New Business Account Interview Including CDD Rules 2016

Transcription

1 New Business Account Interview Including CDD Rules 2016 The material used in this text has been drawn from sources believed to be reliable. Every effort has been made to assure the accuracy of the material; however, the accuracy of this information is not guaranteed. The laws are often changed without prior notice from the government. The publisher and the editor are not engaging in the practice of law or accounting. We are not responsible for the actions of your company's employees. Gettechnical Inc. 1 Instructor Deborah L Crawford Debbie is the President of Gettechnical Inc, a Virginia based training company. Her combined banking and training experience began in 1984 and she is a deposit side expert. She received her Bachelors and Masters degrees from Louisiana State University. If you have any questions just call or us at gettechnical@msn.com. You can find our state law chart at gettechnicalinc.com under resource tab. These resources are free and will help you to locate your state law issues. Gettechnical Inc. 2 gettechnical inc. 1

2 For FinCEN, the key elements of CDD include: (i) identifying and verifying the identity of customers; (ii) identifying and verifying the identity of beneficial owners of legal entity customers (i.e., the natural persons who own or control legal entities); (iii) understanding the nature and purpose of customer relationships; and (iv) conducting ongoing monitoring to maintain and update customer information and to identify and report suspicious transactions. 3 CDD FOUR ELEMENTS 4 gettechnical inc. 2

3 CIP Entity (If Agent then CIP person acting for business) CIP: Identifying and Verifying the Identity of Customers CIP Signatories if in Your Policy CIP Exemptions Open Business Account 4 Elements of CDD Identifying and Verifying the Identity of Beneficial Owners of Legal Entity Customers CIP Beneficial Owners of Legal Entities Customers CIP Exemptions plus those for Beneficial ownership Understanding the Nature and Purpose of Customer Relationships Base transactional questions and more detailed questions for high risk accounts Assign Risk Conducting On Going Monitoring 5 Element One Establish a CIP Procedure for all customers Information Required (Prior to opening an account) + Verification through documents (Reasonable time after opening account) + Nondocumentary verification (Reasonable time after opening account) + CIP Recordkeeping + Customer Notice = CIP COMPLIANCE 6 gettechnical inc. 3

4 Element Two Establish beneficial ownership on legal entity customers Legal Entity Customers Ask for 25% Beneficial Owners + Ask for Controlling Person + Run Your Institution s CIP + CDD Recordkeeping 7 Beneficial Ownership The second element of CDD requires financial institutions to identify and verify the beneficial owners of legal entity customers. In this NPRM, FinCEN proposes a new requirement that financial institutions identify the natural persons who are beneficial owners of legal entity customers, subject to certain exemptions. The definition of beneficial owner proposed herein requires that the person identified as a beneficial owner be a natural person (as opposed to another legal entity). A financial institution may satisfy this requirement by obtaining at the time a new account is opened a standard certification form (attached hereto as Appendix A) directly from the individual opening the new account on behalf of the legal entity customer. 8 gettechnical inc. 4

5 Ownership Prong: Each individual, if any, who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25 percent or more of the equity interests of a legal entity customer; and 9 Control Prong: An individual with significant responsibility to control, manage, or direct a legal entity customer, including (A) An executive officer or senior manager (e.g., a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Managing Member, General Partner, President, Vice President, or Treasurer); or (B) Any other individual who regularly performs similar functions. 10 gettechnical inc. 5

6 Verification of Beneficial Owners Standard Certification Form Verification of Beneficial Owners Do not have to verify status Do have to verify identity like CIP 11 Updating Beneficial Ownership Information No specific requirement to update periodically Update when open new account Update when activity changes with on going monitoring 12 gettechnical inc. 6

7 13 14 gettechnical inc. 7

8 15 Element Three Ask Nature, Purpose and Transactional Questions Applies to all customers on a risk basis Nature and Purpose: Ask Transactional questions The third element of CDD requires financial institutions to understand the nature and purpose of customer relationships in order to develop a customer risk profile. A credit union should obtain information at account opening sufficient to develop an understanding of normal and expected activity for the customer s occupation or business operations. In addition, because this is a necessary step to identifying and reporting suspicious activities, which obligation applies to all transactions conducted or attempted by, at or through the covered financial institution, its scope should not be limited to customers for purposes of the CIP rules, but rather should extend more broadly to encompass all accounts established by the institution 16 gettechnical inc. 8

