Topic: Account Opening
-
Are we required to provide sign language interpretation for a hearing impaired customer who wants to open a deposit account? The customer can read and comprehend the disclosures and has communicated their questions and intentions in writing.
—
by
Whether you must provide a sign language interpreter in this case depends on whether your bank determines such an interpreter is necessary to communicate effectively with the customer. Under the Americans With Disabilities Act, places of public accommodation (including banks) must provide auxiliary aids and services when necessary to communicate effectively with people who have…
-
We have a new business customer that plans to open a deposit account with a 40 million dollar wire transfer. Presuming that the wire transfer is coming from a U.S.-based bank on U.S. soil, what type of information should I obtain about the origin of account funds?
—
by
We are not aware of any law, regulation or guidance that requires you to obtain specific information about the source of a corporate customer’s funds at an account opening. However, if as part of your BSA/AML customer due diligence procedures you determine that this customer presents a higher risk of money laundering or terrorist financing…
-
We plan to start accepting deposit account applications online. When a customer applies for an account, we plan to gather credit data about the applicant. What disclosures are required under the Fair Credit Reporting Act (FCRA)?
—
by
We are not aware of any initial disclosures required by the FCRA at the time of an account opening. However, if your bank rejects an online account application based on information in a consumer credit report, the FCRA requires you to send an adverse action notice to the applicant. In such case, you should follow…
-
If a customer wants to change their account from one type of checking account to a similar account with fewer fees, leaving ownership the same, is it necessary to have the customer sign a new account agreement? Currently, we use a form on which the customer indicates the new account type and acknowledges receipt of the Truth in Savings (TIS) disclosures specific to the new account. We also provide the customer with a brochure listing the TIS disclosures for their new account. Is our current practice acceptable?
—
by
We believe your practice is acceptable for compliance with the Truth in Savings Act, which requires you to provide account disclosures before opening a new account. However, we would recommend requiring the customer to sign a new account agreement when switching to a new account that involves different fees. The account agreement is the instrument…
-
A customer is one of two organizers of an out of state LLC. The papers she provided to us do not contain an employer identification number (EIN). Can she open a business account for the LLC using her own name and social security number, and use a “doing business as” (d/b/a) to include the name of the LLC?
—
by
No, we do not recommend opening a business account for the LLC using the customer’s individual social security number instead of an EIN. The IRS requires an LLC that has employees or that has elected to act as a corporation or partnership to obtain an EIN. In this case, your customer has not indicated that…
-
Some customers ask to add their sole proprietorship’s “doing business as” name to their personal checking account. We know of a recent case of fraud at a different bank where a person deposited checks into their personal account for a business that did not exist. What documentation should we require in order to verify that the individual’s “business” really exists?
—
by
We recommend obtaining the assumed name certificate issued by the county clerk where the business is located. The Assumed Business Name Act requires every person who does business under a name other than their own to file a certificate with the county clerk and publish notice in a local newspaper for three weeks. For resources…
-
We offer Christmas Club accounts to our customers where they determine how much they wish to deposit each week over 50 weeks. When the account reaches maturity, we require that the customer deposited 50 times their weekly amount in order to receive their accrued interest. For example, if they wish to deposit $10 a week, they must deposit $500 over 50 weeks. If they fall short of this amount at the time of maturity, then we do not pay them the accrued interest on the account. Is that permissible? What about withholding accrued interest when they close the account before maturity? Is that an acceptable penalty?
—
by
We are not aware of any law that would directly prohibit a bank from establishing holiday club savings accounts for which customers forfeit their accrued interest if they take early withdrawals or close the account before maturity, provided this forfeiture penalty is clearly disclosed in the account agreement. In fact, Regulation DD appears to allow…
-
Can a bank have a policy not to open accounts for non-U.S. citizens, even if they have documentation establishing their legal right to work in this country?
—
by
While we are not aware of any federal or Illinois law that expressly prohibits a policy to not open deposit accounts based on the non-citizenship status of a person, some courts or regulators still could consider such a policy to constitute unlawful discrimination. The federal Civil Rights Act states that “all persons within the jurisdiction…
-
An existing customer wants to open an account for a fundraiser, which will be raising funds for her daughter’s medical treatment. Do we need to her to obtain an EIN for the account?
—
by
No, we are not aware of a requirement to obtain a separate EIN for an informal fundraising account. We do note that it is possible for fundraising accounts to obtain separate EINs, even when the account holder is not incorporated as a not-for-profit corporation. The IRS’ online EIN application expressly states that various informal groups…
-
One of our customers would like to open a deposit account for a Miller Trust. How should we set up this account? What should we be tracking?
—
by
When opening any type of deposit account, you should follow your standard deposit account opening procedures, which, in the case of a trust, should include obtaining certain information about the trust and its trustees (and, in some high risk circumstances, also about the trust’s beneficiaries). The IRS requires the taxpayer identification number (TIN) used for…