Please excuse the anonymous post, but I have concerns that this is a silly question: The May 9, 2003 Federal Register issue of the CIP final rules is an exact replication of the 106 page release of the final rules on April 30th. In both versions, there are references to comments and the differences between the proposed rule and the final rule. Also, there are references in the definition of "account" that the final rule "...now contains additional, but non-exclusive, examples of products and services..." but I cannot find them in the two releases. Is there a clean version of the final rule out there without all the commentary and comparisions? HELP!!

The actual regulation is buried in that 106 page document. In the PDF it starts on page 76 and ends on page 87. The definition of "account" found at 103.121(a)(1)(i) and (ii) is
(i)A formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. Account also includes a relationship established to provide a safety deposit box or other safekeeping services, or cash management, custodian, and trust services.
(ii) Account does not include:
(A) A product or service where a formal banking relationship is not established with a person, such as check-cashing, wire transfer, or sale of check or money order;
(B) An account that the bank acquires through an acquisition, merger, purchase of assets, or assumption of liabilities; or
(C) An account opened for the purpose of participationg in an employee benefit plan established under the Employee Retirement Income Security Act of 1974.

I hope this helps you.

Inuyasha has provided the language you sought.

If you have further need for the regulation without all the trappings click "Read a Reg" above, Bank Secrecy Regulation and 103.121.

P.S. Your question fails the "silly" test miserably.

I doubt that this will change anything, but I want to address the "silly" questions and anonymous postings. If you have a question, then you need an answer. Who cares? I find it "silly" to read how people are afraid to ask questions without an anonymous post. Sure, if it is confidential, but to hide your identity seems almost wrong.

I have asked questions here before. I saw several HMDA posts from Andy Z (the guy that answers lots of questionos) this year.

OK, I'm done.

As I tell everyone at our bank, there are no silly questions, but it would be silly if you have a question and did NOT ask.

If you do not find an answer to your question after doing a search of the forums, then by all means, you should ask. Who knows, there could be many other people with the same question that are also "afraid" to ask.

We had a prior CEO who used to say something to the effect of, "if you have a problem, lets talk about it and fix it. If you don't tell me about it, you have a real problem".

I always liked him.

Ok, I'll fess up asking the "silly" question and posting anonymously. I do training in the bank and I always encourage questions, and work and live under the premise that there are no silly questions. But, I sometimes doubt the validity of my own questions.

There was a post on here a few weeks ago about how helpful everyone on here is, and what a wonderful forum this is - and I completely agree. I'm hoping to meet some of you at the upcoming ABA Regulatory Conference in Washington.

P.S. After some of your responses to my use of the word "silly" I'm SO glad that I changed the word "stupid" to silly at the last minute before posting the question.

Bolstered by David's encouragement, I will ask another CIP question. The proposed rule required CIP procedures for persons seeking to be added to an existing account. Am I reading correctly that this is not the case in the final rule?

Signage/notice is still a requirement. Look to 103.121(b)(5) which in effect says the final rule allows that notice is adequate if the bank generally describes the identification requirements of the final rule and provides notice in a manner reasonably designed to ensure that a customer views the notice, or is otherwise given notice, before opening an account.

For example, depending upon the manner in which the account is opened, a bank may post a notice in the lobby or on its website, include the notice on its account applications, or use any other form of written or oral notice.

Andy - Maybe my logic circuits need a Level III diagnostic.
(5)(i) says that notice must be provided to customers, but (3)(i) does not include in the definition of customer a person who is added to an existing account, since they are not opening a new account.

Hence my question, am I reading the final rule correctly in thinking that a person seeking to be added to an account is not subject to CIP, as originally proposed, the same way a signatory is not now subject to CIP?

You are correct. I focused on signage and not the definition of customer.

For simplicity sake, our procedures will likely include the notice in most cases.

I'm not sure I'd want to take that position. I'm working from home today and don't have my already dog earred copy, but .... IMHO a customer is someone who has an ownership interest in account.

I wouldn't want to be defending to an examiner that we applied our CIP to the person that physically opened the account, but not any of the drug dealer or terrorist that he/she added to the account.

IMHO, ownership interest is different than signatory authority.

Michelle - As a practical matter, we will apply CIP to added parties. My point in asking the question is the point you make so clearly - the omission of added party from the final rule seems to leave an open back door.

IMHO - it's a matter of risk.
On page 83 (I'm really bad at listing part ii(b)(c)...but trust me it is on page 83), the rule states that "based on the bank's risk assessment" of the account, that the bank will obtain information about "individuals with authority or control, including signatories, inorder to verify the customer's identity."

Here's the direct link to the revised BSA regulations in BOL's Alphabet Soup.

I believe that is reasonable. We have many military units with "Cup & Flower Funds" and the signatories change regularly on them. Minimal risk and we'll likely not do intense verification there. They're not large accounts, funds are not wired in or out, etc.

Other accounts may well require strong CIP measures to close the proverbial back door, mentioned above.

Again, I agree that CIP should be applied to anyone who has ownership control, but 31 CFR 103.121(a)(3)(i) limits the definition of customer to a person that opens a NEW account.

Now I understand why it took since 10/26/02 for the rule to be finalized - it takes a while to construct such a large back door.

Better watch out complyguy, or your tongue may get stuck to your cheek that way.

The definition was changed in part due to the comments. Though it does seem odd they left such a big hole, even though it seems so easy to fill. Perhaps they are leaving that up to the responsible bankers and our risk-based procedures.

They may also clarify this point later, though it does seem like a major definitional issue.