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#908875 - 02/22/08 04:13 PM Phase II Exemption regarding incorporated business
Auditjg Offline
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Auditjg
Joined: Sep 2004
Posts: 67
While reviewing our customer exemptions as part of an audit, I found two businesses that I don't feel are appropriately exempted and are not incorporated to do business in the state. One is a partnership that while reviewing our State's business directory is not listed with the State as a partnership. In addition, we don't have any articles of incorporation as this customer has been with the bank for a long time (before we required them).

2nd, we have a corporation that forgot to file their annual report and was thus dissolved. I know they are in the process of re-registering, but don't know when that will be.

Should I require the BSA Officer to remove both of these entities from the exemption list until we have some sort of proof that they are incorporated?

The other problem is that the partnership lists a DBA name under the partnership on the checking account. In looking at the signature card, they have noted they are a partnership. Are there any problems there?

What process do you go through when verifying that non-listed businesses are in fact "incorporated or organized or registed to do business?"

Thank you!

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#909285 - 02/22/08 09:32 PM Re: Phase II Exemption regarding incorporated business Auditjg
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,785
Cape Cod
What are your state's requirements for partnerships? Are they supposed to register at the state or local level in order to do business? If so, and the partnership hasn't you should pull the plug on the exemption. If you believe the partnership never should have had an exemption, you should contact FinCEN for a back-filing determination.

As for the corporation, if your state law indicates it's doing business illegally until its filings are up to date, you should pull its exemption, too.

Partnerships can "do business as" a trade name. So can corporations, LLCs, etc. If you think that "dba" equates with sole proprietorships, you're mistaken. A business may need to register its trade name in order to operate under a fictitious name.
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