#2238162 - 06/16/20 04:54 PM
"Virtual" office address provided for CIP
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Verifying Vinnie
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BSA people, do you know what a "virtual office address" is? I didn't, until recently. It would look like this:
- Customer Jane Dough LLC opens a bank account and gives you their address as 1234 Main Street Suite 300, Big City, USA. - It is a physical address, and a real address, and has an office building there. - They provide you a copy of their registration to operate an LLC, and it lists the same address. - If you have some way to check their business credit history, you'll see the same address there. - If you mail something to that address, it will be delivered to them.
What you don't know is that for a low monthly fee (double digits), you can rent a "virtual office address" or "virtual office space" from any one of dozens of companies online. Their ads look like this:
- Reserve your virtual office space today - This one is available: 1234 Main Street Suite 300, Big City, USA - Price: $60/month, some features below involve additional costs - This service gives you a local business address which you can use on your website, business cards, etc. - Includes free notarization certifying you are located at that address! - We receive your mail for you and notify you by phone or email when anything is received - We can forward your mail to wherever you happen to be, anywhere in the world! - 24/7 lobby staff to greet walk-ins - Indoor lobby sign confirming the location of your business - We can receive subpoenas on your behalf - We can help with the formation of your corporation or LLC
So what all that tells me is, this is basically a fake address. I would consider it invalid for CIP purposes. CIP requires financial institutions to know the principal place of business or local office physical location of every business customer. This is designed to defeat that, among other things. And I'm betting that not one part of your existing CIP processes would be able to detect this, unless you're at a small bank and have the time and resources to perform an intensive online search of every business address you receive.
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#2238262 - 06/17/20 05:42 PM
Re: "Virtual" office address provided for CIP
Anonymous
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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First, recognize that everyone from the borrower to the lender to the lender's staff, to the SBA, and back again, were under a lot of pressure to push the PPP loans out, and whoever on your staff accepted the virtual address may have been under similar pressure, and may not have enough background on virtual addresses to recognize one.
The borrower/depositor's reasons for using a virtual address may otherwise be legit (I'm assuming innocence here, for the sake of argument), and routinely gives that address when asked for the business address. Would the customer have responded with an actual address if asked something like "What is the address where your company is physically located -- where we might find company officials during business hours?" No one knows.
By all means, follow up with the customer to request the actual address (see if it's any of the loan files, first). And if you don't get the actual address, then decide whether to file a SAR.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2238397 - 06/19/20 07:44 PM
Re: "Virtual" office address provided for CIP
Anonymous
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Anonymous
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If I am a small business owner that operates out of my home, isn't there at least a bit of argument that I don't want my customers to know where I live?
I agree with BrianC. The burden is on the U.S. bank, as enforced by its state and federal examiners, to know the true location of the business. 31 CFR § 1020.220 requires your bank to know and have in its files your business's principal place of business or physical office location, whether that's the customer's home, or their mom's garage, or a rented beachside bungalow in the Pacific. Providing a banker with a fake "virtual" address where you don't actually maintain a physical presence is a good way to get yourself reported to two dozen federal law enforcement agencies, because once we realize we don't know your true address, it hits us that you could be operating in another country, for all we know - anywhere in the world. There are any number of things you would disclose to your bank that you wouldn't disclose to your customers, such as your age, your TIN or SSN, your income, etc. Disclosing those things to the bank does not mean they get revealed to your customers. Operating a business from home, or an online business, is an example of a perfectly legitimate and valid reason that a person might choose to utilize the services of a virtual address; nobody wants some customer showing up at their house asking to meet the person who made the arts and crafts stuff on Etsy. But your banker needs to have your "real" address on file, in order to offer you or continue to offer you an account.
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