Topic: Bank Secrecy Act & Anti-Money Laundering (BSA/AML)
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Can an incorporated business operate an account with a limited liability company (LLC) that is a separate entity with its own employer identification number (EIN) as a “doing business as”? The corporation and LLC are run by the same person.
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No, we would not recommend allowing an incorporated business (i.e., a corporation) to operate an account with an LLC that is a separate entity with its own EIN as a “doing business as” account. We believe this arrangement would risk the commingling of funds between separate business entities. Both corporations and LLCs may transact business…
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Can you provide any guidance on opening a checking account for a non-U.S. citizen? We have a prospective customer with an ID and a foreign passport but no social security number.
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We recommend following your bank’s customer identification program (CIP) regarding its requirements for opening bank accounts for non-U.S. citizens. If your current CIP does not specifically address the identification requirements for non-U.S. citizens, you may wish to update your CIP to include this information, and any revisions to your CIP must be approved by your…
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We have an account for a corporation that has been on our records for many years. We recently learned that this corporation (Customer, Inc.) was merged and consolidated into another corporation years ago, and the acquiring corporation subsequently opened a limited liability company (LLC) with a similar name (Customer, LLC). We have maintained the original account and have been accepting checks made payable to the name of the original corporation, the new LLC, and the acquiring corporation. Obviously, some of these checks are wrongly endorsed. Could we request that someone with authority provide us with a statement that would allow this practice to continue without recourse? Additionally, do we need to go through the process of closing and reopening a new account for this customer and conduct Bank Secrecy Act due diligence again? And, could this practice potentially present an issue with filing future Suspicious Activity Reports (SARs)? Finally, is it possible for a tax identification number to remain the same after a merger? We currently only have an Employer Identification Number (EIN) on file from the original corporation and are not sure whether this would be the same for the LLC.
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Yes, we believe it is possible to enter into a written agreement with the new LLC that would protect you from liability for the incorrectly endorsed checks (that have been endorsed in the name of the original corporation, presumably by an individual identified by the original corporation as its authorized signer). However, an agreement between…
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Are we required to delete copies of driver’s license images used to verify customer identities for online account openings? Are there any exceptions that apply under the Bank Secrecy Act (BSA)? If we are required to delete them, can we request that customers provide us with another image after account opening that we can retain? The retention of licenses or identification is currently part of our BSA policy.
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Yes, we believe that you are required to delete images of driver’s licenses or personal identification cards used to verify customer identity for the purposes of online account opening. Further, we do not believe that you may request and retain those images again after account opening. The 2018 Economic Growth, Regulatory Relief and Consumer Protection…
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A potential customer would like to open a deposit account with our bank to accept deposits made at a Bitcoin ATM that they own. We believe the customer is a money services business (MSB), and it would use a security service (like Garda or Brinks) to pick up the cash from the Bitcoin ATM and count the funds, which would then be sent to the customer’s account at our bank via ACH. Funds would flow out of the account by ACH transfer to a Bitcoin exchange. What BSA/AML concerns should we be aware of when considering whether to do business with this customer?
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We believe your bank should confirm that the customer is registered as an MSB and is licensed as a money transmitter under Illinois law and review the BSA/AML requirements for providing banking services to MSBs generally, as well as federal and state guidance on MSBs that transmit convertible virtual currency (CVC) such as Bitcoin. The…
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After filing a suspicious activity report (SAR) on FinCEN’s website, we were contacted by someone asking for supporting documentation related to the SAR. This person has an email address indicating they work for the Department of Homeland Security, and they appear to be knowledgeable about the facts in the SAR, but they asked for the requested information to be sent to their email address rather than through a secure platform. Is this proper procedure for submitting supporting documentation related to a SAR?
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We recommend reviewing your Bank Secrecy Act (BSA) compliance and anti-money laundering program for procedures related to verifying the identity of requestors of supporting documentation before deciding whether and how to submit the requested documentation. While we are not aware of any laws or guidance outlining any specific procedures required for submitting supporting documentation, FinCEN…
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We have a potential client that would like us to finance the purchase of a Bitcoin ATM. We would not process any transactions for the client through our system, since they do not have a deposit account with us, and our client will engage a third party money services business (MSB) to do all of the actual payment processing associated with the Bitcoin ATM. Under the Bank Secrecy Act (BSA), what type of monitoring would be required for this client, and would the answer change if we begin a deposit relationship with the client?
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We do not believe that lending funds to a borrower for the purpose of purchasing a Bitcoin ATM would require your bank to perform the BSA-related due diligence required for an MSB, unless your customer is an agent of the MSB doing the actual payment processing for the Bitcoin ATM. Whether your bank’s lending relationship…
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What are the record retention periods for deposit account statements and checks? Do these requirements vary between paper and electronic records?
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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. Your bank should retain deposit account statements for at least five years and checks for…
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Are we required to obtain a business customer’s Articles of Incorporation before opening an account if the Illinois Secretary of State’s CyberDrive database indicates the business is currently active?
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No, we do not believe that you are required to obtain a business customer’s Articles of Incorporation if your Customer Identification Program (CIP) procedures allow you to independently verify customers’ identities by comparing information provided by your customer with information obtained from a public database. At a minimum, your bank’s CIP must contain procedures for…
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We are using a third party product to perform background and enhanced due diligence searches of higher-risk customers, including a search of local voter databases. We are not sure if we have a permissible purpose under Illinois law for accessing voter databases. In Missouri, we believe we can search voter databases for “use in connection with a permissible commercial purpose.” Does Illinois allow financial institutions to search voter databases for BSA purposes?
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No, the Illinois Election Code generally prohibits “the disclosure of electronic voter registration records to any person or entity other than to a State or local political committee and other than to a governmental entity for a governmental purpose.” Although individuals may be permitted to view the statewide voter registration list on a computer screen…