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CIP & OFAC for Authorized Signers

Home Forums Bank Secrecy Act/Anti-Money Laundering Compliance/ BSA/AML CIP & OFAC for Authorized Signers

This topic contains 1 reply, has 2 voices, and was last updated by  rcooper 1 month, 1 week ago.

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  • #16318

    ldoyle
    Participant

    If we add someone just as a signer,not as an owner of an account, are we required to do CIP and an OFAC check on the person being added as a signer.

    #16328

    rcooper
    Keymaster

    First, you would need to consider the beneficial ownership requirements. With that said, those who are strictly authorized signers (not owners/beneficial owners) are generally not required by law to be put through the CIP process as it applies to “customers”. A customer for purposes of CIP is “…a “person” (an individual, a corporation, partnership, a trust, an estate, or any other entity recognized as a legal person) who opens a new account, an individual who opens a new account for another individual who lacks legal capacity, and an individual who opens a new account for an entity that is not a legal person (e.g., a civic club). A customer does not include a person who does not receive banking services, such as a person whose loan application is denied. 43 The definition of “customer” also does not include an existing customer as long as the bank has a reasonable belief that it knows the customer’s true identity. 44 Excluded from the definition of customer are federally regulated banks, banks regulated by a state bank regulator, governmental entities, and publicly traded companies (as described in 31 CFR 1020.315(b)(1) through (4)).”https://bsaaml.ffiec.gov/manual/RegulatoryRequirements/01

    However, I believe most banks do apply their CIP requirements to authorized signers as well. Look to your bank’s policy to see if requirements are defined for authorized signers.

    As for OFAC, the FFIEC exam procedures tell us that a bank’s OFAC compliance program should be risk based. Again, I believe most bank’s apply normal customer procedures, including OFAC, to authorized signers.

    https://bsaaml.ffiec.gov/manual/RegulatoryRequirements/15
    OFAC Compliance Program
    While not required by specific regulation, but as a matter of sound banking practice and in order to mitigate the risk of noncompliance with OFAC requirements, banks should establish and maintain an effective, written OFAC compliance program that is commensurate with their OFAC risk profile (based on products, services, customers, and geographic locations). The program should identify higher-risk areas, provide for appropriate internal controls for screening and reporting, establish independent testing for compliance, designate a bank employee or employees as responsible for OFAC compliance, and create training programs for appropriate personnel in all relevant areas of the bank.

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