Your Dental Practice Financing Team


This article provides insights into the importance of establishing a team when acquiring a dental practice. It provides detailed information on choosing a lender and points out key considerations and potential pitfalls that can lead to a less than ideal experience.usbankJennifer Maschke, Vice PresidentBusiness Banking Officer at U.S. Bank, applies 10+ years of business banking experience to provide full service relationship banking services business clients. You can count on a highly qualified team to provide personalized service and sophisticated lending experience – all delivered in a manner consistent with our approach to honoring you and your unique goals.

maschke_jennifer_usbank_banking_financing_mn_dentists_nda-copyPreparation – Building a Team

Purchasing a practice requires — at minimum — knowledge in law, accounting, human resources, banking, and business. Dentists are experts in dentistry. Successful practice owners surround themselves with experts who can serve them well — accountants and attorneys who focus on dental practices, dental brokers who can help find, evaluate, and assist with the purchase, business associates who know human resources, real estate and practice management, and lenders who have expertise in practice finance. Buyers can avoid many problems or surprises by asking the right questions at the right time and fully understanding the nature of the business relationships forged during a practice purchase. Outlined below are some of the main team members and considerations that should be addressed when preparing for practice ownership:

* Dental practice brokers/transition specialists — assist buyers and sellers through the sale process. In addition to listing and selling practices, brokers will perform practice valuations and assist with the purchase/sale agreement. Since there is not a source to consolidate listings, buyers normally need to find practices by working with multiple brokers. Word of mouth, trade journals, Web sites and dental suppliers also are sources to find a practice that is a good overall fit for the buyer.

* Dental consultants — also assist buyers with the purchase. Dental consultants who represent the seller and/or buyer can assist with the due diligence analysis of collection ratios, scheduling, fee structures, chart reviews, and computer analysis to ensure the practice details are accurately represented. If due diligence discovers a previously undisclosed issue, buyers often times have new negotiating power to reduce the price or may even decide not to move forward with the purchase. Through their analysis, dental consultants can often recommend changes that the new buyer can implement to increase profitability and grow their business.

* Dental-focused lawyers — review the purchase/sale agreement to ensure all language is included to protect both the buyer and seller in the transition. They also review the lease and any other agreements required for closing the transaction.

* Dental-focused CPAs — analyze, assess tax impacts, and make recommendations on the buyer’s financial options from a tax perspective. They are responsible for the overall financial analysis and tax planning for the practice and will complete the payroll and tax returns for the new buyer.

* Lenders — finance the purchase. Once a location has been identified and an offer has been made, the lender evaluates both buyer and seller information to make the final lending decision. Not all lenders offer the same financing terms and conditions, so it is important to evaluate lenders and offers prior to securing financing.

* Buyer due diligence: Often times, one or more parties to a sale will offer to make a referral and be subsequently compensated for the referral. Buyers should not only perform their own due diligence on each member of their team, but since there are no disclosure requirements, should directly ask how/if they are being compensated for the referral.

Choosing a Lender

Buyers have two main options when looking for practice financing. They can use a lender that specializes in dental practice financing or they can go to a commercial lender at their local financial institution. A third option, using a seller’s note, may be considered for all or part of the financing package.

* Using a specialist in dental practice financing: This type of lender will have a deep understanding of practice finance and will use the assets of the dental practice for collateral. Due to their experience, they can more easily identify strengths and weaknesses in a potential practice, and will usually be able to render quicker decisions and close the loan faster than a standard commercial loan. They typically are able to finance 100 percent of the purchase price, plus working capital needs that may arise.

* Obtaining a commercial Loan through a financial institution: A commercial loan financed through a local bank will use the overall practice as collateral. In addition, loans of this nature usually require money down and alternative collateral such as a personal residence or other bank assets.

