31 C.F.R. The FDIC will evaluate each subsidiary relationship in the context of the bank's safety and . 103.121(b)(5) -- Customer notice, Yes, notice must be provided to all owners of a joint account. The final rule states that notice is adequate if the broker-dealer generally describes the identification requirements of the final rule and provides notice in a manner reasonably designed to ensure that a customer views the notice before opening an account. (April 2005), An escrow account is an account generally established for the deposit of funds that are to be paid to a specified party on the fulfillment of escrow conditions or returned. 103.121(b)(4) -- Section 326 List, No such list has been designated to date. In this case, the bank might verify a students identity using a student identification card or by having the students teacher confirm the students identity. Section 326 of the USA PATRIOT Act . Therefore, when the account is a loan, the account is opened when the bank enters into an enforceable agreement to provide a loan to the customer. However, the bank may be able to rely on its affiliate to perform elements of its CIP, as provided in 31 C.F.R. No, the CIP rule in 31 C.F.R. Answer: Section 103.121 (b) (5) of the currently proposed regulation says: "The program must include procedures for providing bank customers with adequate notice that the bank is requesting information to verify their identity." The Patriot Act requires 2 forms of identification to be collected and verified by the VA mortgage home loan originator when an applicant applies for a VA loan. Why is this required? 103.131 (b) (2) (ii) Customer verification. At a minimum, the due diligence program must: (1) determine whether the account is subject to enhanced due diligence under section 312 (see discussion of the notice of proposed rulemaking below); (2) assess the money laundering risk posed, based on a consideration of relevant risk factors; and (3) apply risk-based policies, procedures, and controls to each such correspondent account reasonably designed to detect and report known or suspected money laundering activity, including a periodic review of the correspondent account activity. Section 326 of the USA-PATRIOT Act requires the Treasury Department, working with these agencies, to issue regulations setting out minimum standards that banks, thrifts and credit unions must use to identify a customer who opens an account. This Fact Sheet summarizes the basic requirements of the final rule and the proposed rule as well as the effective dates of the final rule. Significantly, if an account otherwise satisfies the definition of a private banking account as described above, but the institution does not require a minimum balance of $1,000,000, then the account does not qualify as a private banking account under this rule. As with any other responsibility performed by an agent, the issuing bank ultimately is responsible for the agents compliance with the requirements of the CIP rule. Additionally, they are required to take reasonable steps to ensure their correspondent accounts are not used to indirectly provide correspondent services to such banks. The official title of the USA PATRIOT Act is "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001." Account means a formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. Education, Money Smart - A Financial I. As of the time of publication, lists published by OFAC have not been designated as lists for purposes of the CIP rule. 103.121(a)(3)(ii)(C). The final rule provides guidance to financial institutions in assessing the risks posed by a correspondent relationship by outlining several risk factors to be considered as appropriate. The final rule requires certain U.S. financial institutions to establish and maintain a due diligence program for private banking accounts that is reasonably designed to detect and report any known or suspected money laundering or suspicious activity. The NCUA provides a number of support services to the credit union system, such as providing training, grants and loans, chartering, and field-of-membership services; maintaining the health and stability of Share Insurance Fund; managing the assets of failed credit unions; and providing emergency liquidity. So, for example, if the bank obtains other identifying information at account opening in addition to the minimal information required, such as the customer's phone number, then the bank must keep that information. The Act would ban over-the-counter sales of cold medicines that . In July of 2002, Treasury announced a proposed rule implementing Section 326 of the PATRIOT Act and is today announcing a final rule incorporating . (January 2004), 31 C.F.R. Learn if your bank is insured, view If a second means of ID is required, the most commonly used one is a Social Security Card. No. II. (April 2005), 31 C.F.R. In each of these cases, the customer has an existing account. If, however, a minor opens the account, then the minor is the banks customer. Section 326 of the USA PATRIOT Act On October 26, 2001, President Bush signed into law the USA PATRIOT Act, Pub. 103.121(b)(2)(ii)(C). Covered by the FDIC, What's Protection Topics, Submit a (January 2004), In some states, sole proprietorships are required to file fictitious or assumed name certificates. Banks may choose to use these certificates as a