What are Related Entities?

Related entities refer to relationships between a bank’s customers and accounts. Related entities may be:

• Two people
• A person and a business
• Two businesses

Related Entities and Compliance

A bank’s legal lending limit caps the amount that can be loaned to a borrower. Legal lending limits help financial institutions reduce exposure to loan defaults. Tracking related entities helps a bank remain in compliance with these lending regulations.

Documenting Related Entities

Lending decisions often require the banker to obtain a global view of the customer’s relationships with related entities. Unfortunately, tracking related entities in a core system can be challenging and creates time-consuming work to understand:

• All accounts under the customer’s name
• Trusts on which a person is listed
• Accounts held by the customer’s family members

Identifying individual customers who are involved in specific business accounts can be especially difficult, since a customer could be part of multiple corporations, LLCs, etc.

Leveraging Tech to Connect Related Entities

Some banks use account management software to tie related entities together for a comprehensive view of a customer and his or her relationships. For example, AccuAccount offers a “Related Entities” report that lists all linked customer accounts. Related entities information also appears on every AccuAccount customer page, displaying the full relationship of the customer. It also provides clarity to understand other parties tied to that customer.

Compliance Tools & Tips for Bankers

Looking for more information about compliance in the banking industry? Be sure to check out our extensive resource library with free spreadsheets, whitepapers, and ebooks.

Browse our banking definitions page for more terminology.