* Financing with a seller’s note: A seller’s note can be used in conjunction with one of the other methods of financing to provide further security or eliminate some risk. Instances where a seller’s note can be of benefit include when the buyer feels that a practice is overpriced but still wants to purchase the practice. In this case, the seller carries a note, subordinated to the bank, for a percentage of the financing. In another example, due diligence might bring a piece of information to light that causes the buyer to have reservations about the purchase. In this case, the seller can carry a note to guarantee what they are representing. Since the buyer has no leverage after the fact, this is a way to minimize the buyer’s risk. Conclusion

Buying a dental practice can be very exciting. It can also be overwhelming. That is why it is so important not only to be educated on the process but to be surrounded by a team of experts. A lender that has the expertise, stability, and commitment to help weigh the alternatives and analyze each unique situation will help to ensure a suitable practice for the buyer now and in the future. Astute buyers know, or quickly learn, that there is more to a well-structured financing package than simply the interest rate. Thorough preparation, lender selection, and offer analysis are the critical components of a smooth buying experience and well-structured loan.

There’s a reason U.S. Bank Practice Finance is a premier lender to health care practitioners – we’re committed to helping practices manage and grow their business. Our representatives have special expertise in lending to dentists, veterinarians, optometrists and ophthalmologists, and will work with you to develop a customized solution that fits your needs and budget. Building lasting relationships with customers is our top priority. It’s why we offer a full suite of financial solutions backed by exceptional service and our experience as a leading small business lender and top financial institution in the United States.

For more information on U.S. Bank’s Practice Finance solutions, please contact Jennifer Maschke, Vice President Business Banking Officer at U.S. Bank, at (952)388-3273 or at  Jennifer is also a NDA member.

Rewarding for Dentists, Life Changing for Patients!

Dentists, you are invited to this exciting seminar detailing the causes and treatments for sleep apnea and the use of appliances.

2_back_sleepapnea_nda_march-2017 copy

  • Dr. Jeff Forslund

    • Thursday, March 9th, 2017

    • 6:30 Register & a light dinner
    • 7-9:30pm Speaker

Purchase Tickets here:
$60 ($50 if registered before February 23, 2017)

Two Fundamental CE credits, approval pending.


NEW LOCATIONimg_2273_sleep-apnea-orthodics-dental

Pattern Dental:

  • 815 Northwest Parkway, Suite 180
  • Eagan, MN 55121
  • United States






Sponsored by the Northern Dental Alliance

5 Things Every Savvy Dentist Knows When Picking a Real Estate Agent


Tyler Van Eps
Carr Healthcare Realty

A commercial real estate transaction can either catapult or cripple your business. As one the highest expenses of healthcare practices, a real estate negotiation needs to be handled by an expert. One small mistake on a lease or purchase can cost hundreds of thousands of dollars.

Protect yourself and your business by identifying these five warning signs that you might be picking the wrong real estate agent.

  1. The agent only shows you one property at a time.  As a business owner your time is extremely valuable.  You should be looking at multiple properties and evaluating them simultaneously.  This gives you leverage in your negotiations, back up plans in the event your first choice doesn’t work out and a snapshot of the market in a competitive environment.  Every landlord is different in their willingness to earn your business. It is critical to have multiple options (whenever possible) so you don’t miss a good deal.
  2. The agent is on the flyer of the space you are looking at.  You are entitled to representation. If the agent you’re working with has a listing agreement with the landlord, their fiduciary responsibility is to maximize that landlords profit. They cannot represent the landlord and adequately represent your interests as well.  Avoid conflicts of interest by signing an agreement with an agent that specializes in buyer/tenant representation.
  3. The agent is asking you questions about your business that are obvious to anyone who knows your industry.  Questions like, “What do you want to offer? How long of a term do you want? And how long does your construction typically take?” These are red flags that demonstrate that they do not know your industry or the needs of your business.  Dental offices have specific electrical and mechanical needs that need to be addressed up front or they could be very costly.  Also, if they don’t understand your business and industry, they can’t sell the landlord on your value as a tenant.
  4. Reputable professionals in your industry can’t vouch for their experience.  Building a dental practice is a collaborative process between your equipment specialist, contractor, architect, lender, and real estate agent.  If your agent is not in sync with those professionals it can turn your project into a nightmare.
  5. The agent has listings in your desired market.  If the agent has listings in the market you are looking in, they have a conflict of interest in representing you as a tenant or buyer and should be eliminated as an option to represent you.  That agent is financially incentivized to push you towards their listings. Also, they have existing working relationships with landlords in your market. If negotiations get tough, does your agent’s loyalty lie with the landlord or you?  You might miss the ideal property because it is listed by your agent’s biggest competitor.

