CIP FAQs - How do the requirements of the CIP rule apply to a loan that is renewed, or a certificate of deposit that is rolled over?

Compliance > BSA > FinCEN FAQs - CIP
Q:  A loan and a time deposit are each an “account” for purposes of the CIP rule. How do the requirements of the CIP rule apply to a loan that is renewed, or a certificate of deposit that is rolled over?
 
A:  The CIP rule applies to a “customer,” generally, “a person that opens a new account.” 31 C.F.R. § 103.121(a)(3)(i). (Emphasis added.) “Account” means a formal banking relationship established to provide or engage in services, dealings, or other financial transactions including a deposit account, a transaction or asset account, a credit account, or other extension of credit. 31 C.F.R. § 103.121(a)(1)(i). For purposes of the CIP rule, each time a loan is renewed or a certificate of deposit is rolled over, the bank establishes another formal banking relationship and a new account is established. However, the rule provides that the term “customer” does not include a person that has an existing account with the bank, provided that the bank has a reasonable belief that it knows the true identity of the person. 31 C.F.R. § 103.121(a)(3)(ii)(C).  In each of these cases, the customer has an existing account. Therefore, as long as the bank has a reasonable belief that it knows the person’s true identity, the bank need not perform its CIP when a loan is renewed or certificate of deposit is rolled over. However, if a new customer is added to the loan or deposit account, the bank would need to satisfy the CIP rule with respect to that new
account relationship.  (January 2004)

 
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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