No Signature on Joint Account

Have a highly-valued customer. Came in and opened four joint accounts, each with one of his kids as co-owner. However, he doesn't want kids to know about them, so one of the senior officers okayed the opening of the joint accounts without the second signature.

I say "BS". I know ultimately it will get approved by executive management, but what problems do we face? If the customer dies, is the money really the kids' in a joint account if they never signed the agreement?

It's a state law question; my guess is that the child is not a "party" to the account and they have not agreed to anything. So, any automatic transfer of the property at death could be/should be challenged by the personal representative. (There would not have to be any animus involved, it's the personal representative's job to make certain things are done correctly.)

If your state acknowledges POD or ITF designations, that would have been the right way to do this.

As this is a "highly valued" customer your best approach would be to say you did some research in an effort to make certain this would work. It will be incredibly tempting to point out that the lender is an idiot, but it may not put you in the best light.

It has always fascinated me that some people are willing to wade into stuff they know absolutely nothing about...

You also most likely have 4 CIP violations also, unless you have provisions for opening accounts not-in-person and all the requirements were met.

Probably no additional FDIC insurance that might be available due to addition of the kids. You will doing the customer a service by getting things right.

And if the kids are minors, is he doing it to hide funds in their accounts?

This lender always wades into stuff about which he knows nothing.

The real kicker is that he used to be in charge of new accounts and still thinks he and his team did a great job! We're still correcting all this &*^% after 3 years.

The accounts won't be considered joint accounts by the FDIC should the bank fail. They would be counted as individual accounts of the "highly valued customer" and if they put him over the limit, some of the money will be uncovered.

Since there's no contract with the kids, the kids don't have legal access to the funds, and as pointed out above, they would almost certainly not have survivorship rights in the accounts.

Luckily, since we are a small family-owned bank, I just had to send an email to the President/Chair/Owner advising him of all the downsides. 20 minutes later I had a 'tail between his legs' email from the senior officer (full of &^%$, but at least he now has to remedy the situation).

Good deal. I like it when there is support and corrective action!

While it may have seemed like it was helping out the customer, it was wrong on many compliance levels and in training, I would indicate that is why the bank has procedures. (Good thing the senior officer didn't mention waiving flood insurance. )