9 Go further for high risk customers: MSBs + MRBs + Cash Intensive Businesses + Third Party Payment Processors + Embassy, Foreign Missions and Consulates + Pay day Lenders + Nongovernment Organizations + Professional Service Providers And many more 17 Monitoring Element Four Monitoring Part of SAR program Applies to everyone Conduct on going monitoring + Refresh Customer information when necessary + Must apply not only to customers for purposes of the CIP rules, but more broadly to all account relationships maintained by the covered financial institution 18 gettechnical inc. 9

10 Customer Identification Programs CDD Element #1 19 SOLE PROPRIETORSHIP 20 gettechnical inc. 10

11 To establish a sole proprietorship all an individual is required to do is to start conducting business for profit. There are no formal legal requirements for establishment. In most states these are owned by one person and cease at the death of that owner. Certainly the sole proprietorship can have other signers on the account. 21 Requirements 1. Required Information on Entity: (Before opening account) Sole Proprietorship Name Address Date of birth Taxpayer identification The account will use the Social Security number of owner or employer identification number of owner. 2. IRS Reporting: Report in SSN or EIN of owner 3. Documentary Requirements: Valid identification on sole proprietor (Reasonable time after My financial institution does/does not require opening) all signers to Complete CIP. County issued document such as Occupational license/trade Name The customer applies in the county where he or she is doing business. Resolution: Provided by the financial institution for sole proprietorships and signed by the owner of the business. There may be other signers on the account. These signers may be changed at any time by the owner. Signature card: Provided by the financial institution, signed by those authorized in the Resolution. It is the contract between the financial institution and the customer. 22 gettechnical inc. 11

12 Requirements 4. Suggested Nondocument Verification: (Reasonable time after opening) Sole Proprietorship A CIP program must also have nondocumentary verification. Suggestions include: Welcome letter Call to customer to thank for business Delivery of checks to location by account officer Third party verification Previous financial institution references 5. Account Styling: Joe Smith dba Floral Enterprises 6. Consult Government Lists: Section 326 List OFAC List 7. Insurance: A sole proprietorship is insured under individual coverage for a total of $250, Resolution I, Joe Smith, am the sole owner of Floral Enterprises. I authorize the following to sign on the account: Joe Smith Owner Mary Smith Authorized Signer Usually a list of what they can and cannot do Signed Joe Smith, Owner gettechnical inc. 12

13 Sample: Sole Proprietorship 1 OWNERSHIP Sole Proprietorship 2 TITLE Joe Smith dba Floral Enterprises 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER Joe certifies SSN or EIN (EIN assigned to Joe personally either way Joe is first on title) 4 SIGNATURES (Access) Joe Smith Mary Smith 25 Checklist for Sole Proprietorship Required information on sole proprietorship Report in SSN or EIN of owner Valid identification on sole proprietor Occupational License from county/trade Name/Assumed Name Account Styling: Joe Smith dba Floral Enterprises Account Ownership: Sole Proprietor Nondocumentary verification Resolution Signature Card Government Lists 26 gettechnical inc. 13

14 3 Kinds of Partnerships in Most States General Partnerships Limited Liability Partnerships Limited Partnerships County or SOS SOS SOS May have Agreement Partnership Agreement Partnership Agreement EIN EIN EIN Resolution & Signature Card Resolution & Signature Card Resolution & Signature Card 27 PARTNERSHIP: ALL THREE FOLLOW SIMILAR PROCEDURES ALTHOUGH DOCUMENTS MAY BE DIFFERENT The Uniform Partnership Act defines a partnership as an association of two or more persons to carry on a business as co owners for profit. Partnerships are easily organized and may or may not have a formal partnership agreement. 28 gettechnical inc. 14

