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#2259260 - 09/03/21 07:10 PM CDD and CIP


Thank you for giving me the chance to post and remain anonymous.

I work at a bank and someone new has been asked to look at regulations and give feedback on an issue. I was hoping to ask you all and if they are correct or incorrect so I could help point them in the right direction.

The question is about CDD and CIP with existing customers. Executives are asking about what we have to do for CDD if we have a triggering activity with an individual. Our policy says if an existing customer opens a new checking or savings we will update their information and a new CD we would not.

The person indicated that this is not a regulation point and more likely just what we decided our risk appetite is. CDD was introduced to encompass legal entities and we can still use CIP for our existing customer. They are both (CDD CIP) kinda married to each other at this point.

There is a bit I am leaving out as I was not really in the deep end of the conversation but I hope you all see what I am asking. Is the bank supposed to perform CIP/CDD if an existing customer does something not related to legal entities?

I know we have to complete what our policies say. I don't know if CDD triggering activities effect individuals when they open a new checking account say. I will read tonight the regulations the person sent me so I can learn more about it. It is hard to find a direct answer online but I will up my game on reading regs and guidance.

Does anyone have thoughts? I'm sorry for my lack of understanding of the topic but I do not want this person to go in alone as a new person smile Any help would be appreciated. I will check back in often.

Thanks a bunch.

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#2259273 - 09/03/21 09:15 PM Re: CDD and CIP Anonymous
ColoradoAML Offline
Gold Star
Joined: Mar 2018
Posts: 277
Hi Anonymous,

CDD is not limited only to legal entities. The purpose of CDD is to have a baseline of activity so that you know when a customer is operating outside of those bounds and can investigate and report SARs appropriately. What that CDD looks like is a risk decision, but I would be concerned that stating all of your consumer customers a so low risk that no CDD is necessary may draw some criticism.

I think the exam manual is always a very good starting point: https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/02

I think that CDD on a CD may look very different from CDD on a checking account, because the risk of money laundering is far lower. You may still consider if you want to determine the customer's occupation/PEP status/source of wealth or any number of other questions when opening a CD.

Similarly, collecting CDD on existing customer may look different from new customers, but it's also a good opportunity to update your info.

Finally, CDD and CIP are not either/or, they're both BSA requirements.

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