IBA Compliance Connection

Your go to source for compliance!

We would like to extend a business-purpose mortgage loan to an Illinois corporation that is solely owned by a German corporation. We understand the collection risks, but would there be any foreclosure issues, given the company’s foreign ownership? Also, we are opening a deposit account for the Illinois corporation and a related foreign company — are there any other compliance considerations?

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Mortgage Foreclosure Considerations

We are not aware of any special considerations that would apply when foreclosing a loan made to a foreign-owned Illinois corporation. The borrowing entity will be treated as a domestic corporation (as defined in the Illinois Business Corporation Act of 1983), since it was incorporated in Illinois, irrespective of its foreign ownership.

BSA/AML Considerations for the Deposit Accounts

We are not aware of specific compliance obligations that apply only to foreign or foreign-owned customers. We do recommend reviewing the FFIEC’s BSA/AML Examination Manual for Business Entities, which highlights risk factors and risk mitigation steps for banking both domestic and foreign business entities. Also, if the foreign corporation is transacting business in Illinois, we recommend that you request a certificate of good standing that authorizes the entity to transact business in Illinois as a foreign corporation under the Business Corporation Act.

For resources related to our guidance, please see:

  • Business Corporation Act of 1983, 805 ILCS 5/1.80 (“(a) ‘Corporation’ or ‘domestic corporation’ means a corporation subject to the provisions of this Act, except a foreign corporation. (b) ‘Foreign corporation’ means a corporation for profit organized under laws other than the laws of this State . . . .”)
  • Business Corporation Act of 1983, 805 ILCS 5/13.05 (“A foreign corporation organized for profit, upon complying with the provisions of this Act, may secure from the Secretary of State the authority to transact business in this State . . . .”)