15 Requirements Partnership 1. Required Information on Name Entity: Address (Before opening account) Taxpayer identification The account will use the employer identification number of the partnership. 2. IRS Reporting: Report in EIN of business 29 Requirements 3. Documentary Requirements: (Reasonable time after opening) Partnership Valid Identification on partner(s) opening the account. My financial institution does/does not require all signers to complete CIP Partnership Agreement: When it is available it is helpful to identify all the partners by a copy of the partnership agreement. The key issue to a partnership account is to make sure all partners sign the resolution. Government Issued document at county or secretary of state (Domestic or Foreign) Certification of Beneficial Owner(s) Resolution: Provided by the financial institution for partnerships and signed by the partners. There may be other signers on the account and may be changed at any time by all of the partners. A change in the account requires a new resolution signed by all the partners. Signature Card: Provided by the financial institution, signed by those authorized in the resolution. It is the contract between the financial institution and the customer. 30 gettechnical inc. 15

16 Requirements Partnership 4. Suggested Nondocument A CIP program must also have nondocumentary Verification: verification. Suggestions include: (Reasonable time after Welcome letter opening) Call to customer to thank for business Delivery of checks to location by account officer Third party verification Previous financial institution references 5. Account Styling: Johnson Enterprises 6. Consult Government Lists: Section 326 List OFAC List 7. Insurance: A partnership is separately insured for $250,000 from the individual accounts of the partners. 8. Miscellaneous: No PODs on partnerships. 31 Partnership Resolution Names the Partnership: Floral Enterprises Lists who can sign Joe Smith Mary Smith Betty Smith What their job is Partner Partner Authorized Signer Usually a list of what they can and cannot do Make deposits and Withdrawals Make loans Other Joe Smith Mary Smith Signed by all the partners unless there is a partnership agreement with a managing partner named. 32 gettechnical inc. 16

17 Sample: Partnership 1 OWNERSHIP General Partnership 2 TITLE Floral Enterprises 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of Partnership 4 SIGNATURES (Access) Joe Smith, Partner Mary Smith, Partner Betty Smith, Authorized Signer 33 Joe Smith Floral Enterprises Joe Smith 8/14/77 Mary Smith 9/15/ Main St Monroe LA xxxxx Main St Monroe, LA xxxxx Joe Smith 8/14/ Main St Monroe, LA Joe Smith Joe Smith 1/6/ gettechnical inc. 17

18 Checklist for Partnership Required information on Entity Report in EIN of Partnership Valid identification on partner(s) opening the account Documentary verification County document or SOS document Nondocumentary verification Signature Card Resolution Certification of Beneficial Owner(s) Account Styling: Johnson Enterprises Government Lists 35 CORPORATIONS 36 gettechnical inc. 18

19 Corporations A corporation is formed when Articles of Incorporation are filed with the Secretary of State to approve the new business. Corporations doing business in more than one state must register as a "foreign corporation" in each state. The election of officers, usually contained in the minutes, is done at the first board meeting. The opening and closing of an account is authorized by the Board of Directors and carried out by the Corporate Secretary. 37 Requirements 1. Required Information on Entity: (Before opening account) Corporations Name Address Taxpayer identification The account will use the employer identification number of the corporation. 2. IRS Reporting: Report in EIN of business 38 gettechnical inc. 19

20 Requirements 3. Documentary Requirements: (Reasonable time after opening) Corporations Valid identification on corporate secretary My financial institution does/does not require all signers to Complete CIP. Domestic: Government issued document Foreign: Government issued document Fictitious Name: If the corporation is doing business under another name it must file a Certificate of Fictitious Name 39 Requirements 3. Con t Documentary Requirements: (Reasonable time after opening) 4. Suggested Nondocument Verification: (Reasonable time after opening) Corporations Minutes from Board Meeting: The customer should provide an excerpt from the minutes of the last board meeting where officers were elected specifically the Secretary of the corporation since this person must sign the resolution. Certification of Beneficial Owner(s) Resolution: Provided by the financial institution signed by the secretary of the business. There may be other signers on the account. These signers may be changed at any time by the corporation, provided the corporation provides new minutes, new resolution and new signature card. Signature Card: Provided by the financial institution signed by those authorized in the resolution. It is the contract between the financial institution and the customer. A CIP program must also have nondocumentary verification. Suggestions include: Welcome letter Call to customer to thank for business Delivery of checks to location by account officer Third party verification Contact Secretary of State s Office 40 gettechnical inc. 20

