Answer:
FinCEN provided a Guidance on Customer Identification Regulations FAQ in January 2004. Under the definitions of an account, there is this Q&A:
Q: Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities?
A: Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP. To best mitigate risk, a bank should be in a position to know and have approved the CIP program of its indirect lenders, should audit them periodically and should verify this on some of the loans purchased.
First published on BankersOnline.com 6/02/08
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