ABA Banking Journal - November 2007 - (Page 62)

COMPLIANCE CLINIC MIB X AL O Which gets the nod? POD? Or TOD? What is the difference between TOD (Transfer on Death) and POD (Payable on Death)? Our account opening system gives us this option when opening accounts and I am not sure which one to use. Although both POD and TOD designations allow customers to name beneficiaries, and both POD and TOD accounts allow assets to pass directly to beneficiaries at the death of the customer, there is a difference. Banks generally set up Payableon-Death (POD) accounts to allow customers to name beneficiaries for their checking, savings, and other bank accounts, whereas Transfer on Death (TOD) designations are commonly used to transfer ownership of stocks, bonds, and mutual funds. Both types of designations may help your customer’s beneficiaries to avoid the time and expense of probate. Beneficiaries receive the funds or stocks after presenting the bank or brokerage with proof of death—generally a certified death certificate. Both POD and TOD designations are controlled by state law. The TOD laws are a uniform code similar to the UCC, and most, but not all, states have adopted these laws. Here is a link to a description of the Uniform TOD laws and the states that have adopted them: http://www.nccusl.org/nccusl/uniformact_factsheets/uniformacts-fs-tsra.asp. Q. A. tomer’s account. (It would probably not be feasible or cost-efficient for a large bank to do the same.) The Social Security Administration can and will ask for their money back for funds deposited in error, and the bank is liable, even if the account has been closed. According to FMS.gov, a bureau of the United States Treasury, “Any information of the death received by the RDFI or any of its employees, from whatever source, establishes the full legal liability for ALL SUBSEQUENT post-death federal benefit payments from all agencies, as well as any post-death benefits in the account, which the RDFI then allows to be withdrawn.” [Emphasis added.] http://fms.treas.gov/greenbook/reclam/ reclam-3a3.html Handling customer ID duties with foreign firms How should a bank verify the existence of a foreign business entity? There really isn’t one good way to do this, but for customer identification program (CIP) purposes, you must obtain all required information and verify that information. Documents may be in a language other then English, and you may need to have someone who can read that language confirm that the individuals presenting themselves as signers are authorized to conduct business on behalf of that entity. Once you determine that all necessary information is received, you must make a good-faith effort to verify that information. Verification can be accomplished by such methods as verifying the business telephone listing through international telephone information; the firm’s listing in international or foreign commerce directories or trade publications; confirmation through foreign subsidiaries of your bank; verification through the entity’s embassy Commercial Attaché; or official documents provided by the business that confirms the existence and apparent validity of the business entity. In addition, any business entity doing business in the U.S. must be appropriately licensed and registered by any state in which it does business, so check your state’s requirements for foreign business licensing. Also, because such entities pose a higher risk to your bank, you should independently seek to confirm through clear documentation that proves the signers’ identities, such as through foreign identity documents, driver’s license, passport information and photograph, etc. The bottom line for CIP is that you form a “reasonable belief” that you know the true identity of the customer. If you cannot do that, the account should be declined. In addition, your CIP Policy should address how you will identify foreign corporations and what exceptions you will make, if any. http://www.occ.treas.gov/BSA/pages_manual/OLM_097.htm Q. A. New “$15 or under” rule doesn’t always demand disclosure Is my bank required to make any changes to our Regulation E disclosures or send change in terms notices to our customers pursuant to the recent changes excepting transactions of $15 or less from the requirement that receipts be made available to consumers for transactions initiated at an electronic terminal? (http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070628/default.htm) No modification of your Regulation E disclosures is required to allow this at non-proprietary ATMs or POS terminals, according to the Federal Reserve. However, if you used the model language from Appendix A to Part 205 of Regulation E in your disclosures that states: “You can get a receipt at the time you make any transfer to or from your account using one of our [automated teller machines] [or] [point-of-sale terminals].” and you plan to discontinue offering receipts at your own ATMs, then your disclosure should be modified to include the exception for transactions under $15. [Emphasis added.] A change in terms notice, however, would not be required. The requirements for a change in terms notice outlined in §205.8 are not applicable to this situation. If a bank wanted to inform existing customers that a receipt would not be generated for transactions under $15, a message on the ATM screen or posted on the ATM itself would be the best way to accomplish that. Q. A. Compliance as close as the death notices Are banks required to search the obituary columns in the daily paper? It is not “required,” but this is something typically a smaller or community bank would do as a control mechanism to prevent reclamation claims from the IRS/Treasury for government benefits directly deposited to a deceased cus- Q. A. Leslie Callaway, CRCM, contributing editor, works with ABA experts to answer member questions. Submit questions to lcallawa@aba.com 62 NOVEMBER 2007/ABA BANKING JOURNAL http://fms.treas.gov/greenbook/reclam/reclam-3a3.html http://fms.treas.gov/greenbook/reclam/reclam-3a3.html http://www.nccusl.org/nccusl/uniformact_factsheets/uniformacts-fs-tsra.asp http://www.nccusl.org/nccusl/uniformact_factsheets/uniformacts-fs-tsra.asp http://www.federalreserve.gov/newsevents/press/bcreg/20070628a.htm http://www.federalreserve.gov/newsevents/press/bcreg/20070628a.htm http://www.occ.treas.gov/BSA/pages_manual/OLM_097.htm

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2007

ABA Banking Journal - November 2007 Contents Editor’s Column Briefing: Good News for Mortgages Sleight of Mind N.Y. Hiring Bonanza May Be Bane Snapshot: A Look at Held-For-Investment Loan Growth ABA Resources ABA Chairman’s Position “The Moose Bank” Thrives on Manufactured Housing Loans Finding the Middle Way for Your Bank’s Retirement Program Pass the Aspirin Cover Story: Self-Service Steps Up DIY U.K. Style Marketing to Millennials Getting Real With “Gen Wired” Ethnic Marketing: Disinterested Banking Getting Good at Global Sourcing Case in Point Turn Compliance on It's Head Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2007

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