Invalid SSN

79% of illegal aliens (who would be quite unlikely to have a valid SSN) are from Mexico or Central America, according to US Government estimates. A person noting the ethnicity of a person with a questionable SSN is simply cognizant of that fact, and does not imply that all Hispanics are guilty of this.

How many bank security programs note that bank robbers are overwhelming likely to be male? Anyone ever show a training video that has a female perp? No?

Sexists!!!

Lestie G...this may not be the case in your area but it sure is in mine. I'm only stating a very well known fact. Enough said!

I think you all have me pegged wrong. The only reason I mentioned that he was Hispanic was to further question the validity of the SSN. We have a large contingency of Hispanics in our area. They come straight up from Mexico through Texas. Remember I said the SSN was issued from New York State. Now, I don't know about you, but it seems strange that someone would travel to New York and get a SSN and then end up back in the mid-west where he has supposedly lived a long time. It just made me question it even more. If I were back east I might question the same of someone with a distinct European accent that had a SSN issued from Oklahoma.

According to our local police, an illegal alien usually purchases a complete set of documents to use while in this country. The names and numbers are frequently "recycled". We have seen the same name, DOB, SSN etc on multiple persons.

Right now, I'm dealing with a QC issue where two independent verifications have come back that the "Input SSN have not been issued as of 12/03".

The next step (since the applicants have been at the same job for 2 years) is to have them sign a 4506 and see if the IRS has a record of the returns filed under the SSN's.

Jax, they should also receive a form 1040 through the mail in the next few days. Ask them to bring it in with the pre-printed label.

There is a way to use the Social Security website to determine if a number has been issued. It's takes a few steps, but if anyone wants to PM me and send me their e-mail, I will send the link and try to explain it.

Boomermom - Nobody is trying to peg you incorrectly, and it is understood why your interest would be piqued -- because, as was previously noted, a disproportionate number of fraudulent situations and other OFAC-related issues involve Hispanics. I'm aware of all that.

In your situation, however, you have a loan that you state your bank DID ultimately make to the borrower. Though you don't say what type of loan, I have to believe that the loan officer was ultimately satisfied that the unique identification of the borrower was established -- or else why would you be making unsafe/unsound loans. Therefore, noting that the borrower was Hispanic was a gratuitous remark. Assuming you are a compliance/risk person, you would know that there are many available options for validating an individual's identity -- again, a point noted previously.

Your error in judgement is minor compared to the so-called diamond discussers who offer useless drivel and lament over anonymous postings instead of offering mature, helpful discussions related to nondiscrimination in lending and other services; nondiscrimination in applications; and the existence of illegal disparate treatment. Because you noted that your institution HAD extended credit to the borrower, I was noting that your remark regarding the borrower's ethnicity was not relevant to the process for validating the applicant's identity and social security number. Again, your loan officer would have ample time to obtain numerous proof-of-identity documents prior to disbursing any funds -- and based on the loan having been made, this must have happened.

I have no axe to grind, and I'm not Hispanic nor an alien, but the respondents to your post are not the experienced posters who would have referenced the overt evidence of statements revealing explicit consideration of prohibited factors. Some of the posts use the uncapitalized term hispanic (sic); make other gratuitous references; and don't address the primary issue which is how your institution should address identity verification and validation when instances occur such as the questioned Social Security number. It is acknowledged that there is Social Security-card abuse, illegal immigration, and other bad things, but you made the loan. The Hispanic comment was and is gratuitous.

When there is a mismatch or validation error on Social Security Numbers, often you can call the local Social Security Office and they will verify the name to the number.

FYI - we have tried calling the Social Security Office for verification and they will not give out information except to the holder of the SSN in question.

And Anon, since you do not care to identify yourself, your remarks are taken lightly. Think what you want.

Your story is just not credible anymore. Why would you now being calling the Social Security Administration when you've conceded your institution already extended credit to the borrower. The loan would not be sound if your institution did not establish the unique identity of the applicant prior to disbursing the loan proceeds.

There is no industry or regulatory pressure for any FFIEC- or state-supervised institution to extend credit to any individual where that person's true identity cannot first be validated. I can understand an institution opening a deposit account and putting a hold on the account until the verification/validity is completed, but I can't understand how an institution would extend credit to a loan applicant without this done. That your institution had an individual who ultimately was extended credit by a competent lending officer -- meaning a credit report was obtained, employment was verified, a mail address was obtained -- leaves me to believe that you fabricated the scope of the actual event, and your comment, " Oh, the customer is definitely Hispanic." was made for effect. You knew credit had been extended to the customer when you made the remark. My reply was that the remark is not one that should be shared, obviously because it is a remark that clearly indicates the existence of illegal disparate treatment through your statement -- made in your post -- that your institution explicitly considers prohibited, overt factors and different treatment for Hispanics.

My original point, made clearly, was that the main underlying issue should be for you to devise systematic, consistent incident response-type procedures or steps to address what you should do for any individual -- white, African-American, Hispanic, Asian, Native American -- whose identity is called into question.

You won't concede that your remark was unwarranted, and that it was done for effect to generate more posts that further generalized untrustworthiness of Mexicans/Hispanics, aliens, etc. My original remark was made not to question your competency, but to simply alert you that your personal thoughts should be more carefully shared. If you share them in a post, it's probably something you'd inadvertently say.

I probably shouldn't respond to you, but you should keep your assumptions to yourself. My family has Hispanic friends, our bank has employed several Hispanics and I have nothing against them any more than anyone else - just a fact that we have a closer proximity to Mexico than New York.

