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Election Year Issues: Banking Regulations and Changes


With the increasing focus on preventing the funding of terrorist organizations or laundering money for drugs and other illegal activities, both state and federal governments have tightened regulations for banks. Many banks have also faced more intense regulations in connection with the high-profile bailouts and credit crises in recent years. While these issues may seem very far away from the day to day concerns of the average small business, the increasing scrutiny of bank-customer relationship is changing the way that businesses bank. From increased due diligence throughout the relationship to specific concerns around recently launched programs such as payroll cards, here's a closer look at the issues that businesses can expect to be at the forefront of legislative concerns in the year ahead.

Regulations Remain Strict for Opening Accounts and Making Transactions

Whether you're seeking to open a new bank account for your business or wire funds to a supplier overseas, many businesses are facing more hurdles and paperwork than ever before. Banks are continuing to be required by their regulators at both the state and federal level to maintain strict policies around customer relationships to prevent illegal transactions from being introduced into the banking system. More institutions are enforcing regulations, as large fines have recently been assessed against banks with lax policies.

This translates into more documentation being required to open accounts, proof of compliance with Office of Foreign Asset Control (OFAC) regulations in connection with international transactions, and stricter requirements for accessing control. Your business is in the best position if you keep meticulous financial records, build relationships with specific financial institutions over time, and start complex financial transactions well ahead of deadlines to work through any related bureaucratic challenges.

Payroll Card Lgislation Places Requirements on Employers

Many businesses have migrated in recent years toward issuing payroll cards. It's estimated that in 2012, businesses loaded more than $34 billion dollars in payroll onto these cards. Payroll cards help businesses save money by putting employee payroll into accounts linked to the cards, rather than issuing checks and provide flexibility for employees without bank accounts or who don't want direct deposit. However, there are some things to keep in mind:

Several states have introduced or adopted legislation to regulate the issuance of payroll cards which includes specific requirements of the employers that offer these cards. Some specifics include, providing employees with options for being paid, providing a fee schedule listing potential fees associated with the payroll card and limiting or prohibiting certain fees, providing a method for employees to access their pay each pay period without incurring fees, and ensuring that the card provider offers adequate protections for card users. It is important that businesses select card providers with up-to-date knowledge of the latest state and federal regulations.

You don't have to navigate these regulatory and banking changes alone. Paychex offers a wide range of accounting and payroll services to help companies manage their finances and stay in compliance with changing regulations. Learn more about how Paychex programs can help you stay on top of and in compliance with the latest legislative changes affecting all areas of your business, from employment law to banking regulations.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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