21 Requirements Corporations 5. Account Styling: Johnson Enterprises, Inc. 6. Consult Government Lists: Section 326 List OFAC List 7. Insurance: Each corporation is separately insured for $250, Miscellaneous: No ITF/PODs on Corporations. 41 Resolution Be it resolved at the last meeting of Floral Enterprises, Inc on July 4, 2011 the board of directors the following was decided: All of these will sign on the corporate account: Joe Smith President and Secretary Mary Smith Vice President and Treasurer Usually a list of what they can and cannot do Make Deposits and withdrawals Make loans Other Signed Joe Smith, Corporate Secretary Attested to by another officer 42 gettechnical inc. 21

22 Sample: Corporation 1 OWNERSHIP Corporation 2 TITLE Floral Enterprises Inc 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of Corporation 4 SIGNATURES (Access) Joe Smith, Pres and Sec Mary Smith, VP and Treas 43 Joe Smith Floral Enterprises, Inc Joe Smith 08/14/ Main Street Monroe, LA xxxxx Mary Smith 09/15/ Main Street Monroe, LA xxxxx Joe Smith 08/14/ Main Street Monroe, LA xxxxx Joe Smith Joe Smith 01/06/ gettechnical inc. 22

23 Checklist for Corporations Required information on Corporation Report to IRS in EIN of Business Valid identification on Corporate Secretary Document from Secretary of State Domestic: Government issued document Foreign: Government issued document Fictitious Name (If required) Minutes from Board meeting to determine Corporate Secretary Nondocumentary verification (should check with Secretary of State to see if in good standing) Signature Card Resolution Certification of Beneficial Owner(s) Account Styling: Johnson Enterprises, Inc. Government lists 45 LIMITED LIABILITY COMPANY 46 gettechnical inc. 23

24 Limited Liability Company (LLC) A limited liability company offers the owners limited liability like a corporation with a taxing structure similar to a partnership. The income is passed through to the owners of the business. 47 Requirements 1. Required Information on Entity: (Before opening account) Limited Liability Company Name Address Taxpayer identification The account can use the Social Security number of owner if a one person LLC or employer identification number of the business. 2. IRS Reporting: Report in EIN of LLC or may use SSN of member if the LLC is one person. 48 gettechnical inc. 24

25 Requirements 3. Documentary Requirements: (Reasonable time after opening) Limited Liability Company Valid identification on person opening the account My financial institution does/does not require all signers to Complete CIP. Operating Agreement, if any: Provided by the customer, the agreement between the members of the LLC. It usually names the managing member. Domestic: Government Issued Document Foreign: Government Issued Document Certification of Beneficial Owner(s) Resolution: Provided by financial institution and signed by managing member authorizing others in organization to sign on accounts. Signature Card: Provided by financial institution; it is the contract between financial institution and customer. 49 Requirements 4. Suggested Nondocument Verification: (Reasonable time after opening) Limited Liability Company A CIP program must also have nondocumentary verification. Suggestions include: Welcome letter Call to customer to thank for business Delivery of checks to location by account officer Third party verification Check with Secretary of State s Office 5. Account Styling: Name of business: Examples: Smith Electronics, LLC If a one person LLC using a Social Security number : Joe Smith Smith Electronics, LLC 6. Consult Government Lists: Section 326 List OFAC List 7. Insurance: $250,000 per LLC 8. Miscellaneous: No ITF/PODs on Limited Liability Companies May be a one person LLC May use a Social Security number 50 gettechnical inc. 25

26 Limited Liability Company Resolution Names the Limited Liability Company: Floral Enterprises, LLC Lists who can sign Joe Smith Mary Smith Betty Smith What their job is Managing Member Member Authorized Signer Usually a list of what they can and cannot do Make deposits and Withdrawals Make loans Other Joe Smith, Managing Member Attested to by: Mary Smith, Member 51 Sample: Multiple Member LLC 1 OWNERSHIP Limited Liability Company 2 TITLE Floral Enterprises, LLC 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of LLC 4 SIGNATURES (Access) Joe Smith, Managing member Mary Smith, Member Betty Smith, Authorized signer 52 gettechnical inc. 26

27 Joe Smith Floral Enterprises, LLC Joe Smith 08/14/ Main Street Monroe, LA xxxxx Mary Smith 09/15/ Main Street Monroe, LA xxxxx Joe Smith 08/14/ Main Street Joe Smith Monroe, LA xxxxx Joe Smith 01/06/ Limited Liability Company Resolution Names the Limited Liability Company: Floral Enterprises, LLC Lists who can sign Joe Smith Mary Smith Betty Smith What their job is Managing Member Authorized Signer Authorized Signer Usually a list of what they can and cannot do Make deposits and Withdrawals Make loans Other Joe Smith, Managing Member 54 gettechnical inc. 27

