Q: In a situation where a POA is opening a new account on behalf of a principal who is incarcerated, who must the bank CIP?
A: Although this also depends on each state’s definition of legal capacity, the CIP Rule generally applies to “customers” and whether the principal lacks legal capacity can determine who the customer is in this situation. If the accountholder lacks legal capacity and the account is being opening on his or her behalf by the attorney-in-fact, the customer would be the individual with the power-of-attorney. If the individual is opening an account on behalf of the accountholder who is otherwise competent and does not meet the state’s definition of lacking legal capacity, the attorney-in-fact is merely acting as an agent on behalf of the accountholder and the bank would CIP the owner of the account.
Reference:
“(c) Customer. For the purposes of §1020.220:
(1) Customer means:
(ii) An individual who opens a new account for:
(A) An individual who lacks legal capacity, such as a minor;”
31 CFR § 1220.100(c)(1)(ii)(A) https://www.ecfr.gov/cgi-bin/text-idx?SID=c2b0dfc4e48f40a454232a93453afca0&mc=true&node=se31.3.1020_1100&rgn=div8
“1. Who is the “customer” when an account is opened by an individual who has power-of-attorney for a competent person who is the named owner of the account?
The CIP rule provides that a “customer” generally is “a person that opens a new account.” 31 C.F.R. § 103.121(a)(3)(i)(A). When an account is opened by an individual who has power-of attorney for a competent person, the individual with a power-of-attorney is merely an agent acting on behalf of the person that opens the account. Therefore, the “customer” will be the named owner of the account rather than the individual with a power-of-attorney over the account. By contrast, an individual with power-of-attorney will be the “customer” if the account is opened for a person who lacks legal capacity. 31 C.F.R. § 103.121(a)(3)(i)(B)(1).”
CIP FAQs: https://www.fincen.gov/sites/default/files/guidance/finalciprule.pdf
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