CIP, CDD & EDD in Real Estate Lending

In our AML/CFT Membership Group, Kevin discussed AML/CFT risk associated with residential real estate lending and how loan officers are key players in the process. If you think about it, the majority of any CIP/CDD and EDD information will be gathered and evaluated by your lenders and mortgage loan officers and not your BSA/AML oriented staff. Thus, it is important that your training and procedures for lenders emphasize:

1. Customer Information Program (CIP)

That all loans are treated as “accounts” under CIP regulations and relevant documentation needs to be evaluated for potential red flags and suspicious activity.

2. Customer Due Diligence (CDD)

This includes more than just determining the ability to repay the credit. Customer information, sufficient to establish a customer risk profile, needs to be collected for all loans. This includes borrowers, guarantors, signatories, and principals, as applicable.

3. Enhanced Due Diligence (EDD

Training should clearly outline risk-based triggers for EDD, such as:

1. Foreign nationals or offshore entities;
2. Unusual sources of collateral or income; and,
3. Loans secured by assets in high-risk jurisdictions.

In the video, Kevin touches on this more in the video: