We have an account for an LLC that has been opened for years, we received a phone call that someone needed to be added to the account. We were informed that one of the owners & signers on the account passed away several years ago. When we look at SOS website, we find this business has been dissolved and no longer exists and this was several years ago and the only name associated with the business is the person who is now deceased. Just curious to see if anyone's CIP procedures require an update for business accounts or do most banks just verify all is well at account opening and only take care of issues like this when they become aware of these things?

Do banks routinely check to make sure all their business accounts remain registered - no.

However, when there are requested changes or other actions that requires a bank employee to review the account, common due diligence practices would suggest it is a good time to take a look. Once you have this knowledge, you would be foolish to proceed without an adequate explanation of what was going on.

Trying to police corporate "good standing" status on an ongoing basis would surely be ridiculously costly in terms of labor. I imagine that most banks look when they have a need to check things out -- as you did.

To notch this up a level, when a bank discovers that an existing customer has been involuntarily dissolved by the SOS (usually for not filing annual reports), what is your recommended action? Reaching out to the customer doesn't always produce positive results, especially if/when the application for re-instatement must also be accompanied by a certificate of good standing from the DOR...

For those in states that don't recognize "DOR," Cape Codder is referring to The Massachusetts "Department of Revenue."

Hmmm.....

Well, the State says the business no longer exists. In Texas, the owners and officers become personally liable for the obligations of the company during the time the company’s status is forfeited.

So it might depend on what sort of relationship with the bank you are talking about and the credit worthiness of the owners and officers.

It is probably worth a chat with your legal counsel regarding other risks the bank may face if you choose to continue to act as if the entity still exists.

You definitely won't be able to add them to your CTR exemption list

What you know is that you no longer have a contract because the entity you had a contract with has ceased to exist. Whichever side of the ledger you are on, that's a big deal. As noted, the money your customer spent providing himself with legal protections just got flushed.

Thank you all for your responses. I'm going to get legal counsel involved, and find out if, like Texas, MA also holds officers and owners personally liable for corporate obligations. Sounds good to me.