ABA Banking Journal - July/August 2017 - 50
> ABA COMPLIANCE CENTER INBOX
Are Bank Employee
Referrals to the Trust
from Reg R?
If a trust department is exempt from the definition of "broker"
due to the "chiefly compensated calculation," would referrals
made by bank employees to the Trust Department be exempt
from the referral restrictions of Regulation R?
A: The trust exemption provides
an exemption with respect to
trust activities. A referral by a
bank employee that doesn't
involve investment products
(including variable annuities) to
another department in the bank is not restricted. Both the
networking exemption in Reg R and the banking agencies'
NDIP guidance apply only to referrals of investment
products. (Response provided March 2017.)
I would like clarification on how the
remittance transfer rule applies to loan
proceeds. Our customer is based in the United
States but the loan proceeds will be wired to a
company outside the U.S. The funds are not coming
from the customer's account but are being sent from
our loan settlement account directly. At no time
will the loan proceeds be deposited directly into our
customer's account at the bank. Does the remittance
transfer rule apply to this transaction?
A: Clearly, if the bank deposited the loan proceeds into the
customer's account and then wired the funds, there would
be no question that the transaction is covered. The difference
in your situation is that the bank is wiring the funds from the
bank's own account. The answer to your question is found in
the definitions of the remittance transfer rule. A "remittance
transfer" is an electronic transfer for funds requested by the
ABA BANKING JOURNAL | JULY/AUGUST 2017
sender to a designated recipient. When the bank is wiring the
funds from the U.S. to a recipient outside the U.S. and the
transfer is being done at the instruction of your customer, then
it is a remittance. Remember, under the rule, it isn't necessary
that the customer have an account with the bank. The key
point is that the funds are being wired from the U.S. to
someone outside the U.S. at the instructions of the customer.
(Response provided March 2017.)
We are a national bank. Do you know if we
can have a non-cash branch?
A: Yes. A branch includes "a location at which deposits are
received, checks paid, or money lent." It does not state
you must do all three. If your bank wanted to apply for a
branch license, it is possible to be a "cashless branch"
by limiting what you do to accepting deposits and making
loans. You don't have to cash checks or disperse cash to be
a branch, but you do have to be a branch to perform those
However, if you are asking if you can form a deposit production
office, a DPO is not a branch. The OCC states as follows:
§ 7.4004 Establishment and operation of a deposit
production office by a national bank.
(a) General rule. A national bank or its operating subsidiary
may engage in deposit production activities at a site other
than the main office or a branch of the bank. A deposit