CIP Documentation - Court Ordered Accounts

Answered by:

Question:

Is CIP documentation required for court ordered accounts such as when minor children receive money from a sale of property and the court orders CDs to be purchased for the minors and held until they are 18 years old?

Answer:

There is only one exception carved out for such accounts in the CIP regulations at 31 CFR Part 103, section 103.121 and it hinges on the definition of "customer" at 103.121(a)(3) for the purposes of that section. If the deposit will be controlled by the court or a court officer, the person opening the account will fit the CTR exemption category at 103.22(d)(2)(ii) and therefore not be a "customer" for purposes of CIP regulations because of the definition of "customer" in 103.121. Under those circumstances, the CIP regulations do not require the application of CIP requirements, but be careful if your bank's CIP does require it.

Who is your customer if it is not the court? It's the individual opening the account(s) on behalf of the minor or minora and it could be a custodian under your state's UTMA or UGMA. In such a case, you have to apply CIP standards to the custodian and obtain the SSN of the minor or minors for tax reporting purposes.

First published on BankersOnline.com 1/12/09