It is an extension of credit will be deemed to be made to an insider if the proceeds are transferred to the insider or used for the insider's benefit. This rule does not apply if the credit is made on substantially the same terms and conditions as those made to a noninsider and if the proceeds are used in a bona fide transaction involving the acquisition of property, goods, or services from the insider. What is it?
The question refers to a rule that treats an extension of credit as being made to an insider if the proceeds benefit the insider, but makes exceptions for transactions on comparable terms to those for non-insiders and for bona fide transactions involving property, goods, or services. This accurately describes the Tangible Economic Benefit Rule under 12 CFR 215.3(f), which governs such scenarios.
The statement describes the Tangible Economic Benefit Rule, which is a provision under 12 CFR 215.3(f). According to this rule, if the proceeds of an extension of credit are transferred to an insider or used for the insider's benefit, it's considered an extension of credit to that insider. However, there are exceptions if the credit is made on substantially the same terms and conditions as those made to a non-insider, and if the proceeds are used in a bona fide transaction involving the acquisition of property, goods, or services from the insider.