I know per David Dickinson that we are not required to check if the institution from whom we purchase loans has done a CIP check and placed it in the file, BUT, are we required to do CIP on the purchased borrower such that we will not accept a P.O. Box as their primary address?

You dare to doubt the man behind the curtain? Seriously, David is correct. You needn't go through your CIP process for purchased loans, at least not because of the USA PATRIOT Act or the amendments it caused to the BSA. So, you won't be cited for a BSA violation fo not doing CIP on purchased loans.

Now, let's switch gears from compliance to safety & soundness. From a safety & soundness standpoint, you probably don't want to purchase loans of borrowers who's names and addresses haven't been obtained, if not verified.

In your specific case, regarding P.O. boxes, there is nothing to prevent you from asking for a physical address from the borrower, but you aren't required to do so. I just don't know what leverage you'd have if the borrower refused to furnish the inforamtion, as there is already a contract in place and the borrower already has his/her money.

Again, though, you aren't required to get the physical address info for CIP purposes. AR.

This is pulled from the FinCEN January 2004 FAQ: Final CIP Rule.
http://www.fincen.gov/finalciprule.pdf

2. Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities?

Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP.

Even though participations are exempt, our bank still requires an agreement from the lead bank as required by the reliance provision under 31 C.F.R. § 103.121(b)(6). We usually do this on an annual basis or in the case of a participation with a bank we don't normally do business with, on an individual basis.

This is the often overlooked wording that I pointed out at the BOL, BSA Conference. I rarely see a auto dealer that is truly a creditor. Typically, dealers are merely passing on info to the banker (acting as their agent) and not making credit decision. The dealer does not meet this exemption and CIP is required for all of the "purchased" loans.