Just as dental professionals can specialize, so do real estate agents. You wouldn’t refer an Endodontist to give your patient braces.   The real estate agent who handles your transaction will impact the trajectory of your business for the next 20 years in either a negative or positive way.  Choose wisely!

Carr Healthcare Realty is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Every year, hundreds of dental, medical, veterinary, and other healthcare practices trust Carr Healthcare Realty to help them achieve the most favorable terms on their lease and purchase negotiations. By not representing landlords or sellers, Carr Healthcare Realty is able to strongly advocate for healthcare providers and avoid conflicts of interest while saving their clients hundreds of thousands of dollars. Carr Healthcare Realty’s team of experts can assist with all types of real estate transactions, including lease renewals, expansions, relocations, startup offices, purchases, and practice transitions.

Visit to find an expert in your area to help with your commercial real estate needs.

Tyler is a NDA member

New! Overtime Exemption Rules Issued


Gayle Christensen

Have you heard the latest? That the federal government has issued new rules when it comes to overtime exemptions? Are you wondering what that means? How it affects you? You’re not alone! And, we’re here to help!

To do that, we first have to address a myth about compensating your staff and get a few definitions out of the way.

Myth: I pay a salary so I do not have to pay overtime.

This couldn’t be more false. The method of compensation has no bearing on overtime requirements. Employers may pay their employees in a variety of ways – salary, hourly, piece rate, per day, commission – and the requirement to pay overtime may still exist.

Definition: Non-Exempt Employees

Non-exempt employees receive overtime pay at all times, when it is worked, regardless of their method of compensation; they are not exempt from the overtime pay requirements and calculations.

Definition: Exempt Employees

Exempt employees do not receive overtime pay; they are exempt from the overtime pay requirements. These are the only employees who do not receive overtime. To qualify, there are specific job duties tests put forth by the Fair Labor Standards Act that must be met. An inability to pass those tests means the employees cannot be classified as exempt, and, therefore, they are entitled to receive overtime pay.

The Department of Labor’s (DOL) regulations require exempt employees to be paid on a salary basis. In addition, the amount of the salary paid must meet a minimum specified amount. In 2004, the DOL set the salary threshold at $455 per week or $23,660 per year.

Ok, now that we got that all out of the way, what’s new?

As of the issuing of their final rule, the minimum salary for exempt employees is increasing. Here are the key provisions of the new rule:

  • Sets the standard salary level at $913 per week or $47,476 annually;
  • Sets the total annual compensation requirement for “highly compensated employees” subject to a minimal duties test to $134,004;
  • Amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level; and
  • Establishes a mechanism for automatically updating the salary and compensation levels every three years.

The effective date of the final rule is December 1, 2016. Future automatic updates to those salary thresholds will occur every three years, beginning on January 1, 2020.

What’s Next for You?

Here’s what you need to do to get your house in order, depending on your current situation:

  • If you have erroneously classified employees as exempt, have neglected to pay overtime, and they, in fact, do not meet the exemption duties test, you must re-classify them as non-exempt, rectify the past in which overtime should have been paid and wasn’t, and then pay overtime going forward when it is worked.
  • If you have properly classified your employees as exempt and they are not making the new salary requirement, you must increase their salary on or before December 1st of this year in order to keep them classified as exempt.
  • If you have properly classified your employees as exempt and you do not wish to pay them the increased salary requirements, you must re-classify them as non-exempt and pay them overtime when it is worked going forward.
  • If you have properly classified your employees as exempt and their salary is or exceeds the new requirement, then no action is necessary.
  • For any future hires that you wish to consider classifying as exempt, you must ensure they meet the duties test and you must pay them in accordance with the new salary requirements.


