Does a credit union have any CIP obligations regarding clients whose funds are held in IOLTA or escrow accounts?

In the context of the Bank Secrecy Act and its regulations, credit unions do not have Customer Identification Program (CIP) obligations for clients whose funds are held in IOLTA (Interest on Lawyer Trust Accounts) or escrow accounts. The reason behind this is that these accounts are typically established by third-party entities, such as lawyers or real estate professionals, to hold funds in trust for clients. In such cases, the account holder (i.e., the attorney or agent managing the IOLTA or escrow account) is the one required to perform due diligence on their clients, rather than the credit union itself.

Therefore, since the credit union is not directly engaging with the clients of the attorney or escrow agent regarding the underlying transactions, it is relieved of the obligation to verify the identities of those clients under CIP requirements. This compliance structure helps to streamline the responsibilities of financial institutions while still maintaining a level of oversight through the primary account holder.