The USA PATRIOT Act states that the bank must obtain sufficient information at account opening to form a reasonable belief that it identifies its customer. On the one hand, a sole proprietor is the same as the individual so there may or may not be additional information for identifying the business. (Some jurisdictions require that the owner file an assumed name certificate). Whether you an assumed name certificate or business license is based on your CIP risk assessment. However, consider issues beyond CIP.
If we do not obtain an assumed name certificate, we have no way of knowing if our customer has a legal right to use the trade name they are claiming to have right to. The “poster story” for failure to verify a trade name belongs to Fifth Third Bank, which allowed an employee of the city of Dixon IL to open an account in the name of the city without verifying that the employee had the authority to open such an account. The employee used this account to steal over $50 million from the city. The bank ultimately paid $3.85 million to the city as part of a legal settlement.https://www.saukvalley.com/2013/05/10/bad-faith-shown-by-bank-in-crundwell-thefts/aqu68ju/?page=99
Particularly during the COVID-19 pandemic we have to be especially aware of fraud. FinCEN describes one such scam in their recent press release as an “imposter scam.”https://www.fincen.gov/news/news-re...fincen-encourages-financial-institutions
Folks are setting up fake charities to collect funds to “help” families healthcare workers, etc. So if the bank allows me to set up an account as
Brian J. Crow
D/B/A The American Red Cross
and chooses not to verify that I never filed an assumed name certificate to use that name (because if I did, the Red Cross would block my application) the bank could be accused of not using “commercially reasonable standards” as Fifth Third was if I then steal lots of money from the Red Cross because I am able to deposit checks that should be going to the legitimate charity and use the funds for my personal gain.
Bottom line, there is more at stake here than CIP.
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!www.tcaregs.com