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#1787990 - 02/21/13 04:37 PM Trust Company, CIP & reliance provision - ?
Calmeida12 Offline
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Joined: Sep 2012
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We have a Trust Company that wants to open a NOW account with our bank. The Trust Company will be acting in a fiduciary responsibility for other parties, therefore we know the funds are not truly the Trust company's funds but the funds belong to several different individuals. Who will be the customer for our CIP purposes - the Trust Company and/or the individuals? Also, how should the account be titled, just under the Trust Company's name or should it include the individuals' names as well?
The Account Officer has shown me an agreement that the Trust Company wants the bank to sign where it goes into detail about the Trust Company doing CIP on those individuals just like the reliance provision details. However, I don't think I can use the reliance provision with the Trust Company as they are not federally regulated, they are only regulated by the State. First time dealing with something like this, any advice?

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#2256190 - 06/30/21 09:58 PM Re: Trust Company, CIP & reliance provision - ? Calmeida12
Red Raiders Offline
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I'd like to revisit this. Can someone shed some light on it?
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#2256200 - 07/01/21 12:13 PM Re: Trust Company, CIP & reliance provision - ? Calmeida12
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,572
Really a great question. Reliance on a another FI isn't something I have seen done much, though I helped manage this once a long time ago.

First, does your CIP Policy have language that specifically allows you to rely on another FI for CIP? If not, I'd say you need to stop there.

If your policy does address this, it would need to comply with these provisions, as outlined in the FFIEC BSA/AML Exam Manual:

[i]-Such reliance is reasonable under the circumstances;
-The other, relied-upon financial institution is subject to a rule implementing 31 USC 5318(h) and is regulated by a federal functional regulator;42 and
-The other financial institution enters into a contract requiring it to certify annually to the bank that it has implemented its AML program, and that it will perform (or its agent will perform) the specified requirements of the bank’s CIP.43[i]

As you know, CIP is always a hot topic with regulators and if it were me, I would conduct a LOT of due diligence as deficiencies in this area can cause big problems.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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