Skip to content
BOL Conferences
Thread Options
#1715622 - 06/28/12 08:40 PM Review of Entity Status with State
LiL D Offline
New Poster
Joined: Mar 2006
Posts: 3
Sunny Warm Florida
Do you verify if your business accounts are still actively registered with the State on a regular basis? We verify when the account is opened but my branch managers ask each office to review all their business account annually to ensure the business is still "active" and has filed its annual report...and then they will contact the customer if they have not...
Is that really necessary?
Can we keep an account opened and remain compliant if they have not filed?
Do we have to force them to close the account if they don't renew their status?
_________________________
Live your life so when you wake up in the morning the devil shudders and says: Oh no! she's awake...

Return to Top
BSA/AML/CIP/OFAC Forum
#1715626 - 06/28/12 08:44 PM Re: Review of Entity Status with State LiL D
BFrame Offline
Gold Star
BFrame
Joined: Nov 2011
Posts: 402
USA
We don't go back and review their status with the State after account opening.

If an existing deposit customer applies for a loan with us, then the customer must have filed their annual report to obtain the loan, but that's about it.
_________________________
~

Return to Top
#1715630 - 06/28/12 08:47 PM Re: Review of Entity Status with State LiL D
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
It might depend on State law. In Texas:

§277.002. Account Information Required.

(a) A financial institution shall require, as a condition of opening or maintaining a business checking account, that the applicant or account holder provide:

(1) if the business is a sole proprietorship:

(A) the name of the business owner;

(B) the physical address of the business;

(C) the home address of the business owner; and

(D) the driver’s license number of the business owner or the personal identification card number issued to the business owner by the Department of Public Safety; or

(2) if the business is a corporation or other legal entity, a copy of the business’ certificate of incorporation or a comparable document and an assumed name certificate, if any.

(b) The financial institution shall request that the account holder inform the institution at least annually of any changes in the information the institution is required to obtain under Subsection (a).

Some banks are a little more proactive than waiting for the customer to tell them.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1715665 - 06/28/12 09:55 PM Re: Review of Entity Status with State LiL D
BSAChick Offline
Member
Joined: Oct 2005
Posts: 94
Illinois
I do go back and review the status annually on my high risk customers only.
_________________________
CAMS

Return to Top
#1715672 - 06/28/12 10:43 PM Re: Review of Entity Status with State LiL D
DebL Offline
Gold Star
Joined: Jan 2007
Posts: 314
CA
We review the status of our high risk customers and as part of our annual review of CTR exemptions.
_________________________
Of all the things I've lost, I miss my mind the most.

Return to Top
#1715719 - 06/29/12 12:47 PM Re: Review of Entity Status with State LiL D
BFrame Offline
Gold Star
BFrame
Joined: Nov 2011
Posts: 402
USA
Question for those that review status annually for your high risk or exempted customers - What is your policy regarding a business that is not in good standing during one of your reviews?
_________________________
~

Return to Top
#1715735 - 06/29/12 01:27 PM Re: Review of Entity Status with State LiL D
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
It would depend on what that means in your State. As long as they are still able to legally do business in your State with this status, they would still meet the regulatory requirements for exemption. However, this is usually a sign of 1) just a filing error or a late filing or 2) a much more serious problem. Typically, the banks I work with will contact the customer and ask them (sometimes they don't even know) and see what they say. Tickle the file and recheck in a short period of time. If the situation is not corrected on a timely basis, re-evaluate. Also review your policies and procedures - you don't want to go against anything you might have in those.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1715740 - 06/29/12 01:36 PM Re: Review of Entity Status with State LiL D
BSAChick Offline
Member
Joined: Oct 2005
Posts: 94
Illinois
We do what Randy said. Contact the customer and ask. Nine times out of ten they just forgot to file. We give them time to do so and follow up to make sure they register. If not, then we would take it from there.
_________________________
CAMS

Return to Top
#1716123 - 06/29/12 09:31 PM Re: Review of Entity Status with State LiL D
LSkid Offline
New Poster
Joined: Mar 2012
Posts: 21
N TX
I don't know what the operations side does. We check for Good Standing on our borrowers (annually - when there is new loan/renewal activity, and the Certificate of Good Standing in file has expired). In most cases, it usually involves a late filing and the borrower resolves the matter. However, I currently have a situation that a borrower is not in good standing, and their charter has been revoked. They are no longer a legal entity. Upon that discovery, I ran a UCC search that reveals that they have several Federal Tax Liens to the tune of over $183M. My lender is not happy.
_________________________
Karma - No need for revenge.
~~~~~~~
The opinions expressed are my own and do not necessarily reflect those of my employer.

Return to Top
#1716125 - 06/29/12 09:37 PM Re: Review of Entity Status with State LiL D
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Yup - that is an example of the "much more serious problem" I was referring too. If you have loans to these customers, the BSA department should have a direct line to your lending area when these are discovered.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top

Moderator:  Andy_Z