Answer:
While I believe you can exempt sole proprietorships under the regulations, I think they are tricky to do right and present an increased risk that most prudent banks should refrain from exposing themselves to. To exempt an eligible non-listed business, the business must meet four criteria:
- Has had a transaction account at the bank for at least 12 months. (That is pretty standard.)
- Frequently engages in currency transactions greater than $10,000. (Your documentation should be able to support this.)
- Is incorporated or organized under the laws of the United States or a State, or is registered as and eligible to do business in the United States. Since sole proprietorships are not incorporated or organized, it comes down to whether they are registered as a business in the United States. I have not seen the definition of the term "registered," but I would think it is a little more involved than filing for an "assumed name" at your county recorder's office. I believe in order to pull this off, you are going to have to have solid documentation regarding the legitimacy of the sole proprietorship. Some of this would include detailed financial statements and annual tax returns.
- Is not an ineligible business. (Your standard investigation should be able to prove this.)
While it can be done, I would not normally recommend it without extreme care and due diligence.
First published on BankersOnline.com 2/26/07
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