28 Sample: Single Member LLC 1 OWNERSHIP Limited Liability Company 2 TITLE Joe Smith Floral Enterprises, LLC 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER SSN of Joe Smith 4 SIGNATURES (Access) Joe Smith, Managing member Mary Smith, Authorized signer Betty Smith, Authorized signer 55 Joe Smith Floral Enterprises, LLC Joe Smith 08/14/ Main Street Monroe, LA xxxxx Joe Smith 08/14/ Main Street Joe Smith Monroe, LA xxxxx Joe Smith 01/06/ gettechnical inc. 28

29 Checklist for Limited Liability Company Required information on LLC Report to IRS in EIN (or SSN if one person LLC) Valid identification on managing member Operating Agreement, if any Documentation Domestic: Government Issued Document Foreign: Government Issued Document Account Styling: Smith Electronics, LLC OR Joe Smith, Smith Electronics, LLC Nondocumentary verification Certification of Beneficial Owner(s) Resolution Signature Card Government lists 57 FORMAL NONPROFIT OR UNINCORPORATED ASSOCIATION 58 gettechnical inc. 29

30 REQUIREMENTS FOR FORMAL NON PROFIT OR UNINCORPORATED ASSOCIATIONS Requirements 1. Required Information: (Before opening account) Formal Nonprofit Or Unincorporated Associations Name Address Taxpayer identification The account will use the employer identification number of the organization. 2. IRS Reporting: Report in EIN of Organization 3. Documentary Requirements: (Reasonable time after opening) Valid identification on person opening the account. Sometime financial institutions require identification on all signatories. My financial institution does/does not require all signers to complete CIP Charter, By laws provided by customer. Minutes of Meeting authorizing account opening 59 Requirements 3. Doc. Requirements (Continued) Formal Nonprofit Or Unincorporated Associations Financial Institution Provided Resolution Financial Institution Provided Signature Card 4. Suggested nondocument verification: (Reasonable time after opening) A CIP program must also have nondocumentary verification. Suggestions include: Welcome letter Call to customer to thank for business Delivery of checks to location by account officer Third party verification Previous financial institution references 5. Account Styling: Name of organization. Examples: Rotary Lions Club Kiwanis 60 gettechnical inc. 30

31 Requirements Formal Nonprofit Or Unincorporated Associations 6. Consult Government Lists: Section 326 List OFAC List 7. Insurance: $250,000 per Organization 8. Miscellaneous: Not for profit organizations may not have ITF/POD 61 Nonprofit Resolution Names the Nonprofit: Baton Rouge Rotary Lists who can sign Joe Smith Mary Smith Betty Jones What their job is President VP and Treasurer Secretary Usually a list of what they can and cannot do Make deposits and Withdrawals Make loans Other Betty Jones, Secretary Attested to by: Mary Smith, VP 62 gettechnical inc. 31

32 Example of Formal Nonprofit Organization 1 OWNERSHIP Nonprofit 5 TAXPAYER IDENTIFICATION NUMBER EIN of Rotary 2 TITLE Rotary 3 FEDERAL REGULATIONS 4 SIGNATURES (Access) Joe Smith, Pres Mary Smith, Treas and VP Betty Jones, Sec 63 INFORMAL NONPROFIT OR UNINCORPORATED ASSOCIATION 64 gettechnical inc. 32

33 REQUIREMENTS FOR INFORMAL NONPROFIT OR UNINCORPORATED ASSOCIATIONS Requirements 1. Required Information: (Before opening account) Informal Nonprofit Name Address Taxpayer identification The account will use the employer identification number of the organization. 2. IRS Reporting: Report in EIN of Organization 3. Documentary Requirements: (Reasonable time after opening) Valid identification on all persons opening the account, since there will be no outside documents, such as charters or by by laws Financial Institution Provided Resolution Financial Institution Provided Signature Card 65 Requirements 4. Suggested nondocument verification: (Reasonable time after opening) Informal Nonprofit A CIP program must also have nondocument verification. Suggestions include: Welcome letter Call to customer to thank for business Delivery of checks to location by account officer Third party verification Previous financial institution references 5. Account Styling: Name of organization. Examples: Little League Flower Fund Hunting Club 1975 Class Reunion 66 gettechnical inc. 33

