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#26592 - 08/02/02 07:40 PM Another CIP question
MackenzieS Offline
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MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
I am finalizing our BSA policy amendments to incorporate the CIP requirements and I have a question needing clarification. If a commercial customer comes in to open a business checking account, we verify the legal status of the corporation, obtain the TIN, and perform the OFAC check. But are we now required to obtain the identification information on the owners and all signatories of the account as well?

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General Discussion
#26593 - 08/02/02 08:04 PM Re: Another CIP question
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
The proposal is to require verification of ID on all signatories to new accounts. For business accounts, this will not necessarily mean you will require ID on all of the owners of the business. Or even of all the officers. Just the individuals who sign on the account.

So if you're opening an account for XYZ Corp., a nationwide corporation that wants an account in your town to service their local retail outlet, you won't have to get ID on anyone at corporate HQ who doesn't sign on the account. Just the signatories.

From a practical perspective, I'd interpret that to include anyone who has the authority to move funds by telephone or electronically, too, if the instruction is issued to your bank.
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#26594 - 08/02/02 08:17 PM Re: Another CIP question
MackenzieS Offline
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MackenzieS
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Posts: 1,722
Oklahoma
Okay, so we have a large corporate customer that provides us with the articles of incorporation that authorize 8 individuals to perform transactions on behalf of this company, are you saying that we are going to have to obtain a SSN and a copy of the Drivers License on all eight individuals since they have the authority to perform wire transfers? (This is not a national corporation, just local)

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#26595 - 08/02/02 08:47 PM Re: Another CIP question
Comply 101 Offline
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Comply 101
Joined: Jul 2001
Posts: 708
If all eight want to withdraw funds from their account at your bank, than yes, all of them.
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#26596 - 08/02/02 09:27 PM Re: Another CIP question
MackenzieS Offline
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MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
Wow! Can't wait to see how this one is received by the customers. Thanks for your clarifications, now I can finish this up!

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#26597 - 08/02/02 10:34 PM Re: Another CIP question
SJB Offline
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SJB
Joined: Jun 2002
Posts: 1,210
California
Eight signers on one account seems like a lot to me? Is there a known reason for having so many?
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#26598 - 08/05/02 01:48 PM Re: Another CIP question
MackenzieS Offline
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MackenzieS
Joined: Jul 2002
Posts: 1,722
Oklahoma
Large corporation with a lot of executives. It is not that all of them sign on a day to day basis, it's just that they have the "ability" to sign.

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#26599 - 08/05/02 03:28 PM Re: Another CIP question
Lucy Griffin Offline

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Lucy Griffin
Joined: Nov 2000
Posts: 1,544
This requirement to verify signers is aimed at the way in which terrorists structured their accounts. They often considered themselves interchangeable. Jim Richards (FleetBoston's BSA Officer) gave some very interesting examples -- same address, same phone number. You find these when you check IDs. He spoke at ABA's National Regulatory Conference and is scheduled to speak at their fall AML conference. After hearing him, I would advise customers that this additional identification is for their protection and for the country's.

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#26600 - 08/05/02 07:15 PM Re: Another CIP question
Anonymous
Unregistered

Lucy, I know your past position on photocopying drivers licenses and I share your concerns but how do we balance the CIP requirements and the fair lending/information security issues. I am not convinced that the CIP regulations as proposed specifically come right out and say you have to photocopy identification offered when opening accounts, rather they do say copies of any documentation used to verify the identity of your customer. I foresee monstrous problems with keeping photocopies of identification safe, secure, retrievable, and accessible. Any thoughts?

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#26601 - 08/05/02 07:19 PM Re: Another CIP question
A D Virr Offline
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Posts: 398
Derry, NH
By the way, I forgot to log in on the last post. Silly me!
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#26602 - 08/05/02 07:27 PM Re: Another CIP question
Lucy Griffin Offline

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Lucy Griffin
Joined: Nov 2000
Posts: 1,544
I am hoping that the Fed will clear up any concerns in their Regulation B rule that is due out this fall or winter. If the FRB lifts the ban on collecting race information, then banks can implement their customer information program without violating Reg B.

