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In Response To:
Thread Starter: Anonymous
Title: Re: Verification of identity of Beneficial Owners

Our examination experience was that we need to make a record of how we verified the identity of each beneficial owner (BO). I'm struggling with this. The beneficial ownership form (which we obtained from a major nationwide vendor) does not have a place for us to record the method we used to verify the identity of a BO. It specifically asks for a passport number for non-US persons, but our examiner insists that we also need to be recording the ID type, number, issue date, and expiration date for every BO, not just non-US persons. I searched the reg and I cannot disagree.

I'm trying to incorporate that record onto the BO form, for future account openings. The BO rules say that we can use methods similar to what we would use for CIP. One obstacle is that under FCRA we do not have a permissible purpose to pull credit on a BO just to verify their identity (maybe that's a grey area, but I definitely wouldn't pull credit on a non-present, non-customer BO, such as BO#4 when only BO#1 is in front of me).

So I look to our CIP policy for other options. Of course, the first/best would be a copy of a DL or passport for each BO, but it is absurd to think that every time someone goes to open a business account, they are going to know to bring such a copy for up to four different BOs. I'm trying to find more options for identity verification other than seeing that copy of a photo ID. Our CIP policy written nearly 20 years ago allows things like "contacting or visiting the customer" but I'm struggling to understand how that would be a valid substitute for seeing a photo ID. I'm picturing that conversation:

Banker: Do you have a copy of your ID?
BO: Nope.
Banker: Oh. That's okay. Under our CIP, I'm allowed to verify your identity by "contacting" you. I'm contacting you now, by seeing you face to face, so at this point I can consider your identity to have been verified.
or:
Banker: You don't have a photocopy of the ID of BO #4? That's okay. I'll call her up. Hi, are you Karen Q. Public? You are? Great, I just needed to verify your identity really quick. Thanks, bye."

Questions:

1. If the beneficial owner happens to be an existing customer (has a personal account), do the BO rules specifically require us to re-verify their driver's license or passport information at the time of the new business account opening? I know for a fact that CIP does not require it, but do BO rules require it? If not, then wouldn't a simple notation of "Existing customer" be valid, for a record of how we verified the BO's identity?


2. Occasionally we'll see BO #1 in person but BO #2, 3, or 4 does not come in to open the account. They also don't send over a copy of their driver's license or answer the phone when we call to get them to send it to us. What methods do you allow at your institution, of verifying that not-present, non-customer BO's identity, other than seeing a government-issued photo ID? Are you using credit reports? Financial statements? Merely "contacting" the individual?