The method (hourly, salary, commission, etc.) with which an employer compensates employees has no bearing on overtime requirements. There are myriad of things to comply with and consider. We find that nearly 95% or more of employees in the dental field do not qualify for the exempt classification. We have only scratched the surface on this issue. Be sure to work with an HR professional before implementing exemption positions at your practice.

For More, Contact NDA member, Gayle Christensen.

Gayle owns Christensen Dental Consulting, & is an Independent HR Certified Consultant with Bent Ericksen & Associates.


The Value of a Financial Advisor

I am often asked the question or some variation from a prospective client:  Is your ongoing financial advisory fee really going to be worth it to us?  The simple answer is I won’t know for sure until I dig into your planning.   I do believe and have found that we provide a very real return on an investment in ongoing financial planning.  This comes from the experience of my wife and I working with a fee-only comprehensive planner from before we were married and from my now working with over 150 families throughout my career.


There has been research into analyzing this question done by Vanguard on Advisor Alpha, Morningstar on Gamma return, and by Nick Murray in his book  “Simple Wealth, Inevitable Wealth”   I found the work that Vanguard regarding Advisor Alpha as summarized in the following report (Click Here) a helpful analysis.  Their research is not an exact science, but suggests working with a financial advisor could add about 3% total return after fees to a client’s portfolio over time.

Vanguard’s Research

To break out the potential areas an advisor can help improve client’s returns over the long term. Vanguard’s research focused on three areas that advisors provide value:

  • Portfolio Construction – Potential value add up to 1.20%
  1. Suitable asset allocation using broadly diversified funds
  2. Use of low cost funds
  3. Allocation between taxable and tax-advantaged accounts
  4. Total return versus income investing.
  • Wealth Management – Potential value add up to 1.05%
  1. Regular rebalancing
  2. Spending strategy for portfolio withdrawals
  • Behavioral – Potential value add up to 1.5%
  1. Advisor guidance to adhere to their financial plan.

What Vanguard’s research suggests is that working with a comprehensive financial advisor could add about 3% return to a client’s portfolio after fees.  So rather than “saving” the advisors fee and doing on their own as the best alternative for prospective clients, they would be much better off “investing” in working with an advisor as a way to improve their long term returns.

Additional Potential Added Value

Vanguard’s research focused in on the value an advisor provides to an investment portfolio. There is also value a comprehensive advisor can provide in addition to the potential portfolio return. Areas that an advisor can provide additional value:

  • Provide Peace of Mind
  • Knowing you have a plan in place in-line with your values and your goals
  • Insurance Planning
  • Do you have the right amounts and types of insurance in place?
  • Are you getting good value for the premiums you are paying?
  • Cash Flow help
  • A second set of eyes to identify areas that could be improved without impacting your lifestyle
  • Optimizing debt and payment plans
  • Ensuring cash surplus isn’t sitting on the sidelines and working for you
  • Taking advantage of employer retirement plans
  • Tax planning strategies
  • How best to pay for college
  • Ensuring estate plans are in place that passes your assets efficiently to the next generation
  • Making the most of a business
  • Career change guidance
  • Best way to make donations to charity
  • Help through financial transitions like death, divorce, retirement, inheritance, etc.


Can a financial advisor provide you enough value to justify their fee? It depends on the answers to three questions:

  1. Do you have the time, energy, interest, knowledge, and desire to research and investigate all areas of your finances to determine the best strategies to implement for your specific circumstances?
  2. Do you have the time, energy, interest, knowledge, and desire to implement and follow through on all of the identified strategies?
  3. Will you be able to hold yourself accountable and follow through over many years?

If you answer ‘no’ to all three questions, then it is worth considering that working with a comprehensive fee only financial advisor can improve your net worth over time even after paying the advisor’s fees.

