What is covered in here

  1. How to best prepare
    1. What is Know your Customer (KYC)?
    2. What information & documentation will be needed
    3. Abaca Client Onboarding Steps
    4. How it starts
  2. Portal walkthrough
  3. Account Opening Email

How to best prepare 

What is Know Your Customer (KYC)? 

Know your customer (KYC) is a financial-institution-specific onboarding process required by regulators to deter and guard against financial crime and money laundering. These KYC processes and regulations require Banks to gather important details about its customers and impose greater requirements for companies engaged in high-risk industries such as cannabis.

What information & documentation will be asked

  • Articles of Incorporation – Document that establishes the existence of an entity. These are generally filed with the Secretary of State, in the state where the company is incorporated.
  • Operating Agreement – This document is used by Limited Liability Companies to outline the business financial and functional decisions including rules, regulations and provisions. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners, called “members.”OR

    Bylaws
     – Bylaws are similar in function to Operating Agreements. Bylaws may be established by entities such as a business corporation. Bylaws are a set of rules or laws established by an organization or community to regulate itself, as allowed or provided for by some higher authority.
  • EIN Letter – The tax ID verification letter is the official confirmation that the Internal Revenue Service (IRS) sends following a request for an EIN (Employer Identification Number).
  • Licenses – Images of each active license for the entity. This includes all licenses required to operate, such as a local retail license.
  • Tax Returns from Previous Two Years – This is requested to view the reported income to determine the debt-to-income ratio, which is the percentage of the monthly gross income that is used to pay monthly debts. For startups that haven’t yet filed taxes, returns are needed from one majority holder or managing member.
  • Initial Deposit – A bank statement or other source of documentation to demonstrate where the initial funds will come from. A term sheet or investor agreement may be submitted instead.
  • Cap Table – A table that shows a company’s ownership by percentages, equity dilution, and the value of the equity in each round of investment. Even if it is also included in the operating agreement, we ask that the cap table be submitted as a standalone document.

Additional requests you might encounter:

  • DBA (Doing Business As) Filing – Filing for a DBA allows customers to conduct business under a name other than their own name or the name of their LLC.
  • Certification of Trust – If ownership is held by a trust, this document certifies the existence of the trust and proves the trustee’s authority to act.
  • Insurance Documents for Vehicles (transport/delivery licenses) – For transportation/delivery cannabis licenses, proof of insurance for all business vehicles will be needed.
  • Management Agreement – If the license is owned by another entity or individual, a management agreement is needed
  • Lease Agreement/Deed – If we are unable to verify the business address you provided, we will ask for a lease agreement or deed. If you are pre-operational and a location has not been established yet, we may request a utility bill, invoice, or lease agreement to tie the location used on the entity CIP to an individual listed on the account.

For those holding pre-operational licenses, we request that the customer provide any application that has been submitted to the state. This will not be applicable for each state as some states require a bank account before applying for a license.

Abaca Client Onboarding Steps

  1. Abaca sends out an onboarding email to the client’s primary contact.
  2. The client fills in the onboarding information and submit the application.
  3. The client will Secure signatures of equity owners & signers and management members. You can learn about who’s signature will be needed here.
  4. Abaca and our bank partners will review your application and run due diligence. This can take up to 30 days based on the complexity of your application and ownership structure.
  5. If approved, you will be sent the banking agreements to execute and sign.
  6. You will be ready to start setting up your account.

Portal Walkthrough

How it starts 

The primary contact at your organization will be sent an automated email – “Abaca’s New Account Application.” In the email, click the “Login Now” button, and it will take you to the self-service onboarding portal. 

You can expect the process to take between 20-60 minutes to complete based on the complexity of your company structure. You can fill out the application on either your computer or mobile.

If you would like to apply and see if you qualify for a bank account, you can apply for an Abaca bank account here.

Any field with an asterisk (field*) is required. Anything else is additional information that helps the underwriting process go as quick as possible.

This is the help pop-up. When you click / tap it, additional information will pop-up to help you.

Services (Link)

This section determines how the rest of the application walkthrough works. Because we care about your customer experience, we ask questions that help us better identify the financial services that best fit your business.

Company (LINK)

The company section is where most of the information is asked and has been separated into four sub-sections: 

  1. Overview – General information about your business and formation.
    1. Primary / Principal location – The location where main business operations occur.
    2. NAICS Code: (North American Industry Classification System) Classifies a business with a six-digit number based on the primary type of work the business performs 
  2. Locations – All offices that cover your main business operations, mailing and any locations linked to a license.
  3. Regulatory – You only need to include the licenses and applications linked with the bank account for this bank account application.
  4. Financial – What is the general flow of money with your business?
    1. Initial Deposit Source of Funds – Initiating the source of funds and what the amount is.
    2. Financial Projections – To the best of your ability, predict the annual revenue for the next two fiscal years.
    3. Monthly Debits – A projection of how much you plan to withdraw or spend from your account on a monthly basis and what methods of payment you will be using.
    4. Monthly Credits – A projection of what type of deposits you anticipate making on a monthly basis and your anticipated method of those deposits.

