From time to time we have loans where a third party is pledging the collateral as security. Recently these third parties have been input to our core system so they can link the name on the title to the collateral and then link to the loan it is pledged to.

Now, the issue comes when we start checking Customer ID info and there are CIF's created with no ID info.

Also, is there now an OFAC issue if these people were not scanned when the loan was opened? I know they technically are not customers but wouldn't we be doing business with them?

Anyone have any suggestions? Am I making a big deal out of nothing?

So, what you are saying is, if a terrorest or drug dealer pledges collateral for a loan transaction and has a straw person as a borrower, it doesn't concern you enough to perform CIP and OFAC due diligence? Even outside of CIP, without apropriate and documented solid identificiation, how do you know the person signing the pledge is even the person that owns the collateral?

Excellent, I believe this has been a problem for a long time. Thanks for the input!