34 Requirements 6. Consult Government Lists: Section 326 List OFAC List Informal Nonprofit 7. Insurance: $250,000 per Organization 8. Miscellaneous: Some small organizations will not have outside documents. You will have to identify all signatories if your financial institution decides to open these accounts. Do not set up as a personal account unless the SSN or the person on the account is signing and checks will be coming in made out personally to that person. 67 Nonprofit Resolution Names the nonprofit: 1975 High School Reunion Lists who can sign Joe Smith Mary Smith What their job is President Secretary Usually a list of what they can and cannot do Make deposits and Withdrawals Make loans Other Joe Smith, President Attested to by: Mary Smith, Secretary 68 gettechnical inc. 34

35 Sample: Nonprofit 1 OWNERSHIP Nonprofit 2 TITLE 1975 High School Reunion 3 FEDERAL REGULATIONS 5 TAXPAYER IDENTIFICATION NUMBER EIN of High School Reunion 4 SIGNATURES (Access) Joe Smith Mary Smith Gettechnical Inc 69 Nature and Purpose CDD Element #3 70 gettechnical inc. 35

36 Purpose and Source What brought you to the credit union today? Where are you moving the funds from? What is the purpose of this business account? Operating, payroll, escrow How is the business structured? Sole Proprietorship, LLC, Partnership, Corporation or other. Do you have beneficial owners on this business who own 25% or more of this business? 71 Thanks for that information now we can tell you what documents we will need on the business and the parties involved CIP Business and Signers CIP Beneficial Owners (Proposed) Follow check lists on paperwork for the particular type of business. 72 gettechnical inc. 36

37 Geography Can you tell me the service area of your business? Do all of the principals live in the same geographic region? 73 Transactional questions Now to get you in the right product, we will have to ask a few transactional questions. Expected Annual Deposits Types of banking services used Expected International Services 74 gettechnical inc. 37

38 Products and Services We have several options for the account that might work for you. Let me go over them with you. We have some additional services that I can also offer you. Remote Deposit Capture Debit Cards Online banking Bill Pay Now let s make sure you understand all the benefits and fees of the choices you have made. 75 Money Service Business Does your company cash checks over $1000? Does your company issue cashier s checks or money orders over $1000? Does your company exchange currency over $1000? Do you transmit currency even virtual currency at any dollar amount? Do you provide or sell prepaid cards? Over $2000 Closed loop Not for HSA, Government Benefits or Employee Benefits Over $1000 At any amount if allow for reloads from nonfinancial institutions or internationally If a seller, if you do not CIP or sell under $10,000 If yes, then we will need your FinCEN Registration and state registration when applicable unless you are acting as an agent solely and can provide proof of the agency status. 76 gettechnical inc. 38

39 Unlawful or lawful internet gambling Does your company have any games or financial activities on its website? Do you provide services to companies who provide internet gambling? If internet gambling is legal in your state, provide licensing. Otherwise have company sign certification that it is not engaged in unlawful internet gambling. 77 Private ATMs Does the business have any private ATM machines located on the premises? Does your business own or lease from another contractor? We will need: Copy of the ATM agreement with sponsoring entity Exact physical location(s) of the ATM(s) Copy of state registration (if required by state) Copy of three months ATM activity statements Description of currency servicing arrangements including How is cash being replenished (store proceeds, armored car, etc) 78 gettechnical inc. 39

40 Funds Availability on Checking Here is our funds availability policy. You will notice that our funds are generally next day available but cash is available on the same day. You can make a deposit from 9 5 at the teller window and it will be available generally by the next morning. 79 Debit Cards We do issue debit cards for business accounts. Is this something that you are interested in? You can order these for employees but I want to take a minute to go over the limits and what happens if there is an unauthorized transaction on you business debit card it is a little different than a personal account. Explain 80 gettechnical inc. 40