means to verify the identity of a sole proprietorship, if appropriate. The bank has to do an assessment of risks posed by the types of customers, accounts, and locations where the bank is doing business, and, based on that assessment of risk, determine for itself what types of identification would be acceptable. Estate Sales, Structured (January 2004), 31 C.F.R. Answer: The Patriot Act does not specify acceptable forms of identification. Process, Servicing Overview Section 312 of the USA PATRIOT Act requires U.S. financial institutions to perform due diligence and, in some cases, enhanced due diligence, with regard to correspondent accounts established or . Fannie Mae requires that each borrower have a valid Social Security number or Individual Taxpayer Identification Number (ITIN), in addition to meeting existing legal residency and documentation requirements. 31 C.F.R. Reports (UBPR), Statistics The information that the Loan Signing Agent fills out on this form includes the following: the issue date of the ID, County and State of origin, ID number, date of birth, and expiration date of ID. List of Banks Examined for CRA, CRA Ratings Related Acts, Financial Institution Center, Community Banking The purpose of the CIP is to reasonably identify members opening accounts. Implementation In the case of these accounts (including, for example, accounts established by governmental entities to administer retirement or benefit plans or by employers to administer stock option or restricted stock plans) that are established as trusts, the banks customer will be the trust established by the employer to maintain the assets. (3) What are the general due diligence requirements of the private banking portion of the final rule? If the bank is the escrow agent, then the person who establishes the account is the banks customer. For example, if the purchaser of real estate directly opens an escrow account and deposits funds to be paid to the seller upon satisfaction of specified conditions, the banks customer will be the purchaser. BankersOnline.com - For bankers. (3) Which foreign financial institutions are subject to the due diligence required by the correspondent banking portion of the final rule? Support our advertisers and sponsors by clicking through to learn more about their products and services. Tools, Compliance Backed by the full faith and credit of the United States, the Share Insurance Fund provides up to $250,000 of federal share insurance to millions of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. Its name literally means "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism," and it applies to the U.S. Treasury's very broad definition of financial institutions. If the account is not a trust, the banks customer will be the employer that contracts with the bank to establish the account. (2) Which U.S. financial institutions are covered by the correspondent banking portion of the final rule? The staff of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and the United States Department of the Treasury (Agencies) are issuing these frequently asked questions (FAQs) regarding the application of 31 C.F.R. This joint regulation implements section 3261 of the USA PATRIOT Act and requires banks, savings associations, credit unions and certain non-federally regulated banks ("bank") to have a Customer Identification Program ("CIP"). For example, the bank may post a sign in its lobby or provide customers with any other form of written or oral notice. (January 2004), A bank may obtain an electronic credential, such as a digital certificate, as one of the methods it uses to verify a customers identity. See 31 C.F.R. 103.121(a)(3)(ii)(C) Person with an existing account, The CIP rule applies to a customer, generally, a person that opens a new account. 31 C.F.R. (January 2004), Yes, the number on the roadside mailbox on a rural route is acceptable as an address. Included in this requirement is the duty to conduct enhanced scrutiny of any private banking account that is maintained for senior foreign political figures, their immediate family members, or persons widely and publicly known to be close associates of such individuals. However, the rule provides that the term customer does not include 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. Education Program, Teacher Online Resource Section 314 helps law enforcement identify, disrupt, and prevent terrorist acts and money laundering activities by encouraging further cooperation among law enforcement, regulators, and financial institutions to share information regarding those suspected of being involved in terrorism or money laundering. Account Fully Insured? (January 2004), Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. Overview Since these requirements went into place several years ago, most established banks should already have a Customer Identification Program (CIP) in place that specifies acceptable identity verification methods and tools. The Federal banking agencies take the position that implementation of customer identification programs by subsidiaries of banks is appropriate as a matter of safety and soundness and protection from reputational risks. Rather, it charges the institution with collecting certain pieces of identifying information and verifying that information in accordance with risk-based standards established by the