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Say Uncle

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Question: 
A customer came in and opened a checking account for her disabled uncle. She is the uncle's legal custodian. Due to the USA Patriot Act (CIP) do we need to get ID from the uncle? How should the account be titled? Is the uncle the beneficiary?
Answer: 

Think of the CIP requirements in two layers. The bottom layer includes the regulatory requirements and this is the bare minimum your bank has to adhere to. The top layer is any added requirements included in your bank's CIP. Under the regulatory requirements, if the uncle is legally incapacitated (as declared by a court), sometimes we use the term "incompetent", then your customer for CIP purposes is the legal custodian (his niece). In most states, her status would be called guardian rather than custodian, but use the title that she's given in the court appointment. You need to obtain the four ID elements from her.

If your bank's CIP considers the uncle a customer for CIP purposes you will also need to get his four ID elements, because he is the beneficial owner of the funds in the account. You will need to obtain his SSN in any event for your CIF and IRS reporting purposes. If your processing system is capable of using something other than the first line of the account titling for tax reporting purposes, I'd recommend setting the account up in the name of:

NIECE [TITLE]
FOR UNCLE
ADDRESS

First published on BankersOnline.com 8/20/07

First published on 08/20/2007

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