First clue is he works for a "well-known lender". I take that as being a large depositary lender? Remove Sr LO, it means nothing outside of his branch/company.
I bring that up because compliance matters trickle down slowly if at all in larger banks.
It sounds like he already went around with this issue with escrow and they said 'fine'.
1. When a DU is run for the customer, a typical requirement message is this:
"Documentation evidencing the borrower's identity is required." I know, that opens questions..
2. "The Agencies wish to emphasize that a bank’s CIP [Customer Identification Program] must include risk-based procedures for verifying the identity of each customer to the extent reasonable and practicable. It is critical that each bank develop procedures to account for all relevant risks including those presented by the types of accounts maintained by the bank, the various methods of opening accounts provided, the type of identifying information available, and the bank’s size, location, and type of business or customer base. Thus, specific minimum requirements in the rule, such as the four basic types of information to be obtained from each customer, should be supplemented by risk-based verification procedures, where appropriate, to ensure that the bank has a reasonable belief that it knows each customer’s identity.
http://www.fdic.gov/news/news/financial/2005/fil3405a.html
See within the above:
31 C.F.R. § 103.121(b)(2)(ii) -- Customer verification
1.Must a bank verify the accuracy of all of the identifying information it collects in connection with 31 C.F.R. § 103.121(b)(2)(i)?
"The final rule provides that a bank’s CIP must contain procedures for verifying the identity of the customer, “using the information obtained in accordance with paragraph (b)(2)(i),” namely the identifying information obtained by the bank. 31 C.F.R. § 103.121(b)(2)(ii). A bank need not establish the accuracy of every element of identifying information obtained but must do so for enough information to form a reasonable belief it knows the true identity of the customer. See 68 FR 25090, 25099 (May 9, 2003). (January 2004)"
3. "The Know Your Customer (KYC) provision is a financial regulatory rule that is mandated by the Bank Secrecy Act and the USA PATRIOT Act of 2003."
http://www.advisoryhq.com/articles/kyc-vs-cip-vs-cdd-know-your-customer-rules-and-guidelines/
Click on the sub-link about "Developing a well-defined customer I.D. Program"
This is part of the Banks Secrecy Act (BSA) and Anti-Money Laundering (AML). Every bank and branch has these along with a compliance manager (supposedly). Very few people ever see it unfortunately.
4. Since he is with a large bank, there may be some confusion about credit cards and no requirement of I.D. when using these.
http://www.creditcards.com/credit-card-news/what-info-merchants-ask-for-when-using-credit-card-1282.php
You can see how any of this can get mixed up.
5. Then notice the comments from this article about 'methods of retention'.
http://www.bankersonline.com/forum/ubbthreads.php/topics/173394/Copy_of_drivers_license_questi.html
There was another good point there about 'profiling', which could lead to Fair Credit Act violations. Notice some of the ways they worked around that problem.
Point is....there is a lot of leeway for putting together internal Policies and Procedures, including training and enforcement. There is no 'one' cookie cutter P&P.
So long as you can survive an audit.
jmo, although I may have missed the memo too.
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