If that doesn't happen, file maintenance and data storage become more important. Getting information about the customer for deposit accounts isn't a concern as long as the information doesn't migrate into loan files. The new CIP is going to require the same identification for loan customers. Unless and/or until the Fed changes Reg B, I would suggest making a copy (if that is necessary to the CIP) but keeping it separately from the loan. In other words, establish a set of customer identification files that are separate from the loan file. Record retention requirements of the various regs don'tactually say you have to keep the information in the product file.

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#26603 - 08/05/02 08:16 PM Re: Another CIP question
BankerMama Offline
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BankerMama
Joined: Jun 2001
Posts: 1,543
OK, if I am opening an account for a Corporation.......I get the name, address, tax ID number, drivers license of ALL SIGNERS on the Corporation's account?

If I am opening an account for a Partnership..........I get the name, address, tax ID number, drivers license for ALL PARTNERS?

GEE......THIS IS A NIGHTMARE! Back to a question I have ask over and over. Is the government trying to run us out of business?

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#26604 - 08/06/02 01:28 AM Re: Another CIP question
Lucy Griffin Offline

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Lucy Griffin
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Posts: 1,544
As the proposal is drafted, I believe you would need the IDs of the signing partners but not necessarily all of them. Imagine getting all partner IDs for an 80-lawyer firm!

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#26605 - 08/06/02 02:15 PM Re: Another CIP question
redsfan Offline
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redsfan
Joined: Dec 2000
Posts: 3,455
The Pennant Race
Is a guarantor a signatory? Imagine your 80-member law firm borrows money to pay year-end bonuses and partner distributions, and all partners are guarantors!
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#26606 - 08/06/02 03:50 PM Re: Another CIP question
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
There's no point in building the bridge until we have seen the river (final regulations), but concerns over fair lending, misuse, etc. can be addressed by either an internal or regulatory requirement that the identifying information be kept separate and secure with access on a "need to know" basis. It's a compliance mechanism that has been acknowledged here before.

Generally, BSA allows banks to use the records it keeps in the ordinary course of business to satisfy the record retention requirements, so it is unlikely that the final regulations would incorporate a segregation requirement.
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#26607 - 08/06/02 06:08 PM Re: Another CIP question
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
This is actually a step we incorporated into our procedures some time ago. Don't you think it's a necessary step if we are going to truly "know our customer"?

Also, it's not unusual to identify a bad guy working under the cover of a business. It's easy to get a business license...$11.00 and you're a business!
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#26608 - 08/06/02 06:14 PM Re: Another CIP question
skinnyminny Offline
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skinnyminny
Joined: Mar 2002
Posts: 395
Heaven in comparison to my pri...

Ever since the proposed regs were released, I've been reading the threads related to CIP of the USA PATRIOT Act. There seem to be plenty of people panicking over the requirement to obtain and retain customer ID.

I'm amazed at these responses. Is our memory so dim that we are forgetting 9/11? There is a purpose to the regs-to try and prevent terrorist infiltration into the banking system. Although it is probably impossible to prevent this from happening, it's at least worth a try. Asking people for ID and photocopying it shouldn't be a big deal-I've been doing for nearly 5 years, including business principals on commercial accounts. Yes, the paperwork is cumbersome, but you can always scan the customer ID into a file to reduce the paperwork. If a potential customer doesn't want to provide the ID-let them go elsewhere. The cases where people refuse to provide ID are rare. Besides, most of the bad guys have IDs that are so good, we wouldn't know if they were fake.

I'm not concerned about someone stealing our customer's ID documents. I'm more concerned with how many fake IDs have been accepted in the files I have.

As someone stated in another thread, the ID documents are valuable during a criminal investigation. If you have been the recipient of any criminal subpoenas, one of the items they always request are identification or account opening documents (i.e., ID).

The USA PATRIOT Act does raise issues of privacy, conflict with other regs, verifying ID and sharing information, but it should not deter us from doing whatever we can to help.


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#26609 - 08/06/02 06:28 PM Re: Another CIP question
redsfan Offline
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redsfan
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Posts: 3,455
The Pennant Race
Skinny, I think the nature and tone of the posts written since 7/23 about the proposed CIP regulations are being driven by the realization that, while we all recognize the goal and agree with it, these requirements will be expensive to implement, while they will do very little to accomplish the task. I do not object to spending money on compliance (since that pays my salary), but I don't see the benefit of obataining and storing documentary evidence of someone's drivers license. I don't think getting identification information on each authorized signer is going to stop terrorists, either.

