Mortgages Analyzed
 
Patriot Act Disclosure

What is a Patriot Act Disclosure?

Patriot Act Disclosure

Patriot Act Disclosure informs the borrower that the lender is requesting identifying information for each borrower to establish their identities. It is provided at the time of account opening to explain to the borrower that the information is required in pursuance of federal regulations.

Mortgage lenders are required to implement a Customer Information program (CIP) under the Bank Secrecy Act (BSA) regulations. CIP must contain procedures to obtain identifying information for each customer at the time of account opening. Additionally, the regulation requires a lender to provide the Patriot Act Disclosure to the customer to inform that the purpose of requesting identifying information is to verify their identity.

At the time of closing, the closing agent (escrow officer, notary, or settlement agent) will ask the borrower to show identity cards or documents. The identification documents may include passport, driver's license, State Id cards, etc. The form is used to record the key identifying information from the documents such as document type, id number, state/country, issue date, and expiry date. Copies of identification documents are not required. For example, if the borrower provides driver's license then the closing agent will record the license number, issue date, expiration date, and other important details in the form. A copy of the driver's license is not retained.

Since the disclosure is provided when collecting the identification information, many lenders provide the Patriot Act Disclosure along with the Borrower Identification Form. The form contains the fields for noting down the identification information.

The disclosure is provided in pursuance of the Bank Secrecy Act regulations codified under 31 CFR 1020.220. The regulations are promulgated by Financial Crimes Enforcement Network, Department of the Treasury.

Source :www.MortgagesAnalyzed.com
 

Borrower's Considerations

Patriot Act Disclosure itself is for informational purposes only since it does not contain any specific loan information that requires your review. However, be prepared to provide identification documents to help establish your identity.

Source :www.MortgagesAnalyzed.com

Lender's Considerations

Content

FinCEN Regulation, Chapter X - Financial Record Keeping and Reporting of Currency and Foreign Transactions - 31 CFR 1020.220(a)(5) provides model language that can be used to provide the notice. The notice is generic and there are no requirements to add any borrower or transaction specific information. The model language is reproduced below:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

I/We have received, read, and understood a copy of this document.

Timing

Patriot Act Disclosure must be provided before opening an account. Most lenders require the closing agent to provide the disclosure and obtain identification information at the time of closing. For this reason, ensure the closing instructions require the closing agent to provide the Patriot Act Disclosure and obtain the proper identification.

Recordkeeping

A copy of the disclosure is not required to be maintained. However, the lender must be able to show that the disclosure was adequately provided before account opening. If the lender obtains an acknowledgement of receipt of the disclosure then the signed acknowledgement should be maintained, as best practice, in the loan file for at least five years after the date the account is closed.

If the disclosure is provided within the Borrower Identification Form then the form must be maintained at least for five years after the date the account is closed.

Source :www.MortgagesAnalyzed.com
 

Applicable Regulations

Treasury regulation, 31 CFR 1020.220, contains the requirements to provide the Patriot Act Disclosure.

§1020.220(5)

  1. Customer notice. The CIP must include procedures for providing bank customers with adequate notice that the bank is requesting information to verify their identities.
  2. Adequate notice. Notice is adequate if the bank generally describes the identification requirements of this section and provides the notice in a manner reasonably designed to ensure that a customer is able to view the notice, or is otherwise given notice, before opening an account. For example, depending upon the manner in which the account is opened, a bank may post a notice in the lobby or on its Web site, include the notice on its account applications, or use any other form of written or oral notice.
  3. Sample notice. If appropriate, a bank may use the following sample language to provide notice to its customers:

Important Information About Procedures for Opening a New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.

Source :www.MortgagesAnalyzed.com
 

Document Summary

 
Patriot Act Disclosure
Purpose
Patriot Act Disclosure informs the borrower that the lender is requesting identifying information for each borrower to establish their identities.
Use in Mortgages
The disclosure is for informational purposes only and discloses the identification information is being obtained in pursuance of regulatory requirements.
Other Names
  • CIP Disclosure
  • CIP Notice
  • Patriot Act Notice
Type
Disclosure
Provided By
Lender
Provided To
Borrower(s)
Notarization Required
No
Signed By
Not Required. However, borrowers are generally asked to sign to acknowledge the receipt of the disclosure
Life Cycle Stage
Origination
Recordkeeping
A copy of the disclosure is not required to be maintained. However, the lender must be able to show that the disclosure was adequately provided. If this is performed through acknowledgement then the signed acknowledgement should be maintained for at least 5 years after providing the notice to the borrower.
Model Form
Model form is prescribed under 31 CFR 1020.220(a)(5)
Applicable Laws
FinCEN Regulation, Chapter X - Financial Record Keeping and Reporting of Currency and Foreign Transactions - 31 CFR 1020.220(a)(5)
Source :www.MortgagesAnalyzed.com
 

Updated: May 18, 2017

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Patriot Act Disclosure informs that identifying information is being requested.
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