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#2224493 - 10/25/19 10:37 PM CIP Sub accounts
BSA2019 Offline
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Joined: Mar 2019
Posts: 17
Is anyone familiar with sub accounts? We are being presented with a scenario where a mortgage lender wants to hold a master account n their name and sub accounts in the names of their clients. The subaccounts would be restricted and only allowed access by mortgage lender to advance funds to their clients. I am contending that we need CIP for the sub accounts. Thoughts?

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#2224497 - 10/25/19 11:28 PM Re: CIP Sub accounts BSA2019
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
What clients and why does a mortgage lender need to set up such an arrangement would be my first question.
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#2225105 - 11/05/19 02:19 PM Re: CIP Sub accounts BSA2019
BSA2019 Offline
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Posts: 17
My understanding it is for home improvement projects

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#2225290 - 11/07/19 08:24 PM Re: CIP Sub accounts BSA2019
TryingtoComply Offline
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Joined: Apr 2013
Posts: 1,980
The West
Why would you need to CIP your customer's customer? The accounts are set up this way to keep the money from being comingled and for their recordkeeping purposes.
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#2225753 - 11/17/19 06:49 PM Re: CIP Sub accounts TryingtoComply
BSA2019 Offline
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Posts: 17
I agree with that however I have people trying to tell me that they want the accounts to be held in the name of the mortgage lender's customers leaving said customers as the account holders. They also are pushing back on CIP for those accountholders.

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#2225757 - 11/18/19 12:55 PM Re: CIP Sub accounts BSA2019
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 79,916
Galveston, TX
Outside of your CIP issue, unless you have a product that actually allows a single customer to hold a master account relationship and then set up their own sub-accounts - which they can name in any manner that they want too - I think I would be taking a pass on this arrangement. If all you are going to be doing is hold home improvement funds for a short period in each of these short-term sub-accounts, of what benefit is to the bank without a substantial fees being involved. Sounds like a maintenance nightmare.

From a CIP standpoint, these appear to be nothing more than a escrow account relationship.

10. Who is the “customer” for purposes of escrow accounts?

An escrow account is an account generally established for the deposit of funds that are to be paid to a specified party on the fulfillment of escrow conditions or returned. If a bank establishes an account in the name of a third party, such as a real estate agent, who is acting as escrow agent, then the bank’s customer will be the escrow agent.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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