Are you ready to create a plan for living the life you’ve always dreamed about?  Contact us today to schedule your complimentary discovery meeting. 

Your Guide to Financial Independence

Rick Epple, CFP®


Construction • It’s What We Do Best



160322_Riverstone_dentists_heritage_receptionHeritage is involved from the start. We provide project management for all the necessary steps to complete your project. We work directly with the design team of architects and engineers, lending our expertise and knowledge of the construction process to develop a plan with function and creativity that meet your goals, while also managing your budget.

StCroixKidds_playroom_heritageWe procure top quality subcontractors that are selected based on your project’s criteria. Our team works with the construction crew to build your project as scheduled while trying to improve your budget. Through the entire process, we maintain a steady stream of communication with you and all team members for constant awareness of the project’s status.

Our Construction Services

  • 130125_Lakeland_dental_operatory_heritage151111_StCroixKidds_heritage_front-deskDesign planning
  • Pre-construction Estimating
  • Coordination Design Team
  • Sourcing Sub-Contractor Team
  • Estimating and Bidding Scheduling
  • Construction Site Supervision
  • Budget Management
  • Quality Control
  • Updating & Remodeling

_Jain-dental_front-desk_heritageIntegrity and professionalism.
At Heritage Construction, we are committed to developing and building our clients’ buildings with the highest level of integrity and professionalism. We manage each project from start to finish and then beyond, providing superior service and value to our clients.

_Jain-dental-operatories_heritageWe strive to create work environments that are based on respect and are rewarding and fun. We will form alliances with our subcontractors and suppliers to enhance job site safety, productivity and cost effectiveness. Most important, we will be honorable.


REVIEW more photos for these & other practices: click here.

Meet NDA member Richard from Heritage: click here.

Why Should We Really Care What Patients Think?

pos_patient-surveys_videos-screenshot_ndaThere is a lot of talk in healthcare today about ‘quality care’ and what really comprises a quality ‘patient experience.’ Call it ‘patient experience’ or ‘patient satisfaction,’ the end result is the same. Patients need to feel good about your practice – and we’re not talking just about their dentist – but the receptionist, the assistants, the hygienist, etc. — every touch point a patient has with your practice.

It’s really quite simple, if they are not satisfied, they move on to another practice. And they likely share their displeasure with others.

Don’t take our word for it. Look at the research. Patients are three times more likely to leave a practice where they report poor quality relationships with their physician.

After all, patients are consumers. Now that patients are paying more out of pocket for their care, they are shopping around for the most affordable care and best experience they can get.

So practices really need to know where they stand with patients. Not only for profitability reasons — but maybe, just maybe, because we know it’s the right thing to do.

At the end of the day your top priority is a healthy patient. After all isn’t that what healthcare is really about? Why do we work in healthcare if we don’t care about offering the best patient health outcomes possible? Really, if there is any other reason, we should move on.

So you shouldn’t gain patient feedback just because you HAVE to or MIGHT have to in the future or for the almighty buck, but because you really care about offering your patients the best possible patient experience.

Research points to improved health outcomes where there is strong patient-provider relationships.

POS conducted research to learn what practices thought of the patient experience. More than 70% of practices say improving the patient experience is one of their top priorities. More than 90% of respondents indicate patient communications is a big factor in the patient experience. But practices indicate they lack time, expertise and ideas to improve patient communication.

78% of practices say they are very interested in learning patient opinions, yet many have no formal method of gaining patient feedback. And why are they interested? One of the top reasons — ‘Because it’s the right thing to do.

So don’t collect patient feedback just because you think someone is going to make you collect it. Survey patients because you want healthier patients, more patients, new patients, happier patients. After all, happier patients are healthier patients. And survey with a purpose. Use the information to improve your office wait times, the registration process, your billing process and patient care.

POS Professional Office Services works with healthcare practices nationwide to improve provider and patient communications through Print, Statement Processing Digital Messaging and Survey solutions. POS Surveys is our newest survey platform that helps practices collect, compile and analyze patient feedback. Learn more at

• POS is a NDA member, click here for more.

