Will we need to obtain a copy of a driver license for a guarantor on a loan?

Answer by Andy Zavoina:

I assume you are referring to 326 of the USA PATRIOT Act. I don't know that a clear answer has been issued. But if the deposit side applies to any signatory on an account, I believe they mean for this to be farreaching and I would apply your CIP rules to them.

Answer by Ken Golliher:

Neither the proposed regulation nor the supplementary information answers the question, but my perspective is: If the guarantor signs the loan documents, she is a signatory. You will verify her identity according to the terms of your CIP which may or may not include obtaining documentary verification; e.g., a drivers license.

Regardless of the regulation, the banker in me instinctively reaches the same result: If it's only Andy's guarantee that makes the loan "bankable," it's Andy's identification that the bank should want the most. I think anyone considering buying the loan from that bank would agree. To go a step further, I would verify Andy's identity even if he was only signing a security agreement which was necessary to perfect the bank's lien in the collateral. However, I would not be doing it because I thought the law required it.

The CIP regulations are going to require us all to develop a somewhat different compliance mind set. It will not be just about what the regulation requires. It will also be about whether the bank's best interests have been protected by fully verifying the identity of the parties involved. Prudence will sometimes dictate that we do more than the regulation requires to prevent identity theft and fraud.

P.S. David's position is defensible the GLB privacy regulations adopted by the bank regulatory agencies decided a guarantor was not a "customer" for the purpose of those regulations. (NCUA reached a different result.) However, those regulations did not key off the term "signatory."

First published on BankersOnline.com 11/18/2002