A business for profit, a corporation. May it be the owner of a regular savings, an interest bearing deposit account. We realize that the Reg D restricts us from allowing the corporation from owning a NOW, but cannot find a restriction specifically prohibiting businesses from own interest bearing accounts.

Yes, they can own MM accounts and savings/cd accounts.

But keep in mind that the business remains subject to the Regulation D transaction limitations for savings deposits.

Yes, but make sure that you code them separate from other savings and time accounts as they are subject to special treatment on the FR2900 Report (Reserve Account Volume Report).

Also, remember if it is a corporation, partnership, etc. they cannot have any automatic transfers to their checking account. This would be considered an end-run around Reg. D.
Good luck.

Can you explain this "end run" thing to me? I noticed we use "sweeps" for customers that are approaching the limit and was told that was OK. Is it not?

It is not okay for business accounts at all and it is subject to the 6 transfer limitations on everyone else. (consumers)

joker, could you please expand? Are you saying that it is not OK for businesses to have savings or, are you saying that it is not OK for the sweeps?

Thanks,

Just the sweeps SoccerMom.

So, forgive me, but business accounts cannot have sweeps? Is that correct? I think I am confused.

There are ways that business accounts can have "sweeps", depending on the meaning of that term. They can have up to 6 transfers from the savings account per month without violating Reg. D.

Some banks set up sweep accounts for their business customers that sweep funds from a non-deposit products like Repo agreements into a checking account. That is also legal under Reg. D.

Ok - Whew - I thought we were going to be in big trouble for a moment there. Thanks!

Johncrcm,
You are dating yourself (me too apparently) with this question. The restriction on business savings accounts was removed in 1986.

Although GreatBlue brings up one of the legitimate end-run ways (the repo-deal) to automatically transfer business (i.e., corporation, partnership) savings deposits to a checking account, remember if it is NOT PERMISSIBLE to set up a regular auotmatic transfer from business savings to checking. Not even 1 per month is allowed! We just finished an FDIC Compliance Exam and I asked that very question to the EIC and he confirmed my previously established practice of NOT allowing any automatics.

That is because an ATS account (the "from" account in a savings to DDA scenario) has ownership restrictions that would prohibit the business from this in the first place, similar to a NOW.

The Reg. D prohibitions still exist. There are some ways to get around this, but you need to know what you are doing.