Dental Office Fraud Protection Checklist

Fraud Protection

To ensure you have controls in place to protect your organization, use this checklist to assist with your periodic fraud prevention procedures review.

Review and update internal procedures and controls

  • Train personnel on fraud prevention best practices
  • Establish dual control procedures for ACH, remote deposit capture and wires
  • Review employee access privileges and limit administrative rights on company computers • Establish clear division of duties within accounting departments
    • Separate account receivables and account payables functions and processes
  •  Only provide employees with access to financial data if there’s a business need
  • Conduct surprise audits to ensure appropriate procedures are being followed
  • Preauthorize high dollar value checks before the checks are written
  • Do not sign checks without the recipient and amount information completed
  • Verify out-of-pattern payment instructions from internal employees
  • Validate all payment requests from customers and company personnel, including senior officials
  • Validate requests from vendors to change payment instructions; don’t simply reply to email
  • Review transactions before they leave the company
  • Review and update bank signature cards routinely
  • Remove executive signatures from your annual report to prevent illegal scanning and use

Ensure online fraud protection

  • Keep workstations current with security updates
    • Confirm all anti-virus software is up to date
    • Respond to software and security update alerts promptly
    • Ensure protection on all computers and schedule routine updates
  • Apply operating system updates promptly; beware of download requests from pop-ups or advertisement
  • Avoid using email to send confidential information; truncate all but last four digits of account numbers
  • Prevent malware infection
    • Use caution when downloading applications or documents, installing software and opening email attachments
  • Limit Internet use on computers used for online banking activities
  • Limit personal email and Web surfing access on computers used for monetary transactions
  • Use dual authorization for adding users and changing user profiles
  • Require use of security tokens, with strong authentication, for payment applications
  • Use dual authorization when initiating ACH or wire payments
  • Establish separate controls for your business online banking application
    • Use one computer to create online payments and a different computer for secondary approvals
  • • Monitor account balances and activity daily
    Report any suspicious activity immediately to your bank
  • Consider the use of an anti-malware application, as well as a firewall
  • Schedule updates frequently
  • Check your operating system on a regular basis
  • Install all the latest patches and updates
  • Activate all the notification features available in the bank’s online banking application
    • Ensure proactive notification to all users of any suspicious activity
  • Ensure users of financial applications are familiar with system screens and functionality, so suspicious screens are easier to spot and reported quickly to the bank
  • Ensure user access and entitlements are up to date and accurate

Evaluate your paper check supply

  • Select a highly qualified, established check vendor
  • Use one style of checks for each account for easy recognition
  • Incorporate security features into check design
  • Monitor check orders to ensure receipt of exact quantity
  • Store blank checks and check printing equipment securely
  • Limit the working supply of checks removed from the secure area

Leverage U.S. Bank fraud prevention solutions

For SinglePoint® online access

  • Utilize IBM® Security Trusteer RapportTM to detect and eliminate malware

Receive payment service alerts by email, text or fax: SinglePoint External Messaging

For paper check disbursements

  • Review exceptions daily and make payment decisions: SinglePoint Positive Pay
  • Review payee exceptions daily, make payment decisions: SinglePoint Positive Pay – Payee Option
  • Check images online and eliminate need for storing cancelled paper checks: SinglePoint Image Access and SinglePoint Image File Delivery
  • Reconcile accounts daily or monthly: U.S. Bank Account Reconciliation (ARP)
  • Consider outsourcing check processing to eliminate the storage of check supplies: SinglePoint Check Payables

For deposit-only accounts

  • Place blocks on accounts to prevent unauthorized debits: U.S. Bank Check Filter Service
  • Reconcile deposits weekly or monthly: U.S. Bank Deposit Reconciliation Service

