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CDD Regs: Verify Signer & CIP? (Participant Loans)

With the new CDD Regulations, will we need to verify signers and CIP on participant loans? Also - Is there a specific way to verify the information for CDD with the shareholders of a company?

Answer by Ken Golliher:

The beneficial ownership provision of the CDD regulation is triggered when a legal entity opens an account. The legal entity is not opening an account at your bank just because your bank bought some or all of a loan that was made to it.

The regulation does not dictate a mechanism which you must use to verify the existence of the beneficial owners. It merely says you must perform a verification process which would equate to that required by the CIP regulation. If it works (unlikely), you can use the same CIP process on beneficial owners that you use on those who actually are "customers" of your bank.


Answer by John Burnett:

Under the CDD rules, you are to verify the identity of the individuals named by the entity customer as beneficial owners. There is no requirement to verify that the named individuals actually ARE the beneficial owners. You accept the information provided by the representative of the entity customer unless you have reason to doubt its accuracy.

First published on 09/24/2017

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