We often get questions from entrepreneurs about how to open a bank account for a Delaware company. The answer is each bank in the United States has its own requirements so you must check with the bank. Below are guidelines, that serve as a floor, banks must follow. Often a particular bank will ask for additional information pursuant to their internal policies. You can open a bank account in any state when you are incorporated in Delaware
U.S. banks are required by Federal law to ensure that they are able to form a reasonable belief that they know the true identity of each customer applying to open an account. In order to achieve this, banks must implement a Customer Identification Program (CIP). While not uniform, the minimum identifying information that a U.S. bank is required to obtain, for a “person”, is the following:
- Name of Legal Entity or Individual
- Date of birth for Individuals
- Address, which shall be:
- For an individual, a residential or business street address, or for an individual who does not have a residential or business street address, an Army Post Office or Fleet Post Office box number, or the residential or business street address of next of kin or of another contact individual
- For a person other than an individual (such as a corporation, LLC, partnership, or trust), a principal place of business, local office, or other physical location
- Identification number (Employer Identification Number (EIN), Social Security Number or other government identification number (passport number or other similar information in the case of foreign persons))
For legal entity customers, banks will often times request the following information in order to verify that the legal entity is in existence and obtain the identity of the beneficial owners of the entity.
- Certificate of Formation/Incorporation
U.S. banks are required to identify, verify, and record the identities of the beneficial owners of legal entity customers. Beneficial owners are defined as each of the following:
- Each individual, if any, who, directly or indirectly, owns 25% or more of the equity interests of a legal entity customer (i.e., the ownership prong); and
- A single individual with significant responsibility to control, manage, or direct a legal entity customer, including 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 any other individual who regularly performs similar functions (i.e., the control prong). This list of positions is illustrative, not exclusive, as there is significant diversity in how legal entities are structured.
Under this definition, a legal entity will have a total of between one and five beneficial owners (i.e., one person under the control prong and zero to four persons under the ownership prong).
The beneficial owners of legal entities are not required to be present at the time the account is being opened. However, whomever is opening the account will be required to provide the information related to the beneficial owners of the legal entity to the financial institution. Should you have questions about whether you will have what the bank requires, please let us know what your bank is requesting, and we can assist you.