Topic: Account Opening
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How should we title an account for a general partnership that obtained an assumed name certificate from the county in the name of two unmarried individuals and a business? They did not present partnership papers or an employer identification number (EIN). Should we require partnership papers and an EIN to title the account in the assumed business name, or can we open the account in the name of the individuals doing business as (DBA) the assumed name and use one of the individual’s social security numbers? Also, would the partners have been required to present a partnership agreement to the county to obtain the assumed name certificate?
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We recommend requiring an EIN to open a partnership account, since the IRS requires partnerships to obtain an EIN for purposes of filing partnership tax returns. Whether you should require the partnership to present a partnership agreement or other documentation depends on your bank’s customer identification program (CIP), which should specify what documentation you need…
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A customer who executed a small estate affidavit to close their mother’s accounts would now like to use the affidavit to open an estate account. Does this customer need to obtain letters of office to open an estate account?
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No, letters of office are not required to open an account for a small estate. The affiant of a small estate affidavit may act as the estate’s executor and open an account for the estate on the basis of the affidavit — provided that neither the affiant nor anyone else has requested or received letters…
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A husband and wife with separate trust accounts want to open a checking account with their trusts listed as owners as tenants in common. The account would be opened using only the tax ID of the husband’s trust, and checks made out to either trust would be deposited into the account. Each trust would own a percentage of what is in the account, and when either the husband or wife dies, their trust’s assets would go to their individual beneficiaries. Can we set up a checking account like this, and would there be any negative tax implications?
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No, we would not recommend allowing two separate trusts to open a joint checking account, as this arrangement could risk the commingling of funds between two separate entities. Further, distributions from such an account could be susceptible to dispute by each trust’s respective beneficiaries, and this arrangement could cause a trustee to breach their fiduciary…
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Our core provider includes an Illinois Terms and Conditions disclosure in our new deposit account forms, in addition to a Truth in Savings Act (TISA) disclosure. The disclosure includes our account agreement, with provisions on account ownership, stop payments, the duty to report unauthorized transactions, setoff, and more. Is there a law or regulation that requires that this form be provided for every new account opened, including for new accounts opened by existing customers? We have reviewed the Illinois Consumer Deposit Account Act, which states that we comply with the law if we are in compliance with the TISA.
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We recommend providing your institution’s terms and conditions for every new account opened, including those opened by existing customers. While there is no law or regulation that specifically requires you to provide customers with an “Illinois Terms and Conditions” disclosure, it is important to provide the governing rules for accounts held at your institution to…
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We are an Illinois savings bank considering offering minor savings accounts. We would like to provide a gift at account opening, with the exact gift (cash or swag, for example) determined by spinning a wheel that lands on a certain prize. Can minors open savings accounts in their name if they are old enough to sign the signature card? Also, is there a dollar limit on account opening gifts, and would we need to describe the gift in our account disclosures and report it to the IRS for tax purposes?
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Yes, minors are permitted to open savings accounts. While we are not aware of a dollar limit on account opening gifts, Regulation DD’s disclosure requirements apply if the gift is worth more than $10, and IRS reporting requirements apply to gifts valued at $10 or more and $600 or more. Both the Illinois Savings Bank…
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An examiner noted that we have an older account for a customer with a doing business as (DBA) name that is very similar to the name of a corporation where the customer is an employee or owner. The corporation does not have an account with our bank, and we do not have an assumed name certificate for the DBA account. What is our potential liability if our customer fraudulently deposits checks made out to their DBA name that are intended for the corporation? Would we be liable to the corporation if they claim the checks were stolen? If we are unable to obtain an assumed name certificate, could we have the corporation sign an indemnification agreement authorizing the customer to deposit checks made out to their DBA name?
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At the outset, we believe it would be prudent to ask your customer to establish a new account in the name of the corporation, since it appears that your customer is depositing checks payable to the corporation’s name. We recommend following your account opening procedures for corporate accounts, which should include obtaining a corporate resolution…
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Our privacy notice currently states that for Illinois customers, we will not share their personal information for marketing purposes “without your authorization.” Our account agreement does not consent to disclosure. We are aware of an Illinois Department of Financial and Professional Regulation (IDFPR) interpretive letter stating that Illinois law does not require banks to provide customers with “a specific method to authorize disclosure or to opt in” and that banks are not prohibited from “incorporating a customer’s consent to disclosure into the terms of an account or loan agreement” — provided the customer is given a reasonable opportunity to opt out. If our account agreements do not contain such terms, is our privacy notice sufficient to prove the customer’s “opt in” to disclosure of their personal information?
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No, we do not believe notifying a customer at account opening that you will not share their personal information with nonaffiliates is sufficient to prove that a customer has opted-in to disclosure of their personal information. As you noted, IDFPR Interpretive Letter 01-01 clarifies that the privacy protections in the Illinois Banking Act do “not…
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For a monthly fee, we offer an add-on checking account product that includes three types of insurance (as well as ID protection and travel perks) — cell phone protection, accidental death and dismemberment coverage, and debit card purchase protection for items that are damaged or stolen within ninety days of purchase. Our marketing materials indicate that these insurance products are not insured by the FDIC. Do these insurance products qualify as “nondeposit investment products,” and are we prohibited from marketing this add-on product at account opening?
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If the three insurance coverages your bank is offering do not incorporate an investment component, we do not believe they would be treated as nondeposit investment products, and you would be allowed to market these products at account opening — provided the required disclosures are made. The Interagency Statement on Retail Sales of Nondeposit Investment…
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We do not currently provide a copy of a signature card to an account owner or business owner unless they request it. Should we be providing a copy of the signature card at account opening and when any changes are made? Our signature cards contain the information we collect as part of our Customer Identification Program (CIP), including tax identification numbers. Could there be any issues associated with providing this information to all authorized signers on an account?
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We recommend providing signature cards to customers at account opening and when changes are made to the signature card, but this decision does depend on whether your signature cards incorporate contractual language that your customer is agreeing to. We are not aware of any laws or regulations that would require you to provide copies of…