Owners (Link)

This is where you outline the equity ownership structure of your business. When adding an owner, there are two options – Person or Entity. To complete this section, we will need to have 100% of the ownership structure outlined.

  • Add Person owner = A human being who has ownership of the Client.
      • A person owner will automatically have a user account created and given view only permissions. This user access can be changed later in the portal in the User Section. 
      • For all Person owners, we will need their date of birth and SSN to run FinCen required due diligence.
      • Once you create a contact in the portal, you can simply pick that contact as a Person owner.
  • Add Entity Owner = Another organization that has ownership of the Client.
    • It will prompt you to fill in the Person Owners of that Entity.
    • For all Entity owners, we will need a Tax ID.

Examples

1) Two Person Owners that each have 50% ownership.

2) Two Person Owners that each respectively have 50% and 25% ownership. In addition, there is an Entity Owner (Abaca Junior) who owns 25%. Abaca Junior’s ownership is evenly split 50/50 between 2 Person Owners.

Management (Link)

This is where you can assign or create the Management Members or other people that have significant controlling interest within your company (eg. CEO, CFO, etc)

There are two options to create management members:

  1. Create new Contacts
  2. Choose from previously created Contacts
    1. Your company’s primary contact.
    2. Any of the Person Owners.
    3. Anyone you add in the Users section.

Users (Link)

Where you select the access level of each user within your bank account.  

  • The primary account user: This will be the main point of contact for Abaca regarding any questions of your business.
  • All Person Owners and Management Members that have been created will be displayed here. By default, all users will be given “View Only” access.
  • If you would like someone to not have any user access, mark their Access Level as “None” (See below). This is useful when you have an owner who is not involved in the finances or day to day operations of the business.
    • 1) Click on the name of the person.

    • 2) Click on the “Access Level” field.

    • 3) Select “None”

Review (Link)

Hooray, you have filled out and finished the majority of the Abaca client onboarding portal! This page showcases the next steps in your application process. 

After you submit your application, the next step is having all customer information profiles (CIPs) filled out and signed. 

Step 1) Filling in and Signing Customer Information Profile (CIP) Agreements 

Per FinCen guidance, we collect information on all beneficial owners and bank account signers.

There are three reasons someone is selected to have a Customer Information Profile (CIP) agreement completed. The people that were sent a CIP to fill out is shown on the review page:

  1. Members of management or other users that have significant controlling interest within your company (eg. CEO, CFO, etc).
  2. Individuals that own 10% or more equity interest in the company.
  3. Having signing authority on the bank account.

You can resend CIPs to anyone by clicking on the blue arrow icon on the right-hand side.

The sections on the Customer Information Profile (CIP)

  1. General – Basic information about you and current residence.
  2. Employment – Where do you currently work, what do you do and how long have you been there.
  3. Identification – You will be asked to provide the details on two current forms of IDs and upload the documentation.
  4. Alternate Contact – Should all efforts to contact you fail, you may designate an Alternate Contact (who does not live with you) to provide us with your current contact information. No account information will be disclosed to this person.

After filling out all the above sections, you will be prompted to sign the completed CIP. Once signed, you are all done and receive a confirmation email.

Step 2) Abaca Review

This is where your New Accounts Coordinator reviews your application before sending it to underwriting. They will be reaching out with anything they notice to ensure as quick as possible underwriting experience.

Step 3) Online Banking Documents

 You are on the home stretch. We have outlined the final steps below:

Entity Customer Information Profile (Entity CIP)

Assigned to: Beneficial Owner or Account Signatory

This form confirms the identity of your organization.

Certificate of Beneficial Owners (CBO)

Assigned to: Beneficial Owner or Account Signatory

This form is required by federal regulations as a means to identify and document information for individuals who own and/or control a legal entity.

Online Banking Agreement

Assigned to: Account Champion & Beneficial Owners

The service agreement that your organization has with your bank partner.

Click Submit and your application will be submitted to our Underwriting Team.

Underwriting (Not in the Portal)

Now our compliance team will verify the information in your application and complete our enhanced due diligence process. This can take between 10 business days – 20 business days and in some complex cases, can last up to 30 days.

During this process, additional requests may come up, so please stand by to help provide any additional documentation / information that our underwriting team will need to determine eligibility.

If your account is not approved, you will be informed by email from your new accounts coordinator. 

Final Stage – Bank Documents + Funding (Not in the Portal)

1) A few final signatures – These will be emailed to you directly from our partner bank or our Compliance team.
Once all signatures have been returned…
2) Funding the account – Funding is expected within 5 business days of account approval. You may fund your account by check, wire, or ACH where exact instructions will be sent to your email.

Account Opening Email

Congratulations!!  You are done with onboarding and are ready to access your account. You will be receiving an email labeled “Abaca Account Approval – {CompanyName}.” This email will go over all the details to get you up and running as a newly approved Abaca client.

To learn more about getting started with your Abaca Online banking account, please check out this article for more information.