For ACH transactions

  • Ensure dual authorization is required: SinglePoint ACH Origination
    • Ensure initiators and approvers use different workstations
    • Alert secondary authorizers to practice a high degree of vigilance in their final review and approval of all outbound monetary transfers
    • Set appropriate transaction limits for each initiator and approver of monetary transfers
  • Review exceptions online: SinglePoint ACH Positive Pay
  • Track the status of ACH Positive Pay authorizations in the ACH Filter Rejected Item report and
  • ACH Filter Authorizations report: SinglePoint Information Reporting
  • Utilize debit blocks to prevent all ACH originators from debiting your account: U.S. Bank ACH Block and U.S. Bank Business Check Block Services
  • Utilize debit filters to control access to your account by customer ID and dollar amounts: U.S. Bank ACH Filter

For wire transfers

  • Ensure dual authorization is required, especially for non-repetitive transfers: SinglePoint Wire Transfer

For regular review of your account information

  • Review your accounts online, at any time: SinglePoint Information Reporting


Posted via Jennifer Maschke, US Bank, Vice President, Business Banking Officer

usbankU.S. Bank and SinglePoint are registered trademarks of U.S. Bank National Association. IBM® and Trusteer RapportTM are registered trademarks of the International Business Machines Corporation registered in many jurisdictions worldwide.

U.S. Bank makes no warranty of any kind as to the effectiveness of the Trusteer Rapport software. U.S. Bank is not responsible for and does not guarantee the products, services, or performance of third parties.

© 2015 U.S. Bank. Member FDIC. U.S. Bank National Association. Member FDIC. (12/15) MMWR-80647

U.S. Bank is committed to helping you meet your treasury management needs including fraud prevention. To learn more, contact your U.S. Bank Relationship Manager or Treasury Management Consultant. To find a consultant near you, email a request to

How U.S. Bank Collects & Safeguards Your Information

From The Shield: A security newsletter for businessesSpring 2016

Since the events of September 11, 2001, banks and regulators are more focused on limiting the potential for financing terrorist and drug-related activities through our financial system. As a result, banks have increased their efforts to prevent money laundering and terrorist financing, and to comply with anti-money laundering (AML) regulations. These efforts are, in turn, a driving factor in determining which information is currently required from customers in order to process their transactions.

In August 2014, the U.S. government issued an Advanced Notice of Proposed Rulemaking entitled “Customer Due Diligence Requirements for Financial Institutions.” When final, the rule will require banks to verify the identities of “beneficial owners” of most legal entity customers, including corporations, LLCs, partnerships, unincorporated non-profits and statutory trusts. “Beneficial owner” is defined as “the natural person(s) who ultimately owns or controls a customer and/or the person on whose behalf a transaction is being conducted.” Beneficial owner also pertains to an individual with an ultimate ownership stake of 25% or more of the equity interest, and an individual who exercises significant authority to control the legal entity customer’s affairs.

As a result of the enhanced due diligence requirements, U.S. Bank may request the following information and documentation from beneficial owners and authorized signers of new and existing legal entity customers:

  • comp_1_logo-usbank-siteheaderFull legal name
  • Date of birth
  • Current residential address
  • Social Security number or other government-issued ID number for non-U.S. citizens

U.S. Bank, in some instances, may also request documentary evidence (e.g., driver’s license) to verify the information provided.

Information collected from beneficial owners or authorized signers is not shared outside of U.S. Bank, its subsidiaries or affiliates. Sharing this data within the bank only occurs for purposes of complying with anti-money laundering laws and regulations. Access to collected information is limited to users on a need-to-know basis.

U.S. Bank ranked first in the Ponemon Institute 2015 “Privacy Trust Study for Retail Banking” and has ranked first for the past nine years. We have a legal and ethical responsibility to ensure information is secure and accurately maintained. U.S. Bank is committed to protecting the confidentiality, integrity, availability and privacy of our customers’ data. Our reputation rests, in part, upon securely maintaining our customers’ information assets.

Other News In the 2016 Spring issue:

Find out more about practice financing options from Jennifer Maschke, NDA member.