Topic: Authorized Signers
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Our Deposit Services Department is requesting that our customer service representatives obtain meeting minutes or a letter of direction from our customers before making changes to authorized signers on existing LLC accounts. Are these documents required, or is an updated resolution sufficient?
We are not aware of any law or regulation requiring a bank to receive meeting minutes or a letter of direction before making changes to authorized signers on an LLC account, and we believe that a resolution by the LLC removing the previous authorized signers and authorizing the new authorized signers could be sufficient. However,…
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What is a “durable” authorized signer? We’re setting up a new deposit platform, and our forms provider is asking if the authorized signer is “durable.” The platform provider won’t explain the term and tells us to just answer the question.
We are not familiar with the concept of a “durable” authorized signer. We recommend answering “no” unless your platform provider clarifies the meaning of this term and how your answer will affect your deposit accounts. The term “durable” is used in the context of power of attorney documents, but we have not seen the term…
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We have a business customer that has many authorized signers on their signature card. They want to replace one of their authorized signers with a new authorized signer. Is it possible to have the new signer sign a new signature card and somehow remove the old signer without having to obtain all new signatures?
We recommend having the current authorized signers and the new authorized signer sign a new signature card, rather than having the new signer sign a separate signature card and removing the old signer from the previous card. Your bank should also review its policies and procedures and the customer’s account agreement and comply with any…
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We have a business checking account for an unincorporated association that was opened with an employer identification number (EIN) in 2013. We know that the account was for an engineer society’s scholarship fund but have no information on its organizational structure or owners. The only items in our file are meeting minutes from 2013 and a signature card listing two authorized signers. The account is not considered dormant according to our records. A family member of one of the authorized signers notified us that the two signers on the account have died and that they are unsure whether the organization still exists. What should we do if we are asked to disburse the funds in the account? What documentation do we need to protect ourselves and make sure we are not disbursing funds to individuals who are not entitled to receive them?
We do not believe you should disburse funds from the business checking account unless you receive direction from an authorized signer or a court order to release the funds. Because the business checking account was opened in the name of the unincorporated association, using its EIN, we believe that you should treat the account as…
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We keep corporate resolutions for five years after we close a business account. If a business customer requests that we update a corporate resolution we have on file, should we keep the outdated resolution that is no longer valid for the life of the account?
We recommend that you retain all corporate resolutions, including outdated resolutions, for at least five years after termination of the business account. FinCEN’s Bank Secrecy Act regulations require you to retain each document granting signature authority over a deposit or share account for five years after they are created. The IBA’s Guide to Bank Record…
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What is the correct way to open a deposit account for a minor? Should we open an account under the “Uniform Gifts to Minors Act,” with an adult acting as a custodian for the account and the minor prevented from accessing the account funds until they reach 18 or 21 years of age? Or should we open the account for the minor with their parent as a joint owner?
There is more than one way to open an account for a minor in Illinois, and the best option depends on your customer’s intentions for the account, including whether their intent is for the minor to access the account funds. As discussed in more detail below, and at your customer’s discretion, you may open a…
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For trust accounts, can a trustee add authorized signers or allow an agent under a power of attorney to act as an authorized signer?
Yes, we believe a trustee may delegate certain powers to a third party, including by adding an authorized signer to a trust account, provided the trustee has been granted the authority to do so in the trust instrument — which we recommend confirming by requesting a Certification of Trust form. Additionally, if the Certification of…
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One of our customers is a corporation with its own employer identification number that is owned by a single individual who is also the only member of its board. If this individual passes away, can the corporation’s authorized signers still transact business on the corporation’s bank account? Additionally, the individual is asking how she can simplify the process of allowing her heirs to continue to transact business on the account after she passes away. What advice should we give her?
Yes, we believe that the corporation’s authorized signers may continue transacting business on the corporation’s bank account, even after the corporation’s sole owner and board member passes away. The Illinois Business Corporation Act states that “the duration of a corporation is perpetual unless otherwise specified in the articles of incorporation.” This means that a…
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We are a federal savings association and have a variety of internal accounts that we maintain, such as expense accounts with checks issued by our accounting department, disbursement accounts with automated clearing house transactions and checks issued by our back office, and network settlement accounts. What are the legal requirements for internal account documentation? Do we need a signature card and resolution identifying authorized signers for each account? We are trying to find the most efficient method for dealing with situations when signers for these accounts change.
We are not aware of any laws or regulations specifically requiring federal savings banks to document authorized signers for a bank’s internal accounts. The former Office of Thrift Supervision’s Examination Handbook (which the OCC states is still applicable to federal savings associations) stresses the importance of establishing key areas of authority and responsibility for operating…
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Can a certificate of deposit (CD) be opened as a minor account under the minor’s social security number with both parents listed as authorized signers? The parents would like to take this approach instead of opening an Illinois Uniform Transfers to Minors Act (UTMA) account, for which only one custodian would be permitted.
Yes, we believe a CD can be opened solely in the name of a minor child with their parents as authorized signers. The Illinois Banking Act specifically authorizes state banks to accept deposits made by minors and open accounts in their names, and a bank’s rules and regulations with respect to an account opened in…