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CIP Requirements for Corporate Trust

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Question: 
When a trust department is involved in administration of corporate trusts, what is the CIP requirement for the municipality? For example, a corporate trust department administers the various accounts related to a municipality's bond issue for sewer and water. Do the authorized signers for the municipality need to be subject to CIP, since they are essentially “in control” of the funds?
Answer: 

Only your bank's CIP, not the regulation, would require you to identify a "mere signatory."

Moreover, in this case the government entity is excluded from the definition of a "customer" and CIP simply does not apply:

3) (i) Customer means:
(A) A person that opens a new account; and
(B) An individual who opens a new account for:
(1) An individual who lacks legal capacity, such as a minor; or
(2) An entity that is not a legal person, such as a civic club.
(ii) Customer does not include:
(A) A financial institution regulated by a Federal functional regulator or a bank regulated by a state bank regulator;
(B) A person described in Section 103.22(d)(2)(ii)-(iv); or
(C) A person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person.

The highlighted section of the regulation refers to most Phase I exempt persons, including goverment entities.

First published on BankersOnline.com 1/31/11

First published on 01/31/2011

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