Topic: Account Opening
-
Our current policy is to require out-of-state businesses to file with the Illinois Secretary of State before establishing an account with us, if they are doing business in Illinois. Is this a requirement in Illinois?
—
by
Yes, generally businesses that “transact business” in Illinois must apply for a foreign business registration with the Illinois Secretary of State. Note that a business will not be considered to be “transacting business” in Illinois if it merely maintains bank accounts in the state without otherwise transacting business in the state. For resources related to our guidance,…
-
When a business customer informs our bank that it requires two signatures for check endorsement, we explain at the time the account is opened that we do not monitor for dual endorsements and advise the customer that it is their responsibility to review their checks for two signatures. However, the corporate authorization resolution form that we provide to our business customers when opening an account includes a field to list the number of signatures required to endorse a check. Even though we advise the customer that we do not monitor checks for multiple signatures, the customer can select a two-signature requirement in this field. Should we discontinue this practice of marking the customer’s request for dual endorsements when our policy is to not monitor for multiple endorsements?
—
by
Yes, we recommend discontinuing the practice of accepting a customer’s request for a two-signature authorization on their corporate authorization resolution when your bank’s policy is to not monitor for multiple endorsements. The Uniform Commercial Code (UCC) provides that when an organization requires multiple signatures to endorse checks, and a check of the organization is endorsed…
-
We would like to create an account that provides customers with a special rate on a certificate of deposit (CD) when they open a new checking account and a CD. Customers with existing checking accounts would not be eligible to open a CD with the special rate. Does offering this type of product pose any problems?
—
by
We believe that offering a special rate on a CD to customers who simultaneously open a checking account and a CD presents a relatively low risk of being considered an unfair, deceptive or abusive act or practice (UDAAP). However, the characterization of an act or practice as a UDAAP violation is highly subjective and sometimes…
-
Can we charge a fee for closing a deposit account within a certain number after days opening the account, assuming that we disclose the fee at account opening? If so, can we place a hold on all newly opened accounts for the early closing fee amount until the expiration of the time period in which we can impose the fee?
—
by
We are not aware of any limitations on charging an account closing fee, provided that the fee is disclosed as required by Regulation DD. The Illinois Banking Act permits banks to determine appropriate deposit account fees in accordance with their prudent business judgment and safe and sound operating standards. However, we recommend caution regarding the…
-
When an individual applies to open a new account, we make an oral disclosure to the applicant that we are pulling their consumer credit report, which we obtain from ChexSystems. When an applicant’s request to open a new account is denied and we provide them with an in-person adverse action notice, we also make an oral disclosure that we pulled the applicant’s consumer credit report. Is this form of notification appropriate, or do we need to follow the notice requirements for investigative consumer reports? Should we obtain written permission from an applicant before pulling a consumer credit report?
—
by
We believe the account opening notification procedures you described are appropriate. We are not aware of any initial disclosures required by the Fair Credit Reporting (FCRA) at the time of an account opening. When pulling a credit report from ChexSystems, your bank is not required to follow the FCRA’s notice requirements for investigative consumer reports,…
-
When a customer comes in to open a deposit account, we are going to begin using a pad to capture the customer’s signature. If the customer does not want the account opening documents for their records, are we required to print and provide them anyway? If they can “opt out” from receiving printed documents, do we have to physically document that anywhere in the file (in the form of a signed disclosure from them), or can we just make a file note that states the customer wished not to be provided copies?
—
by
Generally, we do not recommend allowing a customer to “opt-out” of receiving the required account opening disclosures, irrespective of whether the customer provides a physical or digital signature. If a customer does not wish to receive printed disclosures, we recommend walking the customer through the E-Sign Act’s disclosure and consent procedures so that your bank…
-
One of our customers sold its business. The CPA advised the buyer (which is keeping the business account at our bank) to retain its EIN but change the corporate name. We have obtained amended articles of incorporation, letters sent to the IRS regarding the name change using the same EIN, and an Illinois Secretary of State filing for the amended business name. We don’t have confirmation from the IRS. Should we obtain any additional documents from the customer?
—
by
We recommend treating the account as a new business account and documenting the business’ new ownership and name by collecting any documents prescribed by your policies and procedures when opening a new business account. This may include the business’ articles of incorporation, bylaws, a corporate resolution authorizing the organization to open an account, etc. The…
-
Is it necessary to obtain a W-9 form for a secondary owner of a joint deposit account? Any interest earned is reported under the primary owner’s name and social security number (SSN). Our vendor’s account opening forms have a spot for the primary owner to sign the certification, but not the secondary owner.
—
by
No, the general rule is that it is unnecessary to request a W-9 form from a secondary accountholder — unless all of the accountholders are nonresident aliens. This is because secondary accountholders will not be receiving any interest and consequently will not be subject to any IRS withholding or reporting requirements. However, if all of…