CIP and Security Deposit Accounts

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Question:

We open renters' security deposit trust accounts. Do we need to verify the tenant's ID and check his/her name against the OFAC list? I know that for the landlord we have to do this. Is it sufficient to just keep the W-9 on the tenant?

Answer:

It couldn't hurt, I suppose, to check OFAC. In theory, you're holding assets belonging (at least beneficially) to the tenant. If you want to check ID on the tenant go ahead, but it certainly would not be required.

But your customer for CIP is the landlord. That's who you need to be checking out. Checking out the tenants would have to be done in a non-documentary mode, and you'll get all kinds of red flags, since the address is new. The only "good" info you might have on an honest individual is a name/SSN match in a credit header search.

First published on BankersOnline.com 12/1/03