Topic: Authorized Signers
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We have a business deposit account customer with one authorized signer, who is now in a nursing home. The authorized signer executed a power of attorney (POA) document naming an agent. Can the agent transact on the business account on behalf of the authorized signer?
No, we do not recommend allowing an agent under a power of attorney (POA) to exercise an authorized signer’s powers over a business account, where that agent is not named as an authorized signer by the business in a corporate resolution or other appropriate document. Because the business customer’s sole authorized signer for its account…
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For sole proprietor accounts, we typically create the account in the name of the sole proprietor and permit an authorized signer, which is often the spouse. What documentation should we require to permit the authorized signer to continue to transact on the account after the death of the sole proprietor?
As a general rule, with these facts, we would recommend requesting documentation from the authorized signer indicating that the person either has acquired a legal interest in the account or has been appointed in a representative capacity for the estate of the account owner. Examples would include a will, small estate affidavit, or court order.…
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Can we review the credit history of the primary authorized signer on a business account before opening the account?
We believe you should obtain written permission from this individual before running a credit check related to the opening of a business account. The Fair Credit Reporting Act permits a bank to obtain an individual’s credit report in only a limited number of circumstances. In our view, the only permitted circumstance in the situation you…
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Is CIP required for additional business debit card users that are not signers on the business account?
No, you are not required to obtain identifying information on authorized signers (other than for the account owner). But it may be prudent to also obtain identifying information on certain authorized signers, depending on your bank’s assessment of their risk. Both interagency and FinCEN guidance suggest obtaining identifying information on some or all account signatories…
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We have a business customer that is a limited liability company run by two partners. Recently, one of those individuals passed away. Unfortunately, when the account was opened we did not obtain an Operating Agreement detailing how to proceed in the event of one owner’s death. We have received an updated Limited Liability Company Authorization Resolution removing the individual who has died. Do we need to request an Operating Agreement, or can we remove the deceased person from the account and make a new signature card to reflect the removal of that signer?
In our view, you may remove the deceased customer from the account without requiring an Operating Agreement. Obtaining the revised Limited Liability Company Authorization Resolution should be sufficient to memorialize the customers’ request to remove the deceased customer from the account and update the signature card.
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A limited liability company (LLC) has an account with our bank. The LLC’s manager is authorized by the corporate resolution to transact on the account. The manager has signed a business debit card agreement authorizing our bank to issue a debit card to an employee and outlining the employee’s authority. The employee is not an authorized signer or on the corporate resolution. Should this employee be added to the corporate resolution? Should he sign the business account signature card?
Ideally, the corporate resolution authorizing the LLC manager to establish the account will include language sufficient to authorize the manager to cause the issuance of debit cards to other individuals in the manager’s discretion. We do not think it is necessary to add such individuals to the account’s signature card, absent any provisions to the…
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For our business accounts, we often deal with an authorized signer rather than the account owner. Are we required to notify other authorized signers on the account or the account owner about problem overdrafts?
No, we are not aware of any laws or regulations that would require a bank to notify a business customer’s owner or authorized signer regarding overdrafts. However, we recommend reviewing your business account agreements and signature cards, or other documents establishing an authorized signer’s authority, which might require your bank to provide certain overdraft information…
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When a trustee wants to add an authorized signer to a trust account, we require the trustee to fill out a form letter appointing the individual as an agent of the trustee. We use the term “agent” to signal to the individual that if the trustee dies, the agency relationship ends, and the “agent” will be removed from the account. Should we continue to require that form in order to add an authorized signer to a trust account, or can we just add these individuals as authorized signers?
We agree that your bank should obtain some form of documentation that grants an individual the authority to act as an authorized signer on a trust account. The “agent of trustee” form that you describe can serve as appropriate documentation for this purpose. We also think that you may use the same documents and procedures…
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We have a corporate account that was opened several years ago. We have a corporate resolution showing the owner and three other individuals as authorized signers for the account. The owner recently died, and one of the authorized signers has been running the business and wants to continue to run it (a grocery store) until it can be sold. Do we need to do anything?
No. A corporation normally continues to exist after a sole owner’s death, and until the bank is notified otherwise, the account and its other authorized signers should remain valid. Having said that, we recommend that the bank seek to identify the person or persons who now have legal ownership or control of the business and…
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If a customer has a health savings account (HSA) and a family high deductible plan, can we permit his wife and son to be authorized signers on the HSA account and issue each a debit card in their own name?
Yes, we believe that you may issue the customer’s spouse and son debit cards in their own names. The IRS has confirmed that HSAs may be administered through debit cards and that “an HSA account beneficiary can designate other individuals to withdraw funds pursuant to the procedures of the trustee or custodian of the HSA.”…