BSA/AML, CIP: Auto Dealer Paper
Printer-friendly VersionQuestion:
Our bank buys auto dealer paper. How do the Customer Identification Program rules apply?
Answer:
Loans purchased from ANY third party are excluded. (See definition of "account" at 31 CFR 103.121(a)(1)(ii)(B).) However, if the auto dealer is originating loans for you (much like a mortgage broker), then the CIP rules apply. The bank is ultimately liable for compliance with CIP, but according to the commentary, "...a bank is permitted to arrange for a car dealer or mortgage broker, acting as its agent in connection with a loan, to verify the identity of its customer."