CIP on informal partnership

Posted By: GottaLuvIt

CIP on informal partnership - 05/26/11 04:57 PM

My brain is not functioning today....HELP!

We have four individuals who together have created an informal partnership - meaning there is no legal or formal partnership agreement nor TIN. They want to establish a new account in the name of the informal partnership using one of the individual's socials.

Who would you CIP and what documents would you obtain?

Our policy states for a "General Partnership" to obtain the partnership agreement, but it does not address informal partnerships such as this.

THANKS!
Posted By: Doug Hendrickson

Re: CIP on informal partnership - 05/26/11 05:14 PM

I would consider it a joint personal account, title it such and CIP each one of them. There is not recognized organization type of 'informal partnership' and I wouldn't touch it with a ten foot pole. Either that or let them go elsewhere, 'cause you're just going to get stuck in the middle when something goes wrong with the funds.
Posted By: GottaLuvIt

Re: CIP on informal partnership - 05/26/11 05:23 PM

thanks! that's what i was thinking
Posted By: Elwood P. Dowd

Re: CIP on informal partnership - 05/27/11 02:47 PM

If your state has enacted the "Uniform Partnership Act" then it's a partnership, not a joint account. The law provides a statutory partnership agreement to govern the activity of those foolish enough to do business in this fashion.

The CIP regulation stipulates that your CIP address this situation if you allow it to happen:

(C) Additional verification for certain customers. The CIP must address situations where, based on the bank's risk assessment of a new account opened by a customer that is not an individual, the bank will obtain information about individuals with authority or control over such account, including signatories, in order to verify the customer's identity. This verification method applies only when the bank cannot verify the customerís true identity using the verification methods described in paragraphs (b)(2)(ii)(A) and (B) of this section.

Frankly, I would not allow it to happen; i.e. I would not open the account. (It sounds as if the folks who wrote your CIP dictated that result anyway.)

Four people who go into buisness together with so little forethought are likely to end up on the rocks somewhere.
Posted By: Princess Romeo

Re: CIP on informal partnership - 05/27/11 05:38 PM

Wrong thread. sorry.
Posted By: rlcarey

Re: CIP on informal partnership - 05/27/11 05:48 PM

Plus, even an informal partnership requires a TIN.