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CIP Requirements for Corporate Trust

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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?

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 1/31/11

First published on 01/31/2011

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