And did I say that we called the Social Security Administration on this one? No. I just commented that we HAD (meaning past) tried and couldn't get anywhere. You are assuming again.

Respond away if you wish, but in the future I think I and all others posting to this thread will probably disregard your comments. END!

Obviously, we have an "anon" with too much free time on his hands.

Well, I hesitate to wade into this mess, but if the original anon's intent was to point out to our friend from Oklahoma the error of her ways (and please note I am not agreeing with anon), then he should have evailed himself of the private message system and not started public attacks.
I don't think the motive was to be helpful, but the modus operandi of the famous unnamed poster from out West that Dan has fingered.

Boomermom,
There is a residual issue from the decision to make the loan that may come back to you and you need to figure out how you are going to handle it.

Your bank was required to get a TIN. For the sake of argument, you did. However, when you attempted to verify it, it turned out to be unissued. The CIP regulation requires (D) A description of the resolution of any substantive discrepancy discovered when verifying the identifying information obtained. In short, the law requires you to document how you "resolved" the discrepancy; there is no provision for ignoring a discrepancy.

There are two possible interpretations here: a)the bank did not get a TIN as the law requires or b) the bank failed to resolve a discrepancy as the law requires. Since the loan was made anyway, the violation appears to be willful.

It's anyone's best guess as to how hard the agencies will push on an individual rather than systemic violation under CIP, but there is no question that they can push as hard as they want. At a minimum, have an inspriational conversation with your lender. Remember, whatever your policy says, it was adopted by the Board and I doubt that it gives individual lenders the authority to waive legal requirements.

Bank's who sell their mortgages need to be very careful here. If you find out after the fact that an SSN was not valid (not yet issued, duplicate of another person's number, etc.) you have a fannie/freddie/HUD issue and need to consider the requirements. You will probably have to buy the loan back.

This brings up one other interesting dilema when it comes to CIP and loans:

If you cannot resolve discrepancies and the loan has now been made, how to you close the account?

If it's a revolving line, you can freeze the account (and for HELOCs, I guess you have to use the "fraud or material misrepresentation escape clause to stay in the good graces of Reg Z) , but you still have the outstanding balance that you cannot just "close" since you need to make some collection efforts.

Likewise on a closed end loan, the money is out the door, so you don't just "close" the account since presumably you have to call the account due and collect the balance. But what about contract issues if your note and disclosure? Has anyone added CIP discrepancy as an event of default?

Although you have until the loan closes to do CIP, it isn't practical. It needs to be integrated into the decision process and those verifications shouldn't be closing table surprises.

Andy, you know that, we know that and our policies say that, but try telling that to a lending officer who for 20 years has been doing things another way. To them CIP is just a hassle and if there is a problem takes too much time when the customer is in your office and you have others waiting.

That means you will have to do something to obtain his understanding, agreement, and attention. Such as making sure the board or his supervisor (depending on how high he is in the food chain) takes action and makes it clear that failing to observe the rule in the future will constitute an offense worthy of [name your sanction here].

Unfortunately, John, this is the Sr. Lender.

One of two things comes to mind initially, 1) a side discussion informing the sr. lender that we all want to follow policy, it is there because of the law and we don't want to explain these violations in the BSA discussion of our next exam, or 2) get a higher up to do this, even if it is your examiner's in the next exam. They can always indicate, "looks pretty good, but we do see... which is disturbing". Obviously if this is a real issue and cite-able you'll let them find it first even if it is in your workpapers.

That's why I had the documentation added that the loan officer decided to approve the loan anyway. Covering tracks on the other end. Until one of them gets stuck with a penalty what I say has no bearing - I'm not one of them. I'm just the Compliance Officer and I just look for things to cite them for! I have no authority over bank officers.

"I have no authority over bank officers."

This situation is one that cries out for a policy decision by the bank now. What are the bank's expectations - do they want to make loans to individuals with invalid SSNs (probably no), what do they want to do to protect the bak against this happening again, and what do they want to do when these cases turn up after a loan is booked. To just wait and let more and more pile up is very risky. I would recommend to the powers that be that they do just that and set a policy in place with clear instructions for lenders and others. If the bank then chooses to ignore my advice, well..I have gone on record and need to make my personal decisions if this type of thing keeps happening.

Do you have bank counsel you can get involved or another highly placed ally?

Hopefully you meet independently with the Director's Audit Cmte or the Board. This is an area where you can say "and this is an area we have BSA exposure in...". Prior meetings with this group should have demonstrated to them the recent emphasis, both in rules and penalties, the importance BSA has. This may cause the BSA emphasis to roll downhill.

You may say that this person also attends or is on one of these committees. So be it. You have a responsibility as a bank officer. This is business, not personal. You tried to avoid this and resolve it by other methods.

I don't envy you, but it is a time when you can actually see your authority grow, if handled right, to meet your responsibility.

First, let me state I am Compliance Officer in name only. I am not a bank officer nor am I the BSA Officer. I am just put in charge of writing things like the CIP Program, training and helping implement. I have to audit, keep my notes, etc. We have not Audit Committee and I do not meet with the board. We are a smaller family-owned bank and do not have the same structure as larger corporate institutions. And in cases like this, I can only make recommendations and document that the final decision was made by the lending officer. Thanks for everyone's concern and input.

I originally posted this thread to alert everyone and hopefully educate how to tell if a SSN has been issued. The customer had the documentation but it couldn't be verified.

It's good to know I'm not alone. Doesn't make our job easy though, does it?