CDD

What are your thoughts... I have a current business (medium risk rated) where the long time GM is purchasing the business. Based on the conversation with the GM everything will stay the same except it will XYZ, LLC doing business as ABC Inc. Here is my question should I start the whole risk rating process all over or can I keep the current rating and move along business as normal? This business is pretty active and shows up on my monitoring reports a regular basis so I already know what is normal for this business and it would not go completely unmonitored. If I started the risk rating process over I would be heavily monitoring the business for 90 days to establish a baseline and go from there. So how would you handle this?

It is a new entity. I would do a new, unique risk rating. You are in the fortunate position of knowing what the business activity looked like with the previous owner. A closer monitoring period for the new business once it takes over operations is not a bad thing. It will hopefully help you to identify anything out of the norm if it were to occur.

(I've actually had that happen. New owner took over a business. The new business activity was almost immediately drastically different than the previous owner. You then have to determine whether it is the new owner that is suspicious or the previous owner that may have been nefarious in their business dealings).

I also had a customer who sold his business, but the business went on as usual. I assigned a new risk rating and compared to the old business's number for about 6 months to see if there were any major changes. I wanted to feel comfortable that all was on the up and up. The business kept the same employees and so far all is good.

Check with the government office where DBA's are filed to see if that's even possible. Many states will not allow a DBA name to include Inc, LLC, LLP, etc. as it is inherently misleading.

The LLC is a new customer. The CIP information is new, but the CDD information you use to predict the future can be derived from prior history. You have no tangible reason to change the risk rating.