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Have you ever wondered why banks ask so many questions and seem to set spending or deposit limits? When you go to the bank to open a business account, they will ask for paperwork and information to identify every beneficial owner. If you are not the ultimate beneficial owner, you can still open the account, but you will need to provide names and private information for those who are. Read on to learn why the banks need so much information, how to be prepared to open your business account to save time, and what could happen if the banks do not gather as much information — or any at all. Why banks ask so much When it comes to our financial safety, our banks and other financial institutions are on the front line. Criminals go to banks to open accounts, where they proceed to launder money or create financing for terrorists or drug operations. We can prevent these crimes by detecting the risks each client poses of committing the crime. Each financial institution is required to collect information on each individual and business before opening an account to assess the risks. They then have to monitor each account for signs of criminal activity as well. What could happen? If we let these criminals continue to commit their crimes within our financial institutions they can wreak havoc on the economy. Money laundering can increase the demand for cash and cause inflation. Other crimes that can be prevented by risk management include fraud and organized crimes like terrorist funding that can not only hurt the economy, but also individuals and the safety of the world. Be prepared When you go to open your company’s account, be prepared with the information you will need to prove your business is legitimate and not a risk. Banks will ask for certain documents, which include: - Personal identification of the beneficial owners and the ultimate beneficial owner — this being the people who have at least 25% interest in the company
- The name, incorporation date and physical address of the business — information can be found on your business license and registration
- Your company’s financial records
- The company’s EIN
- Ownership agreements
- And other documents that prove your company does what you say it does
In our current times, there are major risks of crime or harm for the financial industry and the economy. Banks and other financial institutions are required to check and monitor each individual and business who comes to them to open an account. They must find the ultimate beneficial owner and the beneficial owner to determine if they have been or could be involved in a financial crime — like money laundering or financing of terrorists and other illegal activities. When you go to a bank to open an account, it is better to be prepared by having all the documents and information you need — like identification for all beneficial owners and the financial records for your business. If we all do our part to prevent financial crime, we can protect the economy and the world from collapse due to the acts of financial criminals.
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