Academic journal article ABA Banking Journal

Must Customer ID Efforts Be Repeated after Loan Payoff?

Academic journal article ABA Banking Journal

Must Customer ID Efforts Be Repeated after Loan Payoff?

Article excerpt

Q. We have customers who had a loan with our bank. They paid off and a few months later we approved a new loan. We still have identification documents on file from the previous loan. Must we get new ID for the new loan? Or can we use the old documents?

A. That depends on several factors. The Customer Identification Program rules require that you obtain the four pieces of required information and verify some or all so you can "form a reasonable belief that you know the true identity of the customer." Since your customer had an account with the bank and since the CIP rules require you to retain those records for five years after the account closed, you should have what you need on file.

The first place to look is the bank's own policy on acceptable procedures to verify customer identity. CIP regulations require that you identify any customer establishing a new account with your bank, but the extent to which you perform the verification on existing customers will be a matter of bank policy. It may be that non-documentary verifications such as a credit check is all that is necessary, but your policy and not the law itself, should stipulate exactly what practices are in this area. If your CIP does not address this, it should be revised and re-approved by your board.

Part of the decision-making process will be whether this customer has other relationships with the bank and how well you know the individual. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.