Topic: Account Opening
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Do we need to obtain certified beneficial ownership information under the new customer due diligence (CDD) rule every time a business customer renews a certificate of deposit? If so, how do we handle situations when a business customer with an automatically renewing CD refuses to provide this information at the time of renewal? Should we send new disclosures converting automatically renewing CDs to term CDs unless we receive the beneficial ownership information?
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No, your bank does not need to obtain certified beneficial ownership information each time a CD automatically renews. In a recently issued guidance, FinCEN stated that if a customer: (1) certifies their beneficial ownership information once after the new CDD rule takes effect, and (2) agrees to notify your bank of any changes when it…
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We sometimes have customers who want to add an older teenager who is a minor to an account. Can a minor have joint ownership in a joint account, such as with a parent? Could the bank exercise a right of setoff in the parent’s other accounts for the minor’s overdrafts on the joint account? What identification should we require from the minor establishing a joint account with their parent?
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Yes, a minor can hold an account in joint ownership with another party, such as a parent. The Illinois Banking Act permits banks to open accounts for minors, “and the rules and regulations of such bank . . . shall be as binding upon such minor as if such minor were of full age and…
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Can we accept scanned copies of signature cards for our checking and savings accounts, in lieu of the original? For some of our customers, we email our signature card agreement, which the customer signs, scans, and emails back to the bank.
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. Yes, your bank may accept electronically signed or scanned signature cards. Both Illinois and federal…
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Can we convert a NOW account to an interest bearing demand deposit account?
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Yes, we believe that you can convert a NOW account to an interest bearing demand deposit account. We are not aware of any prohibition on converting from one account type to another (including business accounts in the wake of Dodd-Frank’s elimination of Regulation Q’s prohibition on paying interest on commercial deposit accounts). However, you are…
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We have a large business customer (ABC Group) that would like to open non-interest bearing escrow accounts for its clients without giving us the clients’ W-9 forms. Can we do that? If so, should we use the customer’s tax identification number (TIN) to open the accounts and title the accounts as ABC Group, agent for John Doe Client? Can the customer sign one master signature card for all the escrow accounts?
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Yes, we believe you may open the escrow accounts without requiring the TIN of your customer’s clients. The Customer Identification Program (CIP) rules require the customer’s TIN. Through interagency guidance, the federal banking regulators have clarified that the person establishing the escrow account is the customer for CIP purposes. Consequently, we believe it is appropriate…
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Do we need to require court documents (such as letters of office) when the affiant on a small estate affidavit wants to open an estate account? The customer has the will and death certificate but has not been appointed executor.
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No, letters of office are not necessary 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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If we have a joint account with rights of survivorship, and one of two owners passes away, can we change the account into an individual account naming only the surviving owner without a signed signature card for the new account? We would like to clear up accounts with a deceased joint owner where we have been unable to contact the surviving owner, sometimes for a period of a year. We also have this problem when a tenant in common dies and the deceased owner’s executor or beneficiary does not remove the deceased owner from the account.
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Yes, your bank may remove a deceased joint owner’s name and social security number from an account, but we do not recommend opening a new account without a signed signature card from the surviving owner. As of the date of death, joint account funds automatically pass to the surviving joint owner. Assuming that your bank…
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For our portfolio consumer mortgage loans, when borrowers receive insurance claim checks, we deposit the checks into escrow accounts from which we disburse funds directly to repair contractors. How should we set up these accounts? Currently, we set them up as savings accounts under the customer’s name, with our bank listed as the custodian. This creates some issues, because when we search our accounts in response to a subpoena or levy or for unpaid child support data matching, these accounts will be listed under the customer’s name, even though the funds in these accounts technically don’t belong to the customer. Should we instead set up the accounts using our bank’s TIN? Should they be deposit or savings accounts?
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We recommend reviewing your mortgage notes and related documents, which may specify your bank’s obligations as to insurance claim proceeds. For example, the Fannie Mae standard note states that the lender is not required to pay interest on property insurance claim proceeds. If your bank’s mortgage notes or other agreements include similar language, then your…