Pertaining to large corporate secondary market participation / syndication loan questions: What time frames, waivers, or legal letters are reasonable / acceptable regarding BSA compliance, specifically, CIP and CDD Beneficial Ownership Forms, when purchasing a share of a large corporate (not consumer or mortgage loans) participation / syndication loan a few years after its origination (secondary market)?
For example: Purchasing a 3.7% share ($20 million) in an existing ($550 million originally) syndicated corporate (not consumer or mortgage loans) secured term loan for publicly traded and non-publicly traded corporations. The loans are purchased in the secondary market through attorneys and agented by global investment banks such as Credit Suisse Group AG. Some syndicated loans have more than 80 borrowers with more than 100 banks that participate in the loan. Further, our bank is not a Legal Bank of Record for the loan until our initial Funding Date (years after the loan originated) and therefore we cannot request and are not provided with any BSA required documentation such as Beneficial Ownership Forms, and CIP Documents for numerous borrowers, or non-BSA documentation such as Organization Documents, prior to the Funding Date. Typically, it takes 90+ days to receive Beneficial Ownership Forms, CIP information, etc., after the Funding Date, and in some instances, we aren’t provided with some requested documentation at all.
What are reasonable / acceptable timeframes for collection of Beneficial Ownership Forms, CIP, etc. that we can specify in our BSA Policy for these specific syndication loans? Is 90 – 180 days acceptable? If we specify a shorter timeframe we would constantly be up against the due dates, or past due, causing BSA policy exceptions / violations, which we want to avoid. Is it acceptable to obtain only the main borrower’s Beneficial Ownership Forms and CIP?
Alternatively, is it acceptable to create and utilize a standard legal letter signed / certified by the agent bank or attorney that managed the transaction stating that they have in their possession, and thoroughly reviewed for adherence to Regulatory Requirements, specific documents, and information, such as CIP for guarantors, Beneficial Ownership documents, or other BSA or Compliance related documents? Additionally, the legal letter would include a statement that they agree to provide documents or information should the need arise for audit or examination purposes or in the event of a triggering event when the bank would be required to complete enhanced due diligence. Would we be subject to regulatory criticism in either of those processes?
If two separate, unrelated banks have a mutual customer that is engaging in an unrelated loan at each bank that is NOT a participation loan, can one
bank rely on the other bank's beneficial ownership efforts? Again, there is no relation between the two banks or the loan being conducted, the only
common denominator is the each bank is working on a loan for the same legal entity. We have a situation to where the legal entity's beneficial owner
does not want to supply his information to us as he already provided it to the other bank that is working on a separate loan for him. It was basically
suggested for us to ask the other bank for the beneficial owner information. It is also being suggested that this falls under the reliance provision
listed below. I am thinking it does not as there is nothing connecting us to the other bank or the loan they are working on.
(j)Reliance on another financial institution. A covered financial institution may rely on the performance by another financial institution
(including an affiliate) of the requirements of this section with respect to any legal entity customer of the covered financial institution that is
opening, or has opened, an account or has established a similar business relationship with the other financial institution to provide or engage in
services, dealings, or other financial transactions, provided that: (1) Such reliance is reasonable under the circumstances;
(2) The other financial institution is subject to a rule implementing 31 U.S.C. 5318(h) and is regulated by a Federal functional regulator; and
(3) The other financial institution enters into a contract requiring it to certify annually to the covered financial institution that it has
implemented its anti-money laundering program, and that it will perform (or its agent will perform) the specified requirements of the covered financial
institution's procedures to comply with the requirements of this section
During account opening for a new business customer the branches verify that the required annual filings with the state are up to date. As new accounts are opened for existing business customers a CDD questionnaire is completed for each new account, however the branches are pushing back regarding verifying that annual state filings are up to date. I haven't been able to locate any guidance on whether this is a requirement or a recommended best practice. Can you please advise?
Do Reg B requirements apply when taking a "new" application to renew an existing loan?
If the existing customer has already been identified through CIP and we have address/contact/employment information on file already, does Reg B require that we read the standard application disclosures again at time of renewal and is it a regulatory requirement to update driver license expiration, as well as get all new income information, etc. ?
I know we need income information for ability to repay and my understanding is that once they go through the CIP process, we don't have to identify them with each subsequent transaction but in general what are the
regulatory requirements on a renewal application?
A person opens a DDA, is properly CIPd, and his name includes "Jr." as a suffix. Later, the same person, same SSN, borrows money without using the "Jr." suffix. Should the lender require the borrower to re-sign the promissory note using Jr. in the borrower's name?
How do I verify the legal entity name of a public school? The school wishing to borrow has bylaws that state they are a corporation, however, they are not registered with the state of Michigan.
When opening an account or a new loan for a general partnership, is it acceptable to use one of the partners SS# for the Partnership? They never got an EIN for the partnership.
Wondering what specific steps we need to take to lend on an ITIN. We have a large population of Hispanics that have ITIN instead of SSN. What documents should we receive? If documents are expired should we lend to them?
If a customer names a non-profit or charity a beneficiary on their deposit account, do we have to obtain that non-profits tax ID number like we do for individuals?
Mortgage loan application, joint applicants are husband and wife. The wife is the Attorney In Fact for husband and both own the real estate. Who should CIP data be collected on? Attorney in Fact?, both?