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Two Signatures Required
Answers by: Andy Zavoina and Mary Beth Guard, BOL Gurus

Question: I was told that when we have accounts with 2 signatures required, it is NOT up to us (the Bank) to police them and make sure both signatures are on the items. I was told it is up to our customer to police/enforce the 2 signatures required. Is this a federal regulation or am I wrong? If it is a federal regulation, where is it in "ABC Soup" and what year was the requirement established?

Answer by Andy Zavoina:
We state in our deposit agreement that a 2-sig requirement will not be enforced by us and that is up to the customer if they want it for internal controls.

Obviously there would be a great deal more work in verifying that there was not one, but two signatures which were authorized and in place.

Answer by Mary Beth Guard:
Under the revised UCC, if you have an account on which two signatures are required and you pay a check that only bears one signature, you have just paid an unauthorized item. UCC 3-403(b) states:

"If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking."

Check to see if your state has adopted this language. If so, you may want to follow the lead of banks like Andy's who specifically note in their deposit contract that they are not agreeing to the "two signatures required" condition and will not be responsibility for monitoring for two signatures. Others have elected to not allow accounts to be opened with two signatures required. A third alternative is to simply charge more to compensate you for the extra scrutiny that will be required (or the extra risk you are taking if you don't monitor.)

First published on 4/01/02

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