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Jan 15, 2010
Categories: BSA Consumer Lending Home-Secured Lending

FinCEN Ruling on CIP; Tom Petty

Posted by Anthony Demangone

Those unfamiliar with the Bank Secrecy Act's Customer Identification Program (CIP) requirements may not understand the issue with post office boxes and the CIP.  The two generally do not get along.  CIP requires that you gather a residential or business street address. 

This NCUA CIP FAQ shows the tension between post office boxes and CIP requirements. 

What address should be obtained for customers who live in rural areas who do not have a residential or business address or the residential or business address of next of kin or another contact individual? For example, is a rural route number acceptable?

Yes, the number on the roadside mailbox on a rural route is acceptable as an address. A rural route number, unlike a post office box number, is a description of the approximate area where the customer can be located. In the absence of such a number, and in the absence of a residential or business address for next of kin or another contact individual, a description of the customer’s physical location will suffice. (Emphasis added.)
This makes sense. The whole purpose behind the CIP is to gather information about prospective customers and members.  If a crime is being committed, law enforcement likes to kick down doors.  I have yet to see an episode of NCIS, NCIS: LA, CSI: Crime Scene Investigations, CSI: Miami, CSI: Las Vegas, CSI New York, Law and Order, Law and Order: Special Victims Unit, Numb3rs, Without a Trace,  Medium, or The Mentalist where they kick down a post office box.  Law enforcement wants to know where the criminals live, not where they pick up their mail.

But here's an issue.  What if a person is part of an address confidentiality program (ACP).  ACPs are found in 31 states, and they are used to protect victims of domestic violence, sexual assault and stalking.  Under ACPs, the PO Box can be used as their legal business address. 

So, what gives?

FinCEN made public a ruling yesterday that makes an exception.

Accordingly, in an effort to support [name of state ACP] requirements, as well as similar requirements that may arise in other states that have established an ACP, under 31 U.S.C. § 5318(a)(5) and 31 C.F.R. § 103.55(a), FinCEN authorizes the following exception to the requirement that a [financial institution] obtain a customer’s residential or business street address: a customer who participates in a state-created ACP shall be treated as not having a residential or business street address and a secretary of state, or other state entity serving as a designated agent of the customer consistent with the terms of the ACP, will act as another contact individual for the purpose of complying with FinCEN’s rules. Therefore, a [financial institution] should collect the street address of the ACP sponsoring agency for purposes of meeting its CIP address requirement.  (Emphasis added.)

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Tom Petty? Waiting is the hardest part.  

We understand that NCUA will approve the final SAFE Act rule later this month.  Remember - this does not necessarily trigger the 6-month deadline to get everyone registered.  That kicks in when the federal registry is actually open for business. If you want a sneak peek, take a look at the  FDIC's final rule on the SAFE Act.  I bet ours will be very, very, very similar - if not identical.  

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