Page 7 - 638271 IBAT with links for Flip Book_v3

ASSUMED NAMES. For a partnership, this is a name that VERIFICATION of ENTITY. The formation documents are de-
does not include the surname or other legal name of scribed above. The most secure way to verify the entity’s
each joint venturer or general partner. For a corpora- existence and critical information is to use SOSDirect, an
tion, limited partnership or LLC, it is a name other than online business service from the Texas Office of the Sec-
the one stated in the certificate of formation or compa- retary of State: goo.gl/iJNRF2. Other states have compa-
rable document (e.g., articles of incorporation). For an rable web-based search services. By going directly to the
LLP, it is a name other than the one stated in its applica- filing authority, the bank can be comfortable that it has
tion filed with the secretary of state. An assumed name not received a fraudulent or counterfeit document.
certificate is good for 10 years and must be filed with the In addition, the Texas comptroller of public accounts
secretary of state and the county clerk of either its prin- maintains several databases of interest, including one
cipal office—if in this state—or of its registered agent. for certificates of account status: goo.gl/V7gPvm. There
is also a Texas Franchise Tax Ownership Information Report,
MANAGEMENT. For purposes of the FinCEN rule on cus - which is public information.
tomer due diligence, the bank must identify one indi-
vidual with significant responsibility to control, man- DUE DILIGENCE TOOLS. Customer due diligence also requires
age or direct the legal entity. This could be one of the truly knowing your customer’s business and needs. Inter-
following: executive officer, senior manager, chief exec- nal questionnaires and BSA/AML systems can be used to
utive officer, chief finance officer, chief operating offi- collect expected revenue sources and expenditures. But in
cer, managing member (LLC), general partner, president, addition, don’t forget to check for adverse news. This can
vice president or treasurer. be done for free through Google or subscription services.
For the purpose of establishing a valid contractu-
al relationship—a deposit account agreement or loan, lthough we have focused on Texas legal entities,
for example—the governing person or body, such as the the organizational types and rules should be
board of directors, must approve the transaction and A similar in other states, as well. And remember
designate the appropriate person to sign documents. that truly knowing your customer can benefit your mar-
Thus, the bank should obtain a certificate of resolution keting side as you learn more about their needs. H
that accomplishes this. Minutes are not the right docu-
ment. Rather, there should be a certificate signed by the Karen M. Neeley, in the Austin office of Kennedy Sutherland
secretary or other person with authority over the enti- LLP, is widely recognized throughout the Texas financial
ty’s records that verifies that the necessary resolution institution community for her expertise in the areas of regulatory
was adopted in a valid manner. and compliance law. Contact her at [email protected].

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