My financial institution is looking at a participation to purchase. We haven’t done this in a long time, especially after the beneficial ownership rule has been effective. The borrowing entity is an LTD partnership. As only the participant, what do we need to collect for beneficial ownership?
Participation loans are technically exempt from the Beneficial Owner rule. The bank should obtain, however, some type of certification or assurance that the originating bank collected the beneficial owner information.
2. Are loan participations purchased from third parties and loans purchased from a car
dealer or mortgage broker within the exclusion from the definition of “account” for loans
acquired through an acquisition, merger, purchase of assets, or assumption of liabilities?
Yes, this exclusion is intended to cover loan participations purchased from third parties and loans
purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the
borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or
broker is performing the bank’s CIP.
PAGE 2: https://www.fincen.gov/sites/default/files/guidance/finalciprule.pdf