and unnecessary because you are extinguishing your old note and replacing it with a new one each time; therefore, you have a new account each time.

It would have been much easier had they allowed the borrower to provide the statement to notify of any future changes on all new accounts, however, that they did not do.

"Loan renewals" at our shop are different. We commonly allow the borrower to pay interest and extend the maturity on the existing loan with the same loan number and do not extinguish the existing loan. We plan to get the certification and the statement to notify of any future changes when these first mature after May 11, 2018. We sent a follow-up question to FinCEN after they issued the new FAQ and they confirmed this is how our loans should be handled.

Thanks, MBT!

You're welcome.

Question #10 seems to allow this on subsequent accounts. See the part after the paragraph break (break not in the original document).

Question 10: Identification and verification: Certification when a single legal entity customer opens multiple accounts

If a legal entity customer opens multiple accounts at a covered financial institution
(whether or not simultaneously), must the financial institution identify and verify
the customer’s beneficial ownership for each account?
A. Generally, covered financial institutions must identify and verify the legal entity
customer’s beneficial ownership information for each new account opening,
regardless of the number of accounts opened or over a specific period of time.

However, an institution that has already obtained a Certification Form (or its
equivalent) for the beneficial owner(s) of the legal entity customer may rely on
that information to fulfill the beneficial ownership requirement for subsequent
accounts, provided the customer certifies or confirms (verbally or in writing) that
such information is up-to-date and accurate at the time each subsequent account
is opened and the financial institution has no knowledge of facts that would
reasonably call into question the reliability of such information. The institution
would also need to maintain a record of such certification or co nfirmation,
including for both verbal and written confirmations by the customer.

I'm less concerned with CD rollovers (we don't have that many that this would apply to) versus loan renewals. I recognize the form is one more document to add to the package for signatures, but I'm looking to make the process as easy as possible.

I've simply added the statement to my standard form as a sentence following the first one.

So to be clear, if we have the statement that indicates notification to the bank for any changes...and they sign, it will be valid for the life of the CD?

I was resistant to changing my form, but I don't want to have two versions of the form (one for new accounts and one for renewals) so I just added the language to my form. I figure it isn't going to hurt.

My concern with this CD issue is that customers may not return the form and without it we should not renew a CD. If we don't renew the CD, we are not doing what our agreement with the customer states we will do.

We have a good number of LECs with auto-renew CDs, so this will be an issue for us. I expect that we will have employees in our branches chasing customers to get the certification back. Time will tell........hopefully, I'm wrong.

The good news here is that, assuming you have added the "we promise to tell you if this info changes" verbiage to the certification, you'll only need to chase down these customers for one renewal. After that, you'll still need to get new certifications if monitoring produces a "trigger event."

Check your contract. Most agreements state that the bank can close the deposit account at any time for any reason. Following the regulation would probably be a good reason not to renew if they don't provide the requested information.

Sort of. You'll still need to do your usual thorough risk-based monitoring of customer activity and obtain an updated BO certification if you detect an event suggesting there has been a change triggering the need for a new certification. For example, if the legal entity customer has both a CD and a checking account with you and requests a change in authorized signers on the checking account that's connected to a change in the "control prong" slot, you will need to get an updated certification on both the checking account and the CD account. You might decide to obtain them both right after the triggering event, which would be, I think, the logical choice.

Ugh.... John, you bring up a good point. We have some customers that have MANY accounts.

bcompliance,

Thanks for the reminder:

"Check your contract. Most agreements state that the bank can close the deposit account at any time for any reason. Following the regulation would probably be a good reason not to renew if they don't provide the requested information."

As of now, we are using a vendor form. Can we add the "you agree to notify us of any changes" as an addendum?

There is no requirement to use any specific form, so how you accomplish this is really up to you.

Our vendor has said they are reviewing a number of suggestions for improving the form, including adding the verbiage being discussed here so we hope to have that soon. In the meantime, we are going to try to be proactive. We have run a report of maturing CD's for legal entities for the next several months. We are going to have the account officers reach out now to obtain the BO info along with an addendum we create with the verbiage.

If we are unsuccessful by the time the grace period expires on the rollover, we will not renew. Hopefully that will be minimal or none.