This question is regarding multiple signers on an account. I am a trustee on a non profit foundation. My only job is to sit on a bank account and if needed transfer money back to the board of directors. We have 3 signers on the account which is a sizable amount of money. I was informed by the bank that they have no way to insure that at least 2 signatures will be needed to withdraw money. Our bi-laws require 3 signers and a minimum of two signers to withdraw funds. Presently any one of the three has full access to the money.
My question is, is my bank unusual on this issue or is this standard? What kind of account can I get that will require more than one signature?
I think that the problem is that these days, no one actually looks at the signatures anyway. They will retain the cheques thou (you may have to request this) and if there was a query, it would be possible to retrieve them and look at the signatures.
This has been the case for years over here. My wife used to run a Guide Company and there were three signatories on the account with any two required. In practice, she always had a couple, pre-signed by one person, so all she had to do was add her signature and the cheque would be OK. For normal business, the bank would not care if they were signed by Mickey and Minnie Mouse. If there was an extra large cheque, they were supposed to examine it.
As **bob++ **says. As a practical matter, nobody in the US banking industry pays any attention to signatures while a check is being handled. If someone raises a fuss later, that’s where and when the scrutiny begins.
Some things you can do:
Get the check forms printed up with two sig lines and words nearby like “Two signatures required.” That won’t help if somebody writes a check with one signature and deposits it at an ATM, but it will help (a bit) if they present it to a live teller.
The other key thing is to ensure everyone with sig authority understands the requirement for two sigs and accepts that it must be done that way every time with zero exceptions, no matter how inconvenient that may be. Anyone not willing to buy into that needs to be removed from the account as a hazard. IME folks either take fiduciary responsibilities seriously, or they don’t. The latter can’t be retrained; they can only be excluded.
FWIW, back in 1991, when I moved out of my apartment, they wrote me a check for my security deposit refund and the check said “two signatures required” but only one signature was on the check. My bank accepted it, sent it over to the issuing bank, and the issuing back refused to honor the check and sent it back. Then I went in to the issuing bank in person, they talked to someone on the phone, and then agreed to cash the check even though it only had one signature.
But it will help if someone presses a claim as a holder in due course. You can use the fact that the putative holder in due course should have noticed that the check was invalid on its face. § 3-302. HOLDER IN DUE COURSE.
The point is that these things *are *helpful in hindsight when somebody wants to investigate a fraud. They probably *aren’t *helpful in the sense of making it physically impossible to ever negotiate a one-signature check in the first place.
Is it possible to enforce such a requirement if it’s a passbook savings account instead of a checking account?
(Where I banked it was once possible to impose complicated conditions on passbook accounts, though I think many such are now prevented by government regulations.)
I have been told by my bank that only one signature can be required.
I believe it is a general rule these days.
The bank was clear that they don’t mind how many signatures are on the check and we are free to require multiple signatures, but as far as cashing the check, if one of the signatures is valid, the check clears.
Perhaps your non-profit foundation could have its funds protected (insured) by requiring 2/3 signatures on checks and having those persons all bonded. Maybe also signing legal agreements with the non-profit or whatever.
Then if one person was to steal the money, the funds would be repaid by the bonding company?
Anyway one person could withdraw all the money. But the money would be refunded and the person could be prosecuted.
Has anyone actually ever read the disclosures from the bank that come with an account? The bank (several of them that I’ve seen) go to extensive lengths to disavow any liability whatsoever to protect the customer’s money. They say only that they take “reasonable” measures, or similar wording, whatever that means. They give explicit and lengthy examples of ways they could carelessly lose your money, and the loss is yours, not theirs. They disavow liability for paying bad checks; post-dated checks; stale-dated checks; unsigned checks; wrongly signed checks; stopped checks; etc., etc. etc. You might as well leave all your money laying in the middle of the street for all they promise to take due care of it.
Srsly. I read my disclosure agreement from cover to cover. It’s chock full of stuff like that.