41 Marijuana Related Businesses Are you a producer, processor or retailer of marijuana? Yes/No If yes, obtain copy of license What is your annual revenue? If a retailer, you agree that there is: No employee under the age of 21 or allow anyone under the age of 21 on the premises No signage is visible from the public right of way No display is visible from the public right of way No employee or owner shall use the product on the premises Is this business a marijuana related business? Type of Business (Example Insurance company, landlord, security systems etc. Approximate Annual Revenue What percentage of your business is directly tied to marijuana business? % What process do you have in place to make sure the marijuana business is licensed? 81 Checklist Customer Profile Resolution Signature Card W 9 or W 8Bene Documentation on Business Documentation on Signers and 25% Beneficial owners OFAC Business Debit Card Agreement, Online banking and Remote Deposit Capture Funds availability and unlawful internet gambling Registration for MSBs and state law registration State registration and licensing for marijuana businesses Risk rating of business 82 gettechnical inc. 41

42 Monitoring CDD Element #4 Manual Monitoring Automated Monitoring 83 Withholding on Business Accounts FATCA on Foreign Financial Institutions and Entities 84 gettechnical inc. 42

43 IRS determines who uses what 85 IRS versus CIP Requirements For U.S. persons a financial institution must obtain a U.S. taxpayer identification number (e.g., social security number, individual taxpayer identification number, or employer identification number). For non U.S. persons a financial institution must obtain one or more of the following: a taxpayer identification number; passport number and country of issuance; alien identification card number; or number and country of issuance of any other government issued document evidencing nationality or residence and bearing a photograph or similar safeguard. 86 gettechnical inc. 43

44 SS 4 Application for Employer Identification Number (EIN) 87 Social Security Issues 3 Types of Social Security Cards: 1. Shows accountholder name and Social Security number and lets accountholder work without restriction. These are given to U.S. citizens and lawful permanent residents. 2. Shows name and number and notes Valid for Work Only with DHS Authorization. Social security issues this type of card to people lawfully admitted to the U.S. on a temporary basis who have DHS authorization 3. Shows name and number and notes Not Valid for Employment. These are issued to: Those who are lawfully admitted to the U.S. without work authorization from DHS Who need a number because of a federal law requiring a Social Security number to get a benefit or service 88 gettechnical inc. 44

45 89 Know Your Financial Institution s CIP Policy on Social Security Cards as forms of Identification. SSN can now be randomized. 90 gettechnical inc. 45

46 Individual Taxpayer Identification Number (ITIN) Customer is not eligible for a social security number but has a tax purpose for needing a tax identification number. To get an ITIN the customer may have to be turned down for a SSN first and then apply for the ITIN. To get an account for banking purposes, the customer may have to prove the tax purpose. See letter to give customer to get ITIN. 91 General ITIN Information What is an ITIN? An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine digit number that always begins with the number 9 and has a range of in the fourth and fifth digit. Effective April 12, 2011, the range was extended to include through , through and through IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. 92 gettechnical inc. 46

47 The ITIN is for tax purposes only! Use Form W 7 to apply for an IRS individual taxpayer identification number (ITIN). An ITIN is a nine digit number issued by the U.S. Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but who do not have and are not eligible to obtain, a social security number (SSN). ITIN does not entitle accountholder to social security benefits, and creates no inference regarding your immigration status or your right to work in the United States. Any individual who is eligible to be legally employed in the United States must have an SSN. 93 Under the new policy: An ITIN will expire for any taxpayer who fails to file a federal income tax return for three consecutive tax years. 94 gettechnical inc. 47

48 FORM W 9 Gettechnical Inc. 95 Opening of a deposit account Withholding agent W 9 US Person W 8BEN or W 8BENE Nonresident alien 96 gettechnical inc. 48

49 Use TIN number on W 9 or W 8BEN US Citizens SSN Resident Aliens Types of TIN EIN Nonresident Alien Estates, Nonprofits, businesses, etc. ITIN US Persons Nonresident aliens 97 Disregarded entity Disregarded entity. For U.S. federal tax purposes, an entity that is disregarded as an entity separate from its owner is treated as a disregarded entity. See Regulation section (c)(2)(iii). Enter the owner's name on the Name line. The name of the entity entered on the Name line should never be a disregarded entity. The name on the Name line must be the name shown on the income tax return on which the income should be reported. For example, if a foreign LLC that is treated as a disregarded entity for U.S. federal tax purposes has a single owner that is a U.S. person, the U.S. owner's name is required to be provided on the Name line. If the direct owner of the entity is also a disregarded entity, enter the first owner that is not disregarded for federal tax purposes. Enter the disregarded entity's name on the Business name/disregarded entity name line. If the owner of the disregarded entity is a foreign person, the owner must complete an appropriate Form W 8 instead of a Form W 9. This is the case even if the foreign person has a U.S. TIN. Note. Check the appropriate box for the U.S. federal tax classification of the person whose name is entered on the Name line (Individual/sole proprietor, Partnership, C Corporation, S Corporation, Trust/estate). 98 gettechnical inc. 49

