[rcooper]

A question we received from a member:
Are we required to obtain a new certificate for subsequent account openings for an entity we have already CIP’d?

[rcooper]

Answer by Don Blaine:
Great question Santana. The rule and Preamble are very clear in that you need to obtain new CIP information (name, address, SSN, etc) at the time of account opening for each new account and can’t rely upon already obtained information or documents. However, the verification of identify issue isn’t articulated as clearly in either the new rule or in the Preamble but I think there is enough guidance in the Preamble that will allow us to reach a conclusion. My short answer is that your bank must both obtain beneficial ownership information and verify information at the time of account opening for each new account and cannot rely upon previously obtained CIP identity verification documents or information such as driver’s license information.

Listed below is my supporting information:

The relevant beneficial ownership requirements of FinCEN’s regulation in 1010.230(b)(1) and (b)(2) is set forth below and under the identification prong (b)(1) clearly states that the bank should “identify the beneficial owner(s) … AT THE TIME A NEW ACCOUNT IS OPENED (emphasis added). The 230(b)2) verification requirement doesn’t contain the same degree of specificity and simply requires the bank to ‘verify the identity of each beneficial owners …. according to risk based procedures to the extent reasonable and practicable.”

Most of the guidance in the Preamble relates to ownership or identification rather than verification as evidenced by use of the following statements: “”FinCEN believes that beneficial ownership information must be at the time of account opening, both (1) current; and certified to the best of the consumer’s knowledge at that point in time. “FinCEN declines to permit reliance solely upon previously gathered alternate sources of beneficial ownership information.”

1010.230(b) (1)Identification and verification. With respect to legal entity customers, the covered financial institution’s customer due diligence procedures shall enable the institution to: Identify the beneficial owner(s) of each legal entity customer at the time a new account is opened, unless the customer is otherwise excluded; and (2) Verify the identity of each beneficial owner identified to the covered financial institution, according to risk-based procedures to the extent reasonable and practicable.

There were several questions submitted in response to the Notice of Proposed Rulemaking on your issue where guidance was sought on “whether a financial institution must identify and verify a legal entity customer’s beneficial owners each time it opens a new account …or whether the requirement applies only to the first time an account is opened.” FinCEN responded by stating: “…the opening of a new account is a relatively convenient and otherwise appropriate occasion to obtain current information regarding a customer’s beneficial owner”. Again, FinCEN’s response was primarily directed to obtaining identification information rather than verifying identification information.

The record retention requirement for validation information (Driver’s License) info is 5 years after the “record is made”. This would create administrative issues if the original driver’s license you relied upon was obtained 6 years ago as the record retention period would have expired. Additionally, like CIP you have to ensure the documentary evidence, such as a driver’s license, is not expired at the time of bank review.

I hope my answer was responsive to your question.

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