CIP FAQs – In the case of a trust or custodial account, (non-ERISA) who is the bank’s “customer?” Is a participant in or beneficiary of such an account the “customer?”

Compliance > BSA > FinCEN FAQs - CIP
Q:  The definition of “account” excludes accounts opened for the purpose of participating in an employee benefit plan established under the Employee Retirement Income Security Act of 1974 (ERISA).   In the case of a trust, custodial, or other administrative account established by an employer at a bank to maintain and administer assets under a non-ERISA employee retirement, benefit, or deferred compensation plan, who is the bank's "customer?"  Is a participant in or beneficiary of such an account the “customer?”
 
A:  In the case of these accounts (including, for example, accounts established by governmental entities to administer retirement or benefit plans or by employers to administer stock option or restricted stock plans) that are established as trusts, the bank’s “customer” will be the trust established by the employer to maintain the assets.  If the account is not a trust, the bank’s “customer” will be the employer that contracts with the bank to establish the account.*   Based on the bank's risk assessment of any new account opened by a customer that is not an individual, the bank may need "to obtain information about" individuals with authority or control over such an account, including signatories, in order to verify the customer's identity.  See 31 C.F.R. § 103.121(b)(2)(ii)(C).  
 
For purposes of the CIP rule, a participant in or beneficiary of such an account will not be deemed to be the bank’s “customer,” as such a person will not have initiated the relationship with the bank.  The account will not be considered opened by the employee even if a subaccount is maintained in the employee’s name, or the employee is able to make deposits into the account, so long as such ability to make deposits is limited to rolling over assets from another plan, purchasing securities or exercising options to purchase securities issued by the employer, or repaying a loan, in accordance with the terms of the plan.   By contrast, where an individual opens an individual retirement account in a bank, the individual who opens the account is the bank's "customer."  (April 2005)
 
*   Note, however, that the CIP rule will not apply if the employer is exempt from the definition of “customer” under 31 C.F.R. § 103.121(a)(3)(ii).
 

ADDITIONAL INFORMATION
This FAQ was excerpted from the Interagency Interpretive Guidance on CIP Requirements that can be found at the following link:  https://www.fincen.gov/sites/default/files/guidance/faqsfinalciprule.pdf
 

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