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Determining Immigration Status for New Account

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When we open a new account we generally ask the customer whether he/she is a U.S. citizen or not. Once we find out that they are not a U.S. citizen, how far do we have to go in determining their immigration status concerning legal alien/illegal alien/legal worker/illegal worker? For example: If the person is applying for a business account and from immigration documentation we see that they are currently not allowed to work, what is our responsibility?

Basic due diligence, not a specific legal requirement, would require your bank to identify non U.S. persons. They are "subject to expanded examination overview" and, if your bank is blessed with an expanded BSA examination, your regulator will reasonably expect you to provide a list of non U.S. persons on demand.

Beyond that, any attempt to determine or verify immigration status is self imposed. While you might classify it as "enhanced due diligence" in your BSA program, it is not an explicit responsibility. Some "mega" banks knowingly market their services to potential customers whom they know are in the U.S. illegally. Conversely, some banks will not open accounts for those who cannot establish that their presence in the U.S. is legal.

Ironically, the BSA-AML Handbook does suggest that banks should review accounts supported by W-8's to see if the person's status for the purposes of income taxes has changed.

Make available copies of policies, procedures, and processes specific to nonresident alien (NRA) accounts, including guidelines and systems for establishing and updating W-8 exempt status.

The ironies are 1) banks are only required to obtain a W-8 on interest bearing accounts and 2) it's an indicia of income tax status, not residency status.

First published on 2/25/13

First published on 02/25/2013

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