IBA Compliance Connection

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We have several large corporate customers with officers who have full rights on the customers’ accounts and other employees with signing authority only. For example, one customer has two officers with full rights and approximately 32 authorized signers. We would like to streamline the process of adding (or subtracting) multiple signers to a corporate account by using a “signing authority form” as an addendum to a corporate authorization resolution. The signing authority form would provide that (1) the customer understands the document is an addendum to the corporate authorization resolution and account agreement, (2) the “undersigned” (including the corporate officer and any listed authorized signers) authorizes the bank to verify the credit and employment history of the authorized signer(s), which may include obtaining a credit report for the authorized signer(s), and (3) the undersigned acknowledges the receipt of copies of agreements and disclosures related to terms & conditions, truth in savings, funds availability, electronic funds transfers, privacy, and substitute checks. Is there any other language we should include in the signing authority form?

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While we cannot provide you with legal advice, and consequently we cannot opine on the provisions in your account documents regarding their appropriateness or omissions, we do have some general comments in response to your question.

First, we recommend reviewing any proposed language in your signing authority form to ensure that it is consistent with your account opening documentation for corporate customers. For example, it would be prudent to check whether the corporate authorization resolutions on file for these accounts permit the officers described in your question to add or remove authorized signers for the account without any additional resolutions.

Second, when adding new authorized signers to an existing corporate account, we generally recommend following your bank’s customer identification program (CIP) policy for these signers as you would with authorized signers on a new corporate account.

However, if your CIP policy includes obtaining a credit report to verify the identity of each authorized signer, your signing authority form should clearly require each authorized signer to grant permission for their own credit report to be pulled. The Fair Credit Reporting Act permits a bank to obtain an individual’s credit report only in limited circumstances; in our view, the only permitted circumstance in this instance would be when you obtain the specific individual’s prior written consent, which cannot be granted by a third party, such as another officer of the corporate customer.

Third, since your “signing authority form,” which you provide to every authorized signer, states that the signer “acknowledges the receipt of copies of agreements and disclosures related to terms & conditions, truth in savings, funds availability, electronic funds transfers, privacy, and substitute checks”, in our view you should ensure that copies of all such agreements and disclosures are provided to each authorized signer.

Finally, we recommend that your signing authority form include a description of any limitations on the authorized signers’ authority to transact on the account to avoid any confusion on the part of your customer or your staff as to the extent of the authorized signers’ authorities.

For resources related to our guidance, please see:

  • CIP Regulations, 31 CFR 1020.220(a)(2) (“The CIP must contain procedures for verifying the identity of the customer . . . within a reasonable time after the account is opened.”)
  • Fair Credit Reporting Act, 15 USC 1681b(a) (“Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other: . . . (2) In accordance with the written instructions of the consumer to whom it relates. . . (3) To a person which it has reason to believe . . . (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer . . . (F) otherwise has a legitimate business need for the information (i) in connection with a business transaction that is initiated by the consumer”)