Customer pre-CIP - NO TAX ID or EIN

We have some customers who have been with the bank for many years. They were pre-CIP customers. The problem is when we are reviewing their activity and require their TAX ID, EIN - we're being told they don't have one. This particular customer is a religous organization and stated they aren't getting one either. As i understand it, there are no exemptions for churches not to have an EIN.

Has anyone else experienced this? if so, how did you handle it?

If the group has no employees and doesn't need to file any tax information or other annual report requiring the use of an EIN, it may be able to avoid having to get one. On the other hand, if there is a pastor or other religious leader who is paid by the group, there could be tax violations if no EIN is obtained and no year-end reporting is done by the church.

It seems the first thing on your agenda is to get to know more about the group.

thanks for the advice....

From the IRS website...

"Do I need an EIN?

You need an EIN if you:

• Started a new business
• Hired or will hire employees, including household employees
• Opened a bank account that requires an EIN for banking purposes
• Changed the legal character or ownership of your organization (for example, you incorporate a sole proprietorship or form a partnership)
• Purchased a going business
• Created a trust
• Created a pension plan as a plan administrator
• Are a foreign person and need an EIN to comply with IRS withholding regulations
• Are a withholding agent for taxes on non-wage income paid to an alien (such as an individual, a corporation, or a partnership)
• Are a state or local agency
• Are a federal government unit or agency
• Formed a corporation
• Formed a partnership
• Administer an estate formed as a result of a person's death
• Represent an estate that operates a business after the owner's death."

One could argue the point about "opened" meaning recently opened or having previously opened an account.

But, as you stated, "there are no exemptions for churches not to have an EIN." So, explain that while an EIN may not be required for IRS/tax purposes, it is required for banking purposes based on a combination of federal (31 CFR 103.121) and (your internal) institutional CIP requirements.

It's quick; it's easy; and it's free. See Electronic SS4 Application to apply. Item #10: "Reason for applying" can simply be "Banking purpose."

If all else fails, quote Romans 13:1,2: "Everyone must submit himself to the governing authorities, for there is no authority except that which God has established. The authorities that exist have been established by God. Consequently, he who rebels against the authority is rebelling against what God has instituted, and those who do so will bring judgment on themselves." (NIV)

M Cockrell may have already played the trump card in the last paragraph.

For what it's worth, look at the page three of the Tax Guide for Churches and Religious Organizations, Publication 1828. It provides some interesting alternatives; e.g. IRS recognition of tax exempt status or evidence of a "group ruling." It also confirms that regardless of its form of organization, the church would need an EIN. The letter awarding the EIN could qualify as proof of existence for CIP.



You might want to tell them that it wasn't a multiple choice question and any other bank they might think about transferring their money to will require it as well.

I concur Ken. Its always a potentially dangerous situation when a customer tries to dictate the terms on how they will use to account to the Bank. I would kindly point them in the direction of the nearest FI and be done with it.

I have a similiar issue. We have several pre-CIP non-resident alien accounts. I am currently doing a review of accounts we have coded as foreign. There was not enough information collected in 2000 to properly identify these customers. Is there a tactful way to require them to provide this information now? The are a few that I am uncertain about the identities of (may be nonexistant people), I'd like to see closed out..they haven't had much activity for the past few years...significant balances...and I don't want a ML issue with these accounts. I will be discussing these with compliance committee this week, but would like someone else's take on it.
~Newbie BSA Officer

You only responsibility is to obtain updated W-8s if these are interest bearing accounts. If they come into the bank to open another account and you are unsure of their true indentity, you would have to implement your current CIP procedures.

However, there is nothing that prevents you from just closing these accounts. Or you could condition the closure on whether they come in and provide you the documentation you think you require.

We are collecting the W-8s and I have flagged the accounts to collect additional info if they attempt to open new accounts. The account holders are out of state internet accounts. Thanks for the advice. I just wanted to make sure I was on the right track.

You have out-of-state Internet accounts since 2000 for NRAs: OUCH. When you contact them every 3 years to get a current W8 you could ask for current information, ID copies, etc to update your files.

bek7 - If you have determined that you don't have sufficient information to determine the true identities of these persons, you are sitting on an AML timebomb. Insufficient ID PLUS high risk service should equate to a high risk relationship in my book - one worthy of immediate resolution or termination. Also, through the resolution process, anyone not willing to cooperate could become SAR worthy (depending on the circumstances, of course). You should manage this process VERY carefully and sooner rather than later.

Related question:

We have quite a few customers (~200) on our CIF that do not have TINs. In the past, before CIP, the TIN was only obtained for the primary accountholder. Management is telling me that they'll make an attemept to collect the missing TINs if there is a pressing reason to do so. So far I've come up with the following reasons:

We need to file a CTR on a joint account and we don't have the secondary owner's TIN.

The primary owner dies and the secondary owner now becomes single owner and we don't have a TIN.

Anything I'm overlooking?

Joint owner starts doing something suspicious and you have to file a SAR. You can't exactly call them up at that point and ask for their SSN, they'll know you're onto them

Joint owner calls to verify account information. If your current procedures call for positive ID of the person on the phone before you give them any information (as they should), asking for the last 4 digits of SSN is a common question during verification.

You're required to match names and SSNs during your regular OFAC scrub. Not having the TINs raises your risk for missing a potential OFAC match (long shot, but it's an argument worth making.)

I'm sure there are other, more compelling reasons, but those are what I can think of the top of my head right now.

Cool, thanks Agnessa!

Also ask yourself this...Can you effectively identify a joint account owner for the purpose of complying with a tax levy, garnishment, subpoena, etc. without the TIN of the joint owner? If not, you have a significant risk that needs to be addressed.