Banks are permitted to pay interest on demand deposit accounts held by businesses and are under no obligation to police how that interest is spent. Your customer likely has a management agreement in place with the owners of the properties it manages, setting forth the property manager’s duties and compensation. However, your bank is under no obligation to review such an agreement to determine whether your customer’s application of interest payments is consistent with the terms of the agreement.

Unless you have reason to believe that your customer is engaging in illegal activity, necessitating the filing of a SAR, your bank has no obligations with respect to how your customers spend the interest payments on their accounts.

For resources related to our guidance, please see:

• FDIC Final Rule, Interest on Deposits, 76 Fed. Reg. 41392 (July 14, 2011) (“Section 627 of the DFA repealed the statutory prohibition against the payment of interest on demand deposits, effective one year from the date of the DFA’s enactment, July 21, 2011.”)

• FRB Suspicious Activity Report Rules, 12 CFR 208.62 (“A member bank shall file a SAR with the appropriate Federal law enforcement agencies and the Department of the Treasury in accordance with the form's instructions by sending a completed SAR to FinCEN in the following circumstances . . . .”)