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#2136981 - 07/05/17 08:05 PM Corporation disolved with the SOS
Banker Seeking Answers Offline
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We have a business customer that has recently been in the limelight due to an automobile accident. Because of the accident, it was revealed that the business license had expired in 2016 and the Secretary of State has dissolved the business. The account has had minimal activity until I got an alert for possible money laundering. The money laundering alert revolved around an insurance check made payable to the individual involved in the accident that he then deposited into the business account, then withdrew in cash. My question is, once the bank is aware that the SOS has dissolved the business, should we freeze the account until the business has updated it's filings with the SOS and has updated his business license.

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#2136987 - 07/05/17 08:27 PM Re: Corporation disolved with the SOS Banker Seeking Answers
Daisy Doodle Offline
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Southern U.S.
I would probably notify the account officer and request updated due diligence on the business. It would not be unusual for a business customer to keep the business account open for a while after the business ended for any trailing items. Still...there's a limit! Your customer can inform you of a date he expects to have everything wrapped up.

I'm assuming the insurance check was associated with a business insurance policy and payable to the business and that is why it went in the business account.......otherwise you wouldn't have received an alert on the business account and noticed it was not in good standing.

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#2137020 - 07/06/17 08:05 AM Re: Corporation disolved with the SOS Banker Seeking Answers
Elwood P. Dowd Offline
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A bank should be concerned, very concerned, when a legal entity customer has been administratively dissolved. However, that does not imply the bank has a right to a knee jerk reaction such as freezing the account.

Talk to the individual and find out what his immediate plans are to 1) terminate the account or 2) resuscitate the legal entity. Your fact situation raises some questions, but assuming the cash withdrawal was reported as on behalf of the individual (it was his money), no BSA bells are going off.
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#2137021 - 07/06/17 10:36 AM Re: Corporation disolved with the SOS Banker Seeking Answers
rlcarey Online
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Galveston, TX
Unless of course it was a large check and he structured the cash withdrawals.
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#2137454 - 07/10/17 09:50 PM Re: Corporation disolved with the SOS Banker Seeking Answers
fmissle Offline
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Joined: Jul 2007
Posts: 989
Pac NW
I find it's not uncommon for single member LLCs and other small companies to allow the organization to be administratively dissolved. I don't know why, since in Oregon, the SOS is pretty proactive in reminding you and it's really easy to file online.

Anyway, we usually find these when we look at the account for some other reason then we talk to them and they pay the fee and get reinstated.

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#2137466 - 07/11/17 11:27 AM Re: Corporation disolved with the SOS fmissle
Elwood P. Dowd Offline
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Individuals set up corporations, LLC's, and other creatures of statute to protect themselves from liability. When they allow them to "die," they open themselves up to the liability they paid good money to avoid.

Banks reaching out to customers with concerns that an entity is not in good standing are doing the individuals a favor, a real favor. Those receiving such a phone call should be appreciative, nothing less.

Again, without more facts, such as eligibility for exemption or evidence of existence for CIP purposes, this is not a BSA issue per se
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#2137469 - 07/11/17 12:35 PM Re: Corporation disolved with the SOS Banker Seeking Answers
Dog Lady Offline
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Joined: Dec 2015
Posts: 74
I disagree. Yes, it benefits the customer when the bank reminds them to reinstate. However, financial issues can also be a pre-cursor to dissolution. While I agree it is not necessary for the bank to panic and freeze the account, the bank should be ensuring it is reinstated if they are aware, or accept the risk that they are doing business with a "business" that no longer really exists. If the business is dissolved because of financial issues, the bank should be extra cautious about authorizing overdrafts, use of ACH services, loan accounts, etc.

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#2137470 - 07/11/17 12:38 PM Re: Corporation disolved with the SOS Dog Lady
Elwood P. Dowd Offline
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Quote:
I disagree.


With what?
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In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

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#2137471 - 07/11/17 12:41 PM Re: Corporation disolved with the SOS Banker Seeking Answers
Dog Lady Offline
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Joined: Dec 2015
Posts: 74
I just reread your post. I misread that contacting the customer was a favor as that being the only benefit to contacting them. My mistake.

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