Account Styling Change

Answered by:

Question:

We recently had a customer request an account title be changed from a sole proprietorship to a corporation. The customer presented the proper documentation, but requested that the same account number be used. What are your recommendations and concerns regarding this request?

Answer:

That's not an unusual request when a business gets incorporated. Best practice would call for the opening of a new account for the corporation, thus separating the activity in the sole proprietorship's account from that in the corporation's account. The corporation is, in fact, a new entity and a new customer, and changing the old account is not a good idea.

As an accommodation, your bank should consider absorbing some or all of the cost of the first check order for the new corporation, and other costs the customer might incur as a direct result of the change to the new account. Taking this route also helps to reinforce the fact that you must complete your CIP process on the new customer, and that any CTR exemption you may have had in place for the old account cannot be carried forward to the new one.

First published on BankersOnline.com 8/10/09