Topic: Account Opening
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Our commercial customers are complaining about the number of agreements and forms that they need to sign. We are looking to create a Treasury Management Master Service Agreement that combines all of our bank’s agreements and product forms in one document. Do you have any recommendations for vendors that could provide such a document or template?
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We asked the IBA’s Compliance Division Advisory Committee about their banks’ master services agreements, and two members responded that their agreements were prepared by outside legal counsel, not a forms vendor. However, if you are looking for an example, many banks’ master services agreements are available online. For your reference, we have linked three of…
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Does a not-for-profit corporation organized in another state have to register with the State of Illinois to engage in business in Illinois?
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Yes, generally any business, including a not-for-profit corporation, must register with the Illinois Secretary of State before conducting its affairs in Illinois. The Illinois General Not For Profit Corporation Act requires a not-for-profit corporation organized in another state (a “foreign corporation”) to register with the Illinois Secretary of State “in order to procure authority to…
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We found online guidance stating that if an individual works for themself from home, they do not need to obtain an Employer Identification Number (EIN). Is this true of a self-employed individual who is the sole owner and employee of a corporation?
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No, the IRS requires corporations to obtain an EIN, and we are not aware of any exceptions for corporations owned by a sole employee who works from home. We would caution against relying on any guidance found on non-government websites, such as irs-ein-tax-id.com, which is not affiliated with IRS.gov. However, irs-ein-tax-id.com, does note that “[e]ven…
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A prospective customer wants to open an account for their corporation (an Inc.) using their social security number. The customer does not believe they are required to obtain an employer identification number (EIN) since they run the business out of their home and have no employees. Can we open a business account for a corporation using an individual’s social security number instead of an EIN?
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No, we do not recommend opening a business account for a corporation (which presumably will be filing an income tax return) using an individual’s social security number instead of an EIN. The IRS requires corporations to obtain an EIN and to file an income tax return — unless the corporation qualifies as a tax-exempt organization.…
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Can eligible individuals open an Illinois ABLE account at a bank? We saw a statement online indicating that these accounts can be opened only at Illinoisable.com.
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No, eligible individuals cannot open Illinois ABLE accounts at banks. Illinois ABLE accounts must be opened online at Illinoisable.com or by submitting an enrollment form to [email protected] or by regular or overnight mail to the addresses provided in the resources below. The State Treasurer Act provides that the “State Treasurer shall administer” Illinois’s ABLE account…
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Our bank wants to offer existing customers a minimal referral bonus if they bring someone in who opens a new checking account that remains open for a specified minimum time period. Is there any guidance on advertising such a bonus? Also, are there any associated IRS reporting requirements?
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We are not aware of any guidance specific to advertising a checking account referral program for existing customers. We note that Regulation P’s privacy requirements generally prohibit your bank from disclosing “the fact that an individual is or has been one of your customers or has obtained a financial product or service from you.” To…
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Under Illinois law, do wire transfer fees and fees to order foreign currency need to be disclosed on new account opening documents? We have been told that Regulation E and Regulation DD do not require such a disclosure but are wondering if there is an Illinois requirement. Also, if we change one of these fees, do we have to give customers thirty days’ advance notice?
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No, we do not believe that Illinois law requires banks to disclose fees for wire transfers and foreign currency orders at account opening, provided that these services are offered to both account and nonaccount holders. Also, we do not believe that you are required to give customers thirty days’ advance notice if you increase one…
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Does state or federal law limit the number of joint account holders that can co-own a checking or savings account? A customer wants to open a “family account” jointly-owned by all five members of their family.
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No, we are not aware of a law or regulation that would limit the number of joint account holders that can co-own a deposit account in Illinois. Accordingly, we believe whether to open a joint account with five co-owners is a business decision for your bank. For resources related to our guidance, please see: Joint…
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Could it be considered discriminatory to refuse accounts for nonresident aliens because they do not have a social security number (SSN) or individual tax identification number (ITIN)? Are you aware of any sample forms or guidance related to conducting enhanced due diligence on nonresident aliens?
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Opening accounts for nonresident aliens is a business decision dependent on the amount of risk that your institution is willing to accept. FinCEN’s Customer Identification Program (CIP) requirements for non-U.S. persons include the collection of (among other things) either a customer’s “taxpayer identification number; passport number and country of issuance; alien identification card number; or…
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Are we required to pay accrued interest when a customer closes a deposit account? Are we required to do the same for a certificate of deposit (CD) redeemed prior to maturity?
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No, we do not believe you are required to pay accrued interest if a customer closes a deposit account or CD before the date on which the interest is credited — provided that you have properly disclosed that customers may forfeit accrued interest if they close the account before the interest is credited. Regulation DD’s…