As an internal auditor, I am finding more and more clients who are saying that they do not open "2 signatures required" accounts. However, often there is a corporate resolution on file that states that the customer requires 2 signers for transactions, agreements and borrowings. Clients represent that they tell their customers that they will not monitor this. If the bank has a resolution on file stating the 2 signatures are required for transactions - should they not be following through on obtaining this on agreements and wire transfer requests even if they are not monitoring inclearing checks?

First thing to do is review your deposit agreement. Most deposit agreements state the bank does not monitor and/or is not liable for 2 signatures required. Also, my experience is banks do not allow legends on checks saying 2 signatures required.

My concern is whether that verbiage or something similar, protects them from any liability if one person is wiring out large sums of money or borrowing money on behalf of the corporation or signing other agreements with the bank?

Well it depends on the product and resolution.

You can disavow any responsibility under the UCC for checking two signature on checks written by the customer through your written and accepted depositor's contract. By the way, I have never heard of a bank prohibiting a two signature required legend on a check.

Now if it requires two signature to make a loan, I would not suggest that you attempt to make a loan with one signature if you ever want to collect it.

I guess I need to be more specific. Let's apply this to outgoing wire transfers. Corporate resolution says 2 signatures and bank has "told" them they will not monitor the "checks" for signatures. One individual signs a wire transfer agreement on behalf of the corporation and starts sending out wire transfers (again with one signature). I have not found that the majority of financial institutions have language built into the depositor's agreement regarding lack of responsibility for monitoring dual signatures. I recently came across a Dual Signature Indemnity Agreement that a client uses for these types of accounts - but again, the language revolves around the checks and does not address other documents.

If you are executing wire transfers for any entity under any authority except a written and signed wire transfer agreement that was drafted/approved by your attorney that properly sets out all required commercial reasonable security procedures, you are going to have problems - regardless of any type of corporate resolution you may possess.

The bank should read any and all corporate resolutions that they accept for any reason, and if you don't like the terms as set forth in the resolution - don't accept it.

I audit financial institutions and they don't accept resolutions other than the ones that are generated from their new account software. So it will always be the resolution chosen by the bank. Now this is speaking only of the banks that I have audited over the last 15 years. I tend to see the same types of resolutions at various clients and they all have a place to designate the number of signers required for specific transactions (ie, checks, borrowing, transfers, agreements, etc.) It is what I would refer to as an industry standard but are they also shooting themselves in the foot? Typically, the only time I see a customer's resolution that they actually prepared, would be in a loan file.

It is what I would refer to as an industry standard but are they also shooting themselves in the foot?

It depends on the actual underlying agreement that is signed with the bank. Even if the resolution indicate that two people have to sign, if the depositor's agreement disavows any bank liability, then the monitoring of the two signatures required is up to the entity. Like the bank not having to accept a resolution from the customer that they don't agree with, the customer does not have to sign the depositor's agreement if they don't like the terms.