Hoping someone can help with this issue. When a bank has purchased another bank and thereby acquired deposit accounts, what does the purchasing bank have to do when they realize some of the acquired deposit accounts did not have CIP. Assume that these accounts were opened after 2001. Is the acquiring bank off the hook, or must the acquiring bank obtain the CIP? I imagine the acquiring bank has to obtain the SS#, but what about everything else? Also assume accounts were acquired over a year ago and previous bank doesn't exist. Thank you.

Anon2 sez: Regardless of whether you HAVE to, don't you want to? How comfortable is your bank providing accounts to these persons without knowing them, or having a reasonable belief of their identity?

Orig anon here. The BSA department definitely wants to (because we know better!)... the question is whether we have to. Assume it's a question posed to the BSA department by others.

Anon 2 sez: No, you don't have to, but still should.

§ 1020.100 Definitions.
(a) Account. For purposes of Sec. 1020.220: ....
(2) Account does not include:
...
(ii) An account that the bank acquires through an acquisition, merger, purchase of assets, or assumption of liabilities; or
http://www.fdic.gov/regulations/laws/rules/8000-1600.html

Hopefully BSA has enough pull/weight that they can make a convincing argument why you don't want to rely on half-done CIP going forward and indefinitely for these accounts. You don't HAVE to redo CIP, but your examiner may argue that you didn't HAVE to decide to keep these few accounts.

Orig anon here again... sorry... But we do still have to obtain the SS# of authorized signers on business accounts, correct?

Anon2 sez: Drawing a blank on that one. Signers are not your customers in the CIP sense, so CIP doesn't apply to them. You may have operational needs and concerns to address, where you decide you want or will require them, but you're not talking about CIP-by-law anymore when you talk about CIP'g signers.......unless I'm having a brain spasm, which is all too possible. http://www.bankersonline.com/articles/bhv14n01/bhv14n01a28.html

When you buy a bank you buy its BSA program. If the bank you acquired did not comply with it's own CIP your bank can be cited for those violations now and at any point in the future. That's why BSA is covered in any competent due diligence done before the acquisition.

You have no choice but to fix anything the acquired bank failed to do in complying with its own CIP. At the same time, there is no requirement that those acquired accounts must be brought into compliance with the surviving bank's CIP.

Thank you all for your responses, I appreciate them.

What if an account comes over from an institution that is not subject to BSA requirements? Let's say you get an individual receivable "account" from a department store. It seems that the "acquired" account is not an account for CIP purposes, but what kind of expectations, if any, would there be in such cases?

So very true and very important that compliance, BSA, etc is brought in early in the process. I'm fortunate that with my merger which was final last year, I was one of the initial people included when very few knew about the merger so it allowed sufficient time to review exam reports, audit reports, etc so I could identify what issues there were and what I'd be dealing with.