We have a number of loans that are serviced by other companies. We own the loans, but do not handle any of the servicing and have no contact what so ever with the loan customers. For CIP/OFAC purposes, would these borrowers be considered our customers, or would the borrowers be considered customers of the companies who actually service the loans? I'm wondering if the borrowers would be considered our customers since the servicing companies retain the customer information associated with the loans and have all of the customer contact.

Are you wondering if you can consider them existing customers if they come to you for another product? Or, is your concern that if they are considered your customer, you have an obligation to identify them?

My concern is that, if the borrowers are considered customers, we will be required to do OFAC screening and information searches for these borrowers. I'm not worried about identifying them since, if they are "customers," they would be considered existing customers.

I'm still not sure I'm understanding the question, but I'll give it a try.

If you don't originate the loan, but simply buy it on the secondary market, either with or without servicing, then I do not believe those relationships are subject to the CIP rules. The rules exempt accounts acquired through the purchase of assets.

As far as OFAC goes, that's an interesting question I hadn't really thought of. OFAC has an extremely broad reach, so it is conceivable that buying a loan from another entity that was made to someone on the list would be a violation of the OFAC rules. The lender who made the loan certainly had an obligation to check OFAC, and if they made a loan to someone on the list, they did violate OFAC. I'm just not sure that your purchase of the loan also violates OFAC. Anyone else out there checking loans serviced by others against OFAC before you buy them?

Also, for what it's worth, if the only relationship my bank had with a customer was a loan we owned, but had not originated and did not service, I would not consider them an existing customer under our CIP program. I think that's a judgment call, and obviously should be based on whether you have a reasonable basis to believe you know the customer's true identity.

SteveMc: Do you buy these loans or did you originate these loans? If you bought them, they are exempt from CIP as these are not your customers. If you originated them, they are your customers and CIP applies.

Please allow me to add to this. What is the recordkeeping requirement if a loan is sold to the secondary market but our bank continues the servicing? Is this still our customer since we continue the servicing? Or is servicing not an "account" our ours when we sell the loan?