Compliance Alliance Corner

Editor's Note: The following was submitted by Compliance Alliance. LBA, through its subsidiary Louisiana Bankers Service Corporation, has partnered with Compliance Alliance to give banks access to compliance-related services. Click here for more information.

Q: Do we have to “CIP” the bank accounts of the company we just merged with?

A:  Under the Bank Secrecy Act, the Customer Identification Program rule will generally apply to a "customer," which—broadly—is a person that opens a new account. An important component of the definition of "customer" is the opening of an "account," which—in its own definition—does not include those accounts that were acquired via merger, acquisition or purchase of assets, as seen in the following: "Account does not include:[...] (ii) An account that the bank acquires through an acquisition, merger, purchase of assets, or assumption of liabilities;" [Click here to view 31 CFR 1020.100(a)(2)(ii)] As with all BSA principles, this decision will ultimately come down to the bank’s own BSA/anti-money laundering, CIP and customer due diligence policies and procedures, but under the federal scope, such accounts aren’t necessarily subject to the CIP requirements.

Did you know that joint intent must be evidenced at application even if the application is taken over the phone? 

• The bank should establish procedures for taking applications over the phone including properly documenting joint intent for Regulation B. 
• Regulation B does not mention how joint intent must be evidenced, but it does state that signatures on a promissory note may not be used to show intent to apply for joint credit.