Introductory BSA/AML Examiner School, Providence, RI

The CIP procedures must also address situations where, based on the bank’s risk assessment of a new account opened by a customer that is not an individual, the bank cannot adequately verify the identity of the entity that will be the owner of the account. In such situations, the bank will obtain information about the individual(s) with authority or control over such an account, including signatories, in order to verify the customer’s identity. Lack of Verification In certain new account relationships or signature additions for an account, Anytown Community Bank staff may not be able to verify, with or without documentation, the identity of the customer and, therefore, will be unable to form a reasonable belief that the bank has established the true identity of the customer. Anytown Community Bank will have procedures to address when no account relationship should be opened. For those situations where questions arise about documentation, the Bank will have procedures to address how a customer may conduct transactions while the verification of identity process occurs. The procedures will also specify at which point, if the Bank cannot form a reasonable belief regarding the identity of the customer, the account shall be closed. In this latter situation, the procedures shall also prompt management to determine whether a Suspicious Activity Report (SAR) will be filed. Staff who observe transaction activity should be well informed of new account relationship information in order to better evaluate the reasonableness of transactions on a customer’s accounts. Deviations from normal patterns will occur; however, if the occurrence is frequent and apparently without support, personnel must pursue further explanation. As always, staff should be especially aware of customers using large amounts of currency to open an account. Record-Keeping The CIP procedures shall also provide for maintaining a record of all information obtained and reviewed during the process of verifying the customer’s identity. Where the bank has relied upon an identity document, such as a driver’s license or passport, to verify customer identity, a record of the type of ID, issuing authority, ID number, issue date, and expiration date will be maintained. Where non-documentary methods are utilized, procedures will provide for the retention of records describing the non-documentary method(s) used and the results. In all cases, records will be maintained that describe the resolution of any substantive discrepancy discovered when verifying the identity information obtained. The bank will maintain records of customer identity information (name, address, date of birth, ID number, and other identifying information) for five years after the date the account is closed. Records describing the methods (documentary and non-documentary) used to identity the customer and the resolution of information discrepancies will be maintained for five (5) years after the record is made. Government Lists The procedures for opening a new account or adding a new signatory will also include a comparison of information with any list of known or suspected terrorists or terrorist organizations provided by any government agency. These procedures are separate from OFAC requirements. Nevertheless, CIP procedures must also specifically address OFAC requirements, as well as other information lists which must be checked. Staff will follow internal directives and procedures in situations where a customer is identified as a match or suspect match with any of the lists. If possible, comparison of new customer names to government lists will be completed before a new account relationship is established. Approved methods for making the comparison will be documented as part of the CIP and OFAC procedures. All list comparisons will be completed within a reasonable timeframe. Reliance on Others for CIP Support Although the CIP regulation allows the Bank to rely upon the performance by another financial institution (including an affiliate) of customer identification procedures, at the present time Anytown Community Bank does not deem it necessary to enter into such an arrangement. The bank currently purchases loans from other organizations such as residential mortgage loans from its subsidiary and vehicle loans from automobile dealers participating in its Indirect Lending Program. However, these loans purchased by the Bank are closed in the names of the entities that originated them, thereby making these accounts subject to the transfer exception allowed under the CIP regulation. Nevertheless, there may be situations involving the purchase or transfer of accounts where it would be appropriate for the Bank, as part of its BSA customer due diligence procedures to verify the identity of customers associated with accounts that it acquires from another entity and to implement reasonable procedures to detect potential money laundering activities.