Q: Our retail staff is looking to have changes made to our CIP policy in regard to the collection of identification regarding business accounts. The CIP regulation states that the bank should obtain documents showing the legal existence of the entity, such as articles of incorporation or business licenses. We have found that most businesses cannot produce their articles of incorporation or equivalent and we are currently having then fill out our internal resolutions. Does the regulation require us to obtain the original documents showing the formation of the entity?
A: The regulation requires that your CIP policy establish a way to verify the existence of the entity through documentary and/or non- documentary processes. If you’re going to verify through documents, the regulation lists as examples: articles of incorporation, a government-issued business license, a partnership agreement, etc. There is not any particular form of documentation required by regulation and so long as the bank is satisfied that the legal existence of the entity is proven through whatever documentation that the entity is able to provide, then that is all that is required by the regulation. But it is already important to remember bank policy, best practices as well as any investor requirements or examiner input.
Reference:
(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:
(2) For a person other than an individual (such as a corporation, partnership, or trust), documents showing the existence of the entity, such as certified articles of incorporation, a government-issued business license, a partnership agreement, or trust instrument.
31CFR1020.220(a)(2)(ii)(A)(2)https://www.ecfr.gov/cgi-bin/textidx?SID=3bb05afadae1080d1dbd9c9d461a80d6&mc=true&node=se31.3.1020_1220&rgn=div8
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