or all of that information to verify the customers’ identities;
(2) keeping records related to the CIP; (3) determining whether
a customer appears on a designated list of known or suspected terrorists
or terrorist organizations; and (4) providing customers with adequate
notice that information is being requested to verify their identities.
Note that a bank can only use the reliance provision when the other
financial institution is regulated by a Federal functional regulator
and is subject to a general BSA compliance program rule, they share
the customer, the bank can show its reliance upon the other financial
institution’s performance of an element of the bank’s
CIP was reasonable under the circumstances, and the requisite contract
is signed and certifications provided.
2. When a longstanding customer of another
financial institution (including an affiliate) opens a new account
at the bank, can a bank rely on the other financial institution’s
verification of the identity of the customer performed before
a CIP procedure was required?
A bank that is subject to the CIP rule may rely on another financial
institution’s verification of the identity of the customer
if the requirements of the reliance provision are satisfied. The
bank would have to be able to demonstrate that such reliance upon
the other financial institution’s verification of the identity
of the customer is reasonable under the circumstances. For example,
the bank could do so by reviewing the relied-upon institution’s
procedures to ensure that they were adequate although the institution
was not yet subject to a CIP rule when it verified the customer’s
identity. 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.
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REGULATION B AND SPOUSAL
SIGNATURES
Recently we have received several inquiries on the requirements
of Regulation B and the signatures of spouses on loan documents,
specifically when and if a lender may require the signature of a
spouse. If a spouse is unwilling to sign a promissory note, you must
treat the applicant spouse as asking for individual credit. What
this means is that you should require separate balance sheets showing
the division of assets and liabilities plus income and expense histories
and projections showing the split of income and expense.
If an applicant relies on joint property to establish creditworthiness,
the creditor must value the applicant's interest in the jointly-owned
property. See FDIC Guidance, II(C)(4). In determining the value of
an applicant's interest in jointly-owned property, a creditor may
consider factors such as (a) the form of ownership and the property's
susceptibility to attachment, execution, severance, or partition;
(b) the value of the applicant's interest after such action; and
(c) the cost associated with the action. However, you must base the
determination on the form of ownership prior to or at completion
of the loan and not on the possibility of a later change. In other
words, you cannot take into consideration the fact that the parties
may divorce or that the applicant's separate ownership may be conveyed
into tenancy by the entirety between the two parties after completion
of the loan transaction. You must look only at what the ownership
is prior to consummation or at consummation. In sum, the decision
to make the loan and the determination of what signatures should
go on what documents must be based on the ownership of the property
and not the personal relationship of the parties.
If the applicant's interest in jointly-owned property does not support
the amount and terms of unsecured credit sought by the applicant,
you have several choices:
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