50 LLC Limited Liability Company (LLC). If the person identified on the Name line is an LLC, check the Limited liability company box only and enter the appropriate code for the U.S. federal tax classification in the space provided. If you are an LLC that is treated as a partnership for U.S. federal tax purposes, enter P for partnership. If you are an LLC that has filed a Form 8832 or a Form 2553 to be taxed as a corporation, enter C for C corporation or S for S corporation, as appropriate. If you are an LLC that is disregarded as an entity separate from its owner under Regulation section (except for employment and excise tax), do not check the LLC box unless the owner of the LLC (required to be identified on the Name line) is another LLC that is not disregarded for U.S. federal tax purposes. If the LLC is disregarded as an entity separate from its owner, enter the appropriate tax classification of the owner identified on the Name line. Other entities. Enter your business name as shown on required U.S. federal tax documents on the Name line. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on the Business name/disregarded entity name line. 99 Disregarded Entity Business entities; definitions (a) Business entities. For purposes of this section and section , a business entity is any entity recognized for federal tax purposes (including an entity with a single owner that may be disregarded as an entity separate from its owner under section ) that is not properly classified as a trust under section or otherwise subject to special treatment under the Internal Revenue Code. A business entity with two or more members is classified for federal tax purposes as either a corporation or a partnership. A business entity with only one owner is classified as a corporation or is disregarded; if the entity is disregarded, its activities are treated in the same manner as a sole proprietorship, branch, or division of the owner. 100 gettechnical inc. 50

51 LLC Tax Reporting Multi Member LLC May be classified for tax purposes Single Member LLC May be classified for tax purposes Partnership Corporation Disregard LLC and report in TIN of Owner Unless choose to be treated as a Corporation John Smith ABC, LLC Report in John s SSN XYZ, Inc. ABC, LLC Report in XYZ, Inc s EIN 101 LLC Single Member Multi-Member Member is a Person Member is a Business Members are Individuals Members are Businesses Bob Smith Electronic Vision, LLC Report in Bob s SSN or EIN ABC, Inc. Electronic Vision, LLC Report in EIN of corporation Electronic Vision, LLC Managing Member Bob Smith Electronic Vision, LLC Managing Member ABC, Inc. Not a dba Not a dba 102 gettechnical inc. 51

52 Exempt payee code Exempt payee code. Generally, individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends. Corporations are not exempt from backup withholding for payments made in settlement of payment card or third party network transactions. Note. If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding. The following codes identify payees that are exempt from backup withholding: 1 An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2) 2 The United States or any of its agencies or instrumentalities 3 A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities 4 A foreign government or any of its political subdivisions, agencies, or instrumentalities 5 A corporation 6 A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession ofthe United States 7 A futures commission merchant registered with the Commodity Futures Trading Commission 8 A real estate investment trust 9 An entity registered at all times during the tax year under the Investment Company Act of A common trust fund operated by a bank under section 584(a) 11 A financial institution 12 A middleman known in the investment community as a nominee or custodian 13 A trust exempt from tax under section 664 or described in section Gettechnical Inc. 104 gettechnical inc. 52

53 Debbie Crawford Gettechnical Inc gettechnical@msn.com TTS info@ttstrain.com CUWebinars.com Thanks for participating! Upcoming CUWebinars September 19 th - 7 Habits of Highly Successful Sales Staff September 22 nd Compliance Perspectives: A Monthly Update September 28 th - Call Center Representative Training October 6 th Compliance Rules for Lenders October 13 th - 10 Lessons Learned When Your Member Dies October 17 th - 10 Key Criteria Loan Officers Should Focus On Don t forget about our listing of OnDemand programs at CUWebinars.com! Gettechnical Inc. 105 gettechnical inc. 53