Answer:
The CIP regulation requires you to establish the identity of the "person" opening the account. In your examples, that would be the corporation, partnership, and LLC. The regulation does not require you to identify the respective shareholders, partners or members, nor does it require you to identify the signatories on the entities' accounts. It is the entity, not those individuals, that is the customer.
Also, a guarantor is not a "customer" for the purposes of CIP; a guarantor is not opening an account. Nevertheless, if it's the guarantor who makes the loan a bankable deal, it is Underwriting 101 that suggests that identifying the guarantor is a necessity.
As for identifying the signatories on an entity's accounts, it has become preferred practice within the industry - even though the regulation does not require it. It is far easier to steal the identity of an entity than it is to steal that of an individual. Identifying signatories is at least a stop-gap measure toward making sure the people across the desk really do represent this entity. While it may be less of an issue in banks where all borrowers are "locals," a plan that assumes that all borrowers will always be locals is naive.
When your CIP requires more than the law requires and it generates complaints ask yourself what the motivation for the complaints is. For example, are your employees trying to balance the need for information against the burden imposed on the customer or are they just being lazy?
First published on BankersOnline.com 7/24/06
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