Pub. 8 2020 Issue 1

8 The Community Banker www.mibonline.org COMPLIANCE Q&A — SPRING 2020 By Bill Showalter, Senior Consultant, Young & Associates, Inc. Compliance Q&A BSA. Q: I am getting ready to file a Currency Transaction Report (CTR) for a new business account, a corporation. This business is located in our town, but its home office is located in a different state. Based on the new CTR instructions, should I complete a Part 1 on the busi- nesses’ headquarters even though the transaction was completed at the loca- tion here? If that’s the case, I would have three separate Part I pages — one for the business’ headquarters, one for the business’ local location (where the cash is coming from), and one for the store manager who completed the transaction. Is this correct? A: Yes, you will have three Part I’s. FinCEN’s Electronic Filing Instructions for the CTR tells us, “When a CTR is prepared on a legal entity such as a partnership, incorporated business or limited liability company, a Part I section should be prepared to contain the home office/headquarters data (address, telephone number, identification number, etc.) of the entity. When multiple entity locations are involved in an aggregated CTR, a separate Part I section should be prepared for each lo- cation involved. Each additional Part I section should include the entity’s legal name in Item 4 and alternate name, if any, in Item 8. Each additional Part I section will include the lo- cation’s address along with all other location or entity data applicable to that location. The amount and account number(s) entered in Item 21 ‘Cash in amount …’ or Item 22 ‘Cash out amount …’ will be the amount and ac- count number(s) associated with the specific location. The first Part I section on the entity home office/headquarters will show the total amount and all account numbers involved in Item 21 or 22.” TILA. Q: We have a loan application for which the applicant’s father is gifting $30,000 in equity to the son at closing. Son is purchasing Dad’s house, so Dad is also the seller. The purchase con- tract states that Dad is gifting the son $30,000 in equity and we had Dad com- plete a gift letter. Should the $30,000 be listed under “Seller Credit” or “Gift Funds” on Page 3 of the Closing Disclo- sure (Summaries of Transaction)? A: It seems most appropriate to list this as a “seller credit,” though Regulation Z and its Commentary do not directly deal with this issue. Dad is both seller and a family member. If the gift were a sum of money, then “gift from a family member” would seem appro- priate. But, since this is effectively a reduction of the sales price, “seller credit” seems the correct approach. ECOA. Q: I have a few questions re- garding Regulation B. Are commitment letters required on business-purpose loans (not secured by a dwelling)? Are loan officers required to ask marital status on business-purpose loans? Are they required to ask marital status for any loans? I see a lot of “the creditor may inquire of” in this regulation. A: No, commitment letters are not required for business-purpose or loan transactions. Regulation B allows oral, as well as written, notice of the action taken for business-pur- pose applications (while requiring written notice for consumer-purpose transactions). That said, the use of written notices — such as commitment letters (or denial notices, when the news is not positive) — is a best practice, clearly documenting when notice is given and what applicants are told. Marital status is a prohibited information request for any individual, unsecured credit, whether for business or consumer purposes. For any joint or secured credit, it is a permitted inquiry —because lenders may need this information in determining their rights to any collateral (but is still permitted on applications for joint unsecured credit). The only loans/ applications for which requesting marital status is required are those “for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling.” BSA. Q: We have the following CTR scenario: Wife comes into our branch and deposits $12,000 into her husband’s DBA account (John Smith DBA John Smith Construction). She is an authorized sign- er on the DBA account. Is this deposit made on her behalf or is she conducting a transaction for another? Should I put the DBA name on line 8 (Alternate name) for the wife’s Part I page? I understand how to complete the husband’s Part I page based on the new CTR instructions but can’t seem to wrap my mind around the wife’s Part I (autho- rized signer)? A: Unless the wife has ownership of the business and is on the account as such, her position as authorized signer is not