Topic: Account Opening
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We have a customer who wants to establish a PFTA (premium fund trust account). The customer accepts cash premium payments. Do you have any guidance on this type of account? Can an individual broker sign up for a PFTA with other brokers under the individual broker’s SSN? Our policy is to have only one authorized signer for accounts held by individuals.
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Premium fund trust accounts (PFTAs) are fiduciary accounts (similar in that respect to IOLTA accounts for lawyers). Insurance producers (also known as brokers) must place the insurance premiums they collect from clients in PFTAs (unless they send the premiums directly to the insurance broker). The Illinois Insurance Code regulations require any entity that has to…
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Does Illinois law prohibit an individual from using multiple “doing business as” trade names on a single deposit account?
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We do not see any problems with allowing a customer to use a single deposit account for multiple businesses. From the facts you have given us, the customer’s businesses are all sole proprietorships—there are no legal entities that have an existence outside of the customer. For that reason, there should not be any issues with…
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What requirements apply when a customer opens a “doing business as” (d/b/a) account?
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Your procedures may differ for “unregistered businesses” (such as sole proprietorships and certain partnerships) that use an assumed name compared to registered business entities (corporations, limited liability companies, etc.) that use an assumed name. Unregistered businesses are not required to register with the Secretary of State, including sole proprietorships and general partnerships. Types of business entities…
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If we open a deposit account for an Illinois Land Trust, is a tax ID number required? Can we use an individual’s social security number instead?
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We believe that you would have to obtain a tax ID number for a land trust, as you would for any other type of trust. The Customer Identification Program (CIP) rules require that you obtain a tax ID number from all customers, including trusts. 31 CFR 1020.220(a)(2)(i). A “customer” includes any person opening a new…
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Are there any laws that apply to the forced reopening of accounts? When should we collect new signature cards from former customers?
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We believe that if a former customer of the bank is opening a new account, your Customer Identification Program (CIP) should treat that customer as a new customer. While the CIP regulations define “customer” to exclude any “person that has an existing account with the bank,” a customer who has closed all accounts with the…
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Do you have any suggestions for updating our account opening procedures for business and consumer accounts?
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As to consumer accounts, your policy must require that the following information be obtained from customers: (1) name, (2) date of birth (for individuals), (3) address (principal place of business, local office, or other physical location), and (4) taxpayer identification number. 31 CFR 1020.220(a)(2)(i). Your policy must then provide for verifying that information, either by…
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Are there any limits on premiums on what you can offer for new accounts? Right now, we offer gift cards. Can those gift cards be cashed at the bank?
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Other than the Truth in Savings Act/Regulation DD restrictions on bonuses paid on savings accounts, we are not aware of any other restrictions on premiums offered on new accounts. Regulation DD requires that any advertisement of a bonus also include the following information, stated clearly and conspicuously: (1) The “annual percentage yield,” using that term;…
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Have there been any recent changes regarding the documentation and titling of a sole proprietorship account?
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There have not been any changes in the law regarding sole proprietorships that we know of, but we note that this area of law is somewhat unclear because the federal law differs from Illinois law. For purposes of account titling and documentation, the federal IRS rule — allowing for married couples sole proprietorships — is…
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Can we open an estate account using the social security number (SSN) of the deceased individual?
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We believe that the bank needs to obtain an EIN for every estate (even if it will be handled via small estate affidavit). The IRS has stated that “[p]ayers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. After a decedent’s death,…
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How can we CIP a memorial fund that does not have a TIN/EIN?
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You may want to ask that the memorial funds apply for Employer Identification Numbers (EINs) through the IRS (which does not charge a fee). It can be obtained using their online form or by phone (800-829-4933) (which results in a new EIN usually within an hour of application), or by fax or mail (can take…