institution. To view this law in its entirety, click on the USA PATRIOT Act link below. What forms of identification are acceptable for compliance with the Patriot Act? 103.121(a)(3)(ii)(C). For example, in certain circumstances involving revocable trusts, the bank may need to gather information about the settlor, grantor, trustee, or other persons with the authority to direct the trustee, and who thus have authority or control over the account, in order to establish the true identity of the customer. Exchange Act Filings, Deposit Tax Identification Numbers. (January 2004). The USA PATRIOT Act (Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism) requires all financial institutions in the United States to ask new and existing members/customers for identification prior to opening new accounts (deposit or loans), adding individuals/entities to existing accounts . The purpose of the USA PATRIOT Act is to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and other purposes, some of which include: Below is a brief, non-comprehensive overview of the sections of the USA PATRIOT Act that may affect financial institutions. 103.121(a)(3) -- Definition of customer, The CIP rule provides that a customer generally is a person that opens a new account. 31 C.F.R. U.S. financial institutions covered by the final rule must establish a due diligence program that includes appropriate, specific, risk-based, and, where necessary, enhanced policies, procedures, and controls that are reasonably designed to detect and report known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered, or managed in the United States. Examination Handbook, CRA Statute & The final rule states that notice is adequate if the bank generally describes the identification requirements of the final rule and provides notice in a manner reasonably designed to ensure that a customer views the notice, or is otherwise given notice, before opening an account. (April 2005), 31 C.F.R. In addition, even when a bank is relying on the verification of identity performed by another institution, the bank would continue to be responsible for complying with all remaining requirements of the CIP rule, namely, the requirement that it keep records, provide customer notice, and as soon as a section 326 list has been designated, check the list when a new account is opened. Note, however, that a bank does not need to obtain a taxpayer identification number when opening a new account for a customer that has an existing account, as long as the bank has a reasonable belief that it knows the true identity of the customer. . 103.121(b)(6), including the requirement that the person be a customer of both the issuing and agent bank. III. What is the USA PATRIOT Act? Comments are sought on all aspects of this proposed rulemaking. On October 26, . de depsito en espaol, Consumer Advertisers and sponsors are not responsible for site content. Under Section 326 of the Patriot Act, banks must have a customer identification program or CIP. Read press releases, speeches, testimony, and Annual Reports. The OCC's implementing regulations are found at 12 CFR 21.11 and 12 CFR 21.21. of Oil and Gas Related Assets, Press (January 2004). The Combat Methamphetamine Epidemic Act of 2005 has been included in the Patriot Bill signed by the President on March 9, 2006. (April 2005), 31 C.F.R. However, the account is subject to the internal controls and risk-based due diligence included in the institutions general anti-money laundering program. Since the CIP was implemented on October 1, 2003, numerous questions have been raised. It is critical that each bank develop procedures to account for all relevant risks including those presented by the types of accounts maintained by the bank, the various methods of opening accounts provided, the type of identifying information available, and the banks size, location, and type of business or customer base. Statement, EDIE Online Rather, it charges the institution with collecting certain pieces of identifying information and verifying that information in accordance with risk-based standards established by the institution. 103.121 would apply. Market Share Reports, Comparison Many banks already had ID verification procedures in place but they didn't require as many identifiers as the Patriot Act now requires. de Educacin Financiera, Bank Data & See 68 FR 25090, 25093 (May 9, 2003). However, a bank holding company may be subject to another CIP rule. Similarly, the bank may open a joint account using information about each of the accountholders obtained from one accountholder, acting on behalf of the other joint accountholders. Customer Identification - USA Patriot Act Notice The Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. 103.121(b)(2)(ii). 103.121(b)(3)(ii) Retention of records, The CIP rule requires that a bank retain the identifying information obtained about the customer at the time of account opening for five years after the date the account is closed or, in the case of credit card accounts, five years after the account is closed or becomes dormant. However, the CIP rule requires the bank to have a reasonable belief that it knows the true identity of the customer. ) Which foreign financial institutions are covered by the correspondent banking portion of the Patriot Bill signed the. 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