Reliance on another Financial Institution

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    Good afternoon, I’m looking into utilizing the “reliance on another financial institution” section in the BSA/AML regulation regarding CIP/CDD/OFAC. Only utilizing it from a trust department standpoint. However, I’m wondering if someone has a sample agreement to initially put in place with the other financial institution and then a sample of the annual certification that is required to be signed. Any help would be appreciated as well as any additional input as this would be a new path for us.


    Good morning,

    I conferred with our BSA Officer, and our BSA policy has a blurb in it that states: [“Bank” does not rely on any other financial institution or third party to conduct any of its Customer Identification responsibilities with the exception of a purchased loan, in which case, the customer is unaware, and is not identified by “Bank” personnel. In these cases, we rely on the financial institution in which the loan was partially purchased from, to identify the customer.]

    We don’t rely on other FIs or 3rd parties, but if you want a contract or agreement to do so, I would think your bank attorney could create one for you. Also, I would ask for the FI or 3rd party’s applicable policies/procedures to ensure they were in compliance on their end. A little bit like monitoring MSBs, for their BSA policy and program, I suppose.

    Hope this helps.


    Yes, this does help and I would agree that monitoring like it is an MSB is a good way to look at it. I’ll see what language the attorney can develop for us.


    I agree with Pattie on getting legal counsel involved on drafting the contract. I think running your new procedure by your regulator prior to implementing could be helpful as well – at the least there are no surprises at the next exam and they may be willing to share their expectations or best practices they’ve seen. The old BSA/AML Exam Manual from 2006 had the following items, listed below, that examiners would look at. I don’t believe the current version of the manual lists the items out in this mannner (at least not that I saw), but I think it is still relevant.

    • A list of the financial institutions on which the bank is relying, if the bank is using the
    “reliance provision.” The list should note if the relied-upon financial institutions are
    subject to a rule implementing the BSA/AML compliance program requirements of
    31 USC 5318(h) and are regulated by a federal functional regulator.
    Provide the following:
    • Copies of any contracts signed between the parties.
    • Copies of the CIP or procedures used by the other party.
    • Any certifications made by the other party.

    The current manual also details that the examiners will pull samples for testing, so self testing is something that should be done. And you’d want to monitor for BSA/AML enforcement actions against the other institution since that is also something the exam manual says examiners will consider.

    Current Manual:
    If the bank relies on other financial institutions to perform its CIP (or portions of its CIP), select a sample of new accounts opened under the reliance provision…

    Determine whether reliance is reasonable. The contract and certification provide a standard means for a bank to demonstrate that it has satisfied the “reliance provision,” unless the examiner has reason to believe that the bank’s reliance is not reasonable (e.g., the other financial institution has been subject to an enforcement action for AML or BSA deficiencies or violations).

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