Why is it so Hard to Open a Business Bank Account?

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It is harder than it used to be to change banks or open a new bank or brokerage account for a small business. That is not your imagination, and it is not a sign that your business is suspicious. It is the result of a system that decided it would rather move slowly than be embarrassed by fraud.

What follows is a practical guide to that system: what the bank is doing, why they ask what they ask, and how to get through the process with the least amount of wasted motion.

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Why they ask for so much

After the pandemic, fraud went from being “a problem” to “a headline.” Banks and brokers saw fake businesses, stolen identities, and elaborate online scams run right through their intake pipes. Regulators responded with more expectations and more enforcement. The institutions that hold your money now have two basic jobs before they open the door for you:

• Figure out exactly who you are.

• Figure out exactly who owns the company.

Those jobs live in two rules inside the Bank Secrecy Act framework: the Customer Identification Program (CIP) rules and the Customer Due Diligence (CDD) rules. In plain language, CIP says: “Identify the person opening the account and be sure they are real.” CDD says: “Identify the real people who own or control this legal entity and be sure they are real, too.”

These rules are not optional. Banks get fined, shamed, and sometimes sued if they get them wrong. After several years of much‑publicized losses and fraud cases, the pendulum has swung toward caution. The practical result for you is more questions, more documents, and more time between “Apply” and “Approved.”

A brief detour through FinCEN

You may have heard about the Corporate Transparency Act and beneficial ownership reports to FinCEN, the Treasury bureau that collects and analyzes financial‑crime data. That law created a new reporting regime for many small companies: file a beneficial‑ownership report with FinCEN or face potential penalties.

Then came more change. In early 2025, Treasury put out an interim rule that eased reporting for most domestic entities while keeping it for certain foreign‑related structures. It was a half‑step back toward sanity.

Here is the key point: whatever happens with direct reporting to FinCEN, banks and brokers still have to collect beneficial‑owner information at account opening under the existing CDD rules. So even if you hear that some companies are getting relief on their separate reports, do not expect the account‑opening drill to get simpler. You will still be asked to list:

• Each beneficial owner with 25 percent or more of the company, and

• One “control person” who runs the show.

Every one of those people will be dragged into the light on paper, at least.

What the bank needs to know about you

From the bank’s point of view, you are the starting point of the story. Before they worry about the LLC, they worry about the human beings attached to it. For each signer, they will want four pieces of information:

• Full legal name.

• Date of birth.

• Residential or business address.

• An identifying number such as a Social Security number or passport number.

They are required to verify this information using documents (like a government‑issued photo ID) or other methods. No identification means no account. There is no way to charm your way around it, and the front‑line banker cannot waive it.

They then build a basic profile of how you intend to use the account:

• What the business actually does.

• How money will come in (card, ACH, wires, checks).

• How money will go out (payroll, vendors, international payments).

• Whether your activity is local, national, or cross‑border.

They are not being nosy for sport. The more they understand your normal pattern, the easier it is for them to argue later that your account is low‑risk.

What they need to know about your owners

Next comes the cap table. Under the CDD rules, the bank will ask you to list every beneficial owner at 25 percent or more plus one control person. That list includes people who may never sign a check or log in to online banking. They still have to give the same identity information as signers: name, date of birth, address, and identifying number.

This is where many new LLCs stall out. A busy partner is traveling, or a parent‑owner is reluctant to send their ID, or someone never updated their address after a move. The banker cannot “just push it through.” The file sits until every line is filled in and every ID clears.

If your membership interest is owned by a revocable trust, the bank may ask to see the trust document or at least the portion that shows the trustee and the grantor. The more layers between the human and the LLC, the more paper the bank needs to be comfortable.

Two real stories that are now typical

One reader formed an LLC using a virtual‑office provider. They bought both registered‑agent services and a virtual office address from the same company. On paper, the registered‑agent address and the company’s business address were identical. A large national bank refused to open the account. The banker said the bank’s policy did not allow a registered‑agent address to be treated as the physical operating address.

The solution was not elegant, but it worked: the owner agreed to use their home address as the company address for the bank’s records. The LLC’s official address did not have to change with the state; the bank simply needed to see a physical place where a real person lived.

Another reader tried to open a brokerage account for a brand‑new multi‑member LLC at a top‑tier online firm. The brokerage required:

• A written initial resolution authorizing the account.

• A signed operating agreement.

• A cap table showing all members and their percentages.

• Proof of a physical address in the LLC’s name, via a lease or utility bill.

Without all of that, the application was going nowhere. None of these demands were personal. They were simply the brokerage’s way of satisfying the same CIP and CDD obligations your neighborhood bank has.

The paperwork that actually speeds things up

You cannot control the rules, but you can control whether you show up prepared. For an LLC, most national banks and brokers will expect at least:

• IRS EIN confirmation letter or the SS‑4 approval.

• Articles of Organization or Certificate of Formation.

• Operating Agreement showing member names and who is in charge.

• Initial resolution authorizing the account and naming the signers.

• Certificate of Good Standing if the LLC is more than a year old.

• Any trade name or DBA filings.

• A cap table if there are multiple members, totaling 100 percent.

• Evidence of a physical business address — a lease or utility bill in the LLC’s name, especially if you use any sort of mail service.

• Government photo IDs for all signers and beneficial owners, ready to upload.

For an in‑person visit, bring paper copies plus digital versions on your phone or laptop. If you formed in one state and registered as a foreign LLC in another, bring that foreign registration. If an owner is a trust, bring the trust paperwork the banker asks for. The goal is not to talk your way out of the requirements; the goal is to leave with an open account.

Special situations that trigger extra scrutiny

A few facts reliably buy you more questions:

• You are in a higher‑risk line of work: money services, crypto‑related businesses, cross‑border payment facilitation, and similar.

• You rely heavily on virtual office addresses or mail drops.

• Your ownership structure has several layers or foreign elements.

In those cases, expect a thicker questionnaire and requests for licenses, written compliance policies, and more supporting documents.

Pro tip: fund it the smart way

If you are opening your new business bank or brokerage account at a different institution than your personal bank, plan ahead for the first deposit. The fastest, least frustrating way to fund a brand‑new account is usually a wire transfer from your existing bank.

A first deposit by check or mobile deposit often sits on hold while the new bank gets comfortable. A properly sent domestic wire, by contrast, usually posts as cleared money the same day and is available to use. Before your appointment or online application:

• Call your current bank and confirm your wire limits, cutoff times, and fees.

• Ask what information they will need from the new institution.

• Make sure you can initiate a wire quickly once the new account is approved.

When the new account is open, send the wire that day. Instead of hearing, “Your funds will be available in seven business days,” you are more likely to hear, “The wire posted; you’re good to go.”

Simple actions to speed things along

A few small steps can turn this from a two‑week slog into a one‑meeting task:

• Schedule an appointment with a banker who handles new business accounts and confirm their exact document list in advance.

• Make sure your Operating Agreement clearly states who can open and manage accounts; if it does not, write and sign a short resolution that does.

• Collect IDs and information from all owners early instead of chasing them from the lobby.

• Keep a digital “bank pack” folder with all of your core documents and update it any time you change ownership, addresses, or management.

Opening or moving an account for your business now takes preparation and patience. The casual walk‑in, sign‑here, starter‑checkbook experience is gone. What replaced it is a system that wants formation documents, ownership records, operating agreements, and proof that your business exists in the real world.

Accept that reality, come over‑prepared, fund smart, and you can still get through it quickly enough to get back to the real work of running the business.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!