July 22, 2010

Basic FDIC Insurance Coverage Permanently Increased to $250,000 Per Depositor

Filed under: Banking News, Compliance — Admin User @ 10:30 am

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000. The standard maximum insurance amount of $100,000 had been temporarily raised to $250,000 until December 31, 2013. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

The temporary increase from $100,000 to $250,000 was effective from October 3, 2008, through December 31, 2010. On May 20, 2009, the temporary increase was extended through December 31, 2013.

“With this permanent increase of deposit insurance coverage to $250,000, depositors with CDs above $100,000 but below $250,000 will no longer have to worry about losing coverage on those CDs maturing beyond 2013.

To help consumers, bankers and others understand how the new law affects deposit insurance coverage and to help consumers verify whether their deposit accounts are fully protected, the FDIC provides the following resources:

  • Information on deposit insurance on the FDIC Web site: Updated brochures on deposit insurance coverage (including the basic guide, Deposit Insurance Summary, and the more comprehensive guide, Your Insured Deposits) and a new version of the “Electronic Deposit Insurance Estimator” (EDIE), an interactive service that allows consumers to quickly and easily check whether their accounts are fully protected, are now available on the FDIC’s Web site (www.fdic.gov).
  • A toll-free consumer assistance line: Help and information about deposit insurance and other matters of interest to bank customers are available at 1-877-ASK-FDIC (1-877-275-3342) Monