Q: The bank has received an application for a Paycheck Protection Program (PPP) transaction. The beneficial owner of the business is not a signor or guarantor. His ID provided is expired and he doesn’t wish to provide a new copy. Is this a BSA violation if the bank does not obtain an updated ID from him?
A: The CIP regulations do not provide that the only way to verify identification is with an unexpired ID. The regulations list an unexpired ID as an example of a way to verify identification (“documents may include”), but it is not the only acceptable way to verify information with documentary evidence. The regulation allows each bank to create a policy that fits their own needs using both documentary and non-documentary evidence, so your scenario is not necessarily a violation of BSA, although it may be an exception to internal Bank policy.
(ii) Customer verification. The CIP must contain procedures for verifying the identity of the customer, using information obtained in accordance with paragraph (a)(2)(i) of this section, within a reasonable time after the account is opened. The procedures must describe when the bank will use documents, non-documentary methods, or a combination of both methods as described in this paragraph (a)(2)(ii).
(A) Verification through documents. For a bank relying on documents, the CIP must contain procedures that set forth the documents that the bank will use. These documents may include:
(1) For an individual, unexpired government-issued identification evidencing nationality or residence and bearing a photograph or similar safeguard, such as a driver’s license or passport;
31 CFR 1020.220(a)(2)(ii) https://www.ecfr.gov/cgi-bin/text-idx?SID=ac10085d2bd1b4586c54b8a9ed47d5f5&mc=true&node=se31.3.1020_1220&rgn=div8
Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email info@compliancealliance.com and ask for our Membership Team. Compliance rules and regulations change quickly! For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.
Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:
