What makes an account a money market account?

We have accounts coded as money market but management is telling me they are interest bearing checking accounts. 5 of them are open to businesses that appear to be ineligible. When I read the information from the FDIC it says that the Money Markets are subject to the 6 rule. These do not appear to be. However, they do have the option for the bank to require advanced notice for withdrawal.

What you are describing sounds like a NOW account, not a MMA. Money Markets are subject to the REG D rule where the customer is allowed 6 limited transactions a month, like a savings account. In person withdrawals and ATM transfers or withdrawals are unlimited. NOW accounts are not subject to these restrictions but the bank is allowed to require advanced notice for withdrawal like you mentioned. There are entities that are ineligible for these accounts, such as for profit corporations and LLCs.

Those interest bearing checking accounts could also be legal, if they are NOT NOW accounts, but DDAs instead. Banks are now permitted to pay interest on demand deposit accounts (DDAs), and there are no eligibility restrictions.

To compare: NOW accounts have eligibility restrictions, and the bank must reserve the right to require at least 7 days' advance notice of withdrawals. Demand deposit accounts have no eligibility restrictions, and cannot be subject to an advance notice of withdrawal requirement.

Your bank needs to be certain of what it is doing, because it has to separately report NOWs and DDAs on its Call Report.