Good Afternoon--

My organization has many customers that have rental property income that is being deposited into their personal accounts on a monthly basis. These are not just individuals with one rental property but appear to have multiple properties that aggregate anywhere between $3,000 to $9,000 on average, all deposited into personal accounts.

My thoughts are that a business account should be established but wanted to get the opinion of others. Do you see activity of this nature in your organization and if you do, do you require that some sort of Sole Proprietor or business account be opened?

Thanks in advance for your feedback as this has been an ongoing issue and debate for our institution.

I had this very same arguement not too long ago. The "expert" consultants didn't feel it was suspicous, as rental income could be declared on personal tax returns.

Assuming nothing suspicous is going on with the funds after the are deposited of course.

If the checks are made payable to them personally, then whether you not you want to make them open a business account is purely a bank policy as to what type of transactions you allow through your personal accounts. If these checks are made payable to an entity (Inc, LLC, etc.) then they should only be allowed to be deposited into a like named account.

What we are seeing are individuals depositing large amounts of cash into their personal checking accounts & when the source of funds are questioned they state it is income from rental properties. We have always taken the stance that if its one rental property with consistent amounts it's explainable but in most cases what we are seeing is inconsistent amounts monthly and nothing that appears to be related to owning multiple rental properties or activities that would appear to be for such (e.g. Mortgage pymts, repair bills etc.). So was interested to see what our FI's are doing in situations like these.

The lack of mortgage payments, repair bills, etc. is unusual and does warrant further investigation. Based on what you described, I would request a list of the rental properties and if they are local, I would have a branch manager or business development officer perform a site visit. If they are not local, I would ask the customer why they are banking at your location.

At the end of the day, if you feel the customer is structuring the deposits or you cannot verify the source of the cash as legitimate, file an SAR and consider the account for closure.

You might verify ownership of the properties via the local government websites. In other words, just because a person says he/she owns a property doesn't mean they do. Just a thought.

Thanks for the information & feedback! Much appreciated!

We have reviewed and filed Suspicious Activity reports based on unknown source of funds going into personal accounts but we are now getting push back from retail when we request that the customer open an appropriate rental property account or the relationship needs to go!!