Retaining I.D. in CIP loans - Mary Beth Guard

Retaining I.D. in CIP loans
Answer by Mary Beth Guard, BOL Guru
Guru BIOS

Question: Regarding CIP, if we have a person apply for a loan and we gather all of the information that we need and after the credit reports are checked and it is determined that we would not open an account because of the report, what are we required to keep for record retention? Since we are not establishing an account relationship and the decision was made due to the credit report and we do the adverse action as normal, are we required to retain the I.D. records for five years?

Answer: The record retention requirements under the CIP rules would not be applicable because the rules only cover situations where a formal banking relationship is established. If a person merely applies for a loan, but is not approved, no formal banking relationship is established. The rules say your CIP must contain procedures for verifying the identity of each ?customer to the extent reasonable and practicable. The term ?customer? includes only: l) a person that opens a new account; and 2) an individual who opens a new account for an individual who lacks legal capacity or an entity that is not a legal person. If the account isn?t ?opened,? the CIP rules do not come into play. You will still face the record retention requirements of Regulation B, of course, but not CIP.

First published on BankersOnline.com 5/31/04