Compound that with the time frame we will get to implement these requirements (perhaps none), and you get concern and criticism.
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#26610 - 08/06/02 07:06 PM Re: Another CIP question
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
The proposed CIP regulations will not keep anybody but bumblers out of the banking system. Also, as Skinny notes, they do nothing about the "sleeper" accounts already opened which can be taken over by anyone, as illustrated by the procedure the 9/11 terrorists actually used.

The ability to verify identifying numbers to biometrics or at least photographs is the baseline for really keeping the bad guys out. Unless the process is applied to existing relationships, it accomplishes nothing. Obviously, that would be expensive and perhaps more than our countrymen are willing to tolerate.

Yet, whatever CIP turns out to be, as a legal standard it is a minimum standard. Individual institutions can enhance the legal requirements to the point where they have some confidence in the process. If you take such action unilaterally your actions will not protect the country, but they will protect your institution.
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#26611 - 08/06/02 07:38 PM Re: Another CIP question
BankerMama Offline
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BankerMama
Joined: Jun 2001
Posts: 1,543
I am fustrated,overwhelmed and confused (nothing new these days!)and having a hard time deciding what is priority. We have an offsite compliance exam beginning in a few days at one bank and an on-site S&S to begin at another and these CIP/Identification Requirements have about pushed me over the edge. Do the Feds think we are superhuman?

My main question right now is: When MUST we have the CIP completed and approved by the Board of Directors? Anyone know?

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#26612 - 08/06/02 07:45 PM Re: Another CIP question
redsfan Offline
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redsfan
Joined: Dec 2000
Posts: 3,455
The Pennant Race
Not for sure. But under the requirements of the Act, I believe final regulations are supposed to be effective October 25, 2002.

Isn't that a comforting thought.
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The opinions expressed here are personal and do not represent opinions of my employer.

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#26613 - 08/06/02 08:00 PM Re: Another CIP question
BankerMama Offline
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BankerMama
Joined: Jun 2001
Posts: 1,543
Not the kind of comfort I need right now! Man, if I can survive some of the unbelievable demands being put on us bankers by our lawmakers and regulators without it driving me to smoking and drinking (neither of which I do right now) I will be amazed!

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#26614 - 08/06/02 08:03 PM Re: Another CIP question
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Reprise of Prior Post:

The regulations were published July 23 with a comment period of 45 days so that ends on 9/6. If the regulatory agencies take only 30 days (they usually take 60+) to review those comments, that means the final regulations could come out as soon (?) as October 6, yet they would be effective on October 25. If you wait until you see final regulations to begin your efforts, your timeframe for designing a program, obtaining board approval and implementing it throughout your institution based on final regulations would be quite short.

It would be a good idea for you to begin formulating draft policies and procedures based on the proposal. Roundtables and focus groups are timely. We suggest you do some testing of enhanced identification requirements to make certain that what you are asking for is reasonable in your area. Think also about where you are going to keep the new documentation; e.g. consider a dedicated filing system, electronic or paper. However, wait until you have seen the final regulations before you take anything to the board for approval.

Consumer compliance regulations are often issued with an effective date, but also state a later date by which compliance is mandatory. We will all see whether that is appropriate or even possible with a law enforcement statute.
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#26615 - 08/06/02 08:27 PM Re: Another CIP question
BankerMama Offline
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BankerMama
Joined: Jun 2001
Posts: 1,543
Ken, For all our sakes, I hope that mandatory compliance IS at a later date. Althought, I am probably just being overly optimistic!

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#26616 - 08/06/02 09:08 PM Re: Another CIP question
Anonymous
Unregistered

Here is an actual case. We are in rural america where a Wal-Mart store has moved in. Our bank is in negotiations for handling their deposit account. The account for Wal-Mart is set up through their corporate office in Bentonville Arkansas, and will be signed only by corporate officers. All negotiations have been over the phone, e-mails and fax. We have not personally met these corporate officers who will be signing on the account. Do I understand correctly that we will no longer be able to establish this type of account in the future under the CIP rules?

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