Quick Answer
Opening an account requires confirmation that the opening entity has authority, identification of each person authorized to transact, collection of required new-account documentation, and the appropriate approvals. Operations also maintains standing settlement instructions, which record the customer’s established settlement directions for the account.
Authority answers who may establish and use the account. Documentation and approvals support that authority before the account is opened.
Authority to Open and Transact
- Authorized entity: Confirm that the entity opening the account has authority to do so.
- Authorized person: Confirm who is authorized to transact business in the account.
Confirmed authority -> supports a valid account opening and identifies who may act for the customer.
New Account Paperwork and Approvals
- New account paperwork: Obtain the documentation required to open the account.
- Appropriate approvals: Obtain the approvals required for the new account.
Standing Settlement Instructions
- Standing settlement instructions (SSIs): Maintain the customer’s established instructions for settlement.
Think of it this way: Authority identifies who may give directions. Standing settlement instructions identify the settlement directions already established for the account. Both must be maintained, but they solve different operational questions.
Exam Tip: Gotchas
- Authority and settlement instructions are distinct. Confirm the entity and persons authorized to act, then maintain the customer’s established settlement instructions for how settlement is handled.