While business accounts can be beneficial to credit unions and the communities they serve, they also bring a measure of additional risk, attorney David Reed told attendees Tuesday at the CUNA/National Association of State Credit Union Supervisors Bank Secrecy Act (BSA) conference. Reed said that serving businesses helps a credit union increase its presence in its community, and additional due diligence can help avoid potential issues down the road.
Business account risk management processes should include planning; risk identification and management; controls and measuring and monitoring.
“As we talk about Bank Secrecy Act risk, you need to look at your business account agreement documents, policies and procedures,” Reed said. “When we talk about customer due diligence, beneficial ownership, account access, that kind of thing, the account opening process is so important.”
Credit unions should develop a business account policy to describe what entities it will serve, which services will be offered and to specify pricing to account for any additional risk.
Reed says credit unions should have a business account agreement that is different than a natural member agreement, with additional documentary requirements to verify identities and a personal liability agreement, and that includes all account relationship details.
“A business account agreement needs to specifically recognize the nature of the relationship, it needs to recognize the level if risk and the fact that regular consumer protection laws to no apply and you need to create those by contract,” Reed said. “You also need to make it clear any other information you’ll need for Bank Secrecy Act purposes.
For higher-risk accounts, credit unions might consider collecting information on:
Credit unions are required to keep verification records for five years, including name, dates of birth, addresses and identification numbers, such as a taxpayer identification number.
Credit unions must confirm the status of the entity through appropriate documents. The Treasury suggests credit unions confirm evidence of the businesses purported activity and purpose through visiting the website, calling the telephone number and even conducting a site visit