Risk Management Manual of Examination Policies - FDIC

BANK SECRECY ACT, ANTI-MONEY LAUNDERING,
AND OFFICE OF FOREIGN ASSETS CONTROL
must contain the name and address of the borrower,
the loan amount, the nature or purpose of the loan, and
the date the loan was made. The stated purpose can be
very general such as a passbook loan, personal loan, or
business loan. However, financial institutions should
be encouraged to be as specific as possible when
stating the loan purpose. Additionally, the purpose of
a renewal, refinancing, or consolidation is not required
as long as the original purpose has not changed and
the original statement of purpose is retained for a
period of five years after the renewal, refinancing or
consolidation has been paid out.
• A record of each advice, request, or instruction
received or given regarding any transaction resulting
in the transfer of currency or other monetary
instruments, funds, checks, investment securities, or
credit, of more than $10,000 to or from any person,
account, or place outside the U.S. This requirement
also applies to transactions later canceled if such a
record is normally made.
Required Records for Deposit Accounts
Treasury regulation 31 CFR 103.34 requires banking
institutions to obtain and retain a social security number or
taxpayer identification number for each deposit account
opened after June 30, 1972, and before October 1, 2003.
The same information must be obtained for each certificate
of deposit sold or redeemed after May 31, 1978, and
before October 1, 2003. The banking institution must
make a reasonable effort to obtain the identification
number within 30 days after opening the account, but will
not be held in violation of the regulation if it maintains a
list of the names, addresses, and account numbers of those
customers from whom it has been unable to secure an
identification number. Where a person is a nonresident
alien, the banking institution shall also record the person's
passport number or a description of some other
government document used to verify his/her identity.
Furthermore, 31 CFR 103.34 generally requires banks to
maintain records of items needed to reconstruct transaction
accounts and other receipts or remittances of funds through
a bank. Specific details of these requirements are in the
regulation.
Record Retention Period and Nature of Records
All records required by the regulation shall be retained for
five years. Records may be kept in paper or electronic
form. Microfilm, microfiche or other commonly accepted
forms of records are acceptable as long as they are
accessible within a reasonable period of time. The record
should be able to show both the front and back of each
Section 8.1
document. If no record is made in the ordinary course of
business of any transaction with respect to which records
are required to be retained, then such a record shall be
prepared in writing by the financial institution.
CUSTOMER IDENTIFICATION
PROGRAM
Section 326 of the USA PATRIOT Act, which is
implemented by 31 CFR 103.121, requires banks, savings
associations, credit unions, and certain non-federally
regulated banks to implement a written Customer
Identification Program (CIP) appropriate for its size and
type of business. For Section 326, the definition of
financial institution encompasses a variety of entities,
including banks, agencies and branches of foreign banks in
the U.S., thrifts, credit unions, private banks, trust
companies, investment companies, brokers and dealers in
securities, futures commission merchants, insurance
companies, travel agents, pawnbrokers, dealers in precious
metals, check cashers, casinos, and telegraph companies,
among many others identified at 31 USC 5312(a)(2) and
(c)(1)(A). As of October 1, 2003, all institutions and their
operating subsidiaries must have in place a CIP pursuant to
Treasury regulation 31 CFR 103.121.
The CIP rules do not apply to a financial institution’s
foreign subsidiaries. However, financial institutions are
encouraged to implement an effective CIP throughout their
operations, including their foreign offices, except to the
extent that the requirements of the rule would conflict with
local law.
Applicability of CIP Regulation
The CIP rules apply to banks, as defined in 31 CFR
103.11 that are subject to regulation by a Federal Banking
Agency and to any non-Federally-insured credit union,
private bank or trust company that does not have a Federal
functional regulator. Entities that are regulated by the U.S.
Securities and Exchange Commission (SEC) and the
Commodity Futures Trading Commission (CFTC) are
subject to separate rulemakings. It is intended that the
effect of all of these rules be uniform throughout the
financial services industry.
CIP Requirements
31 CFR 103.121 requires a bank to develop and
implement a written, board-approved CIP, appropriate for
its size and type of business that includes, at a minimum,
procedures for:
DSC Risk Management Manual of Examination Policies 8.1-7 Bank Secrecy Act (12-04)
Federal Deposit Insurance Corporation