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 holding company 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 January 2013.) 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 January 2013.) Two years more for tenant foreclosure protection 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. April 2013 | ABA BANKING JOURNAL | 39 http://www.ababj.com

Table of Contents for the Digital Edition of ABA Banking Journal - April 2013

ABA Banking Journal - April 2013
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
Picture This
ABA COMMUNITY BANKING Negotiating better contracts
Pass the Aspirin
Tech Topics
COVER STORY: Focus on risk Regulators raise the bar—big time!
RAROC architect’s views on risk
Top-performing big banks
Compliance Inbox
ABA At Your Service
Legal Issues
First Person

ABA Banking Journal - April 2013

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