ABA Banking Journal - April 2013 - (Page 39)
ABA COMPLIANCE CENTER | inbOx
Must customer ID efforts be repeated after loan payoff?
Q. We have customers who had
a loan with our bank. They paid
off and a few months later we
approved a new loan. We still have
identification documents on file
from the previous loan. Must we
get new ID for the new loan? Or
can we use the old documents?
A. That depends on several factors.
The Customer Identification Program rules require that you obtain
the four pieces of required information and verify some or all so
you can “form a reasonable belief
that you know the true identity of
the customer.” Since your customer had an account with the bank
and since the CIP rules require
you to retain those records for five
years after the account closed, you
should have what you need on file.
The first place to look is the bank’s
own policy on acceptable procedures
to verify customer identity. CIP regulations require that you identify any
customer establishing a new account
with your bank, but the extent to
which you perform the verification
on existing customers will be a matter of bank policy. It may be that nondocumentary verifications such as a
credit check is all that is necessary,
but your policy and not the law itself,
should stipulate exactly what practices are in this area. If your CIP does
not address this, it should be revised
and re-approved by your board.
Part of the decision-making process will be whether this customer
has other relationships with the bank
and how well you know the individual. Another factor is risk presented by
the customer’s profile.You also want
to consider how long it was since the
last loan was paid and the amount.
There is no requirement regarding
frequency, although it would probably be a “best practice” to confirm
that none of the information that
can change has changed since you
first established this relationship.
For example, it is unlikely that the
customer’s date of birth or Social
Security number have changed.
However, the customer’s address or
name could have changed. For this
reason—and sound practices—you
should update records for the new
loan. One way to approach the customer: Let them know that you want
to take the opportunity to be sure
customer records remain current.
(Response provided January 2013.)
Executive officer loans and stock in
Q. Can you tell me if Section 215.10
of Regulation O’s reporting requirements for credit secured by certain
bank stock applies if we have executive officers who have loans of holding company stock? The company is
the bank’s only shareholder.
A. No, in this case it does not
apply. This provision applies only
to loans secured by actual stock
of the bank. For loans secured by
the stock of the bank holding company see Regulation Y, 12 CFR
225.4(e). (Response provided January 2013.)
Optional services don’t
change the status of free
Q. Can we call a checking account
“free” if: (a) the customer signs
up for an optional overdraft transfer from a linked account; (b) we
assess an overdraft transfer fee
when the customer overdraws the
account: and (c) we have to transfer funds to cover the overdraft?
A. Yes. A fee for optional services,
such as overdraft transfers, does
not take the account out of the
“free” category. This is a fee for
an “option” and not a fee for a
transaction that a consumer might
expect to be included as part of
the account. (Response provided
Are we exempt from remittance rule?
Q. My bank will be exempt from
the new Reg E foreign remittances
rule language about disclosures,
because we fall under the de
minimis requirements. However,
does that also mean that we are
exempt from 12 CFR 1005.33—
the section about error resolution?
A. If you are exempt from the
remittance rules, you are exempt
from all of it. (Response provided
Two years more for tenant
Q. Please verify that the lender
or servicer requirements relating
to protecting tenants in connection
with foreclosure proceedings
expired on Dec. 31, 2012.
I haven’t seen any extension.
A. The protections were extended.
The Protecting Tenants at Foreclosure Act is part of the “Helping
Families Save Their Homes Act of
2009.” These provisions took effect
on May 20, 2009, and originally
were to expire on Dec. 31, 2012.
However, the Dodd-Frank Act
moved the date to Dec. 31, 2014.
(Response provided March 2013.)
Leslie Callaway, CRCM,
ABA Compliance Project
Manager, and Mark Kruhm,
CRCM, ABA Senior Compliance Analyst, and other ABA
experts, answer ABA member
questions here and in the online
edition of Inbox at ababj.com.
Member banks may submit
questions to: compliance@aba.
com. Disclaimer: Our answers
do not provide, nor are they
intended to substitute for, professional legal advice. Answers
were current as of date shown at
the end of each item.
ABA BANKING JOURNAL
Table of Contents for the Digital Edition of ABA Banking Journal - April 2013
ABA Banking Journal - April 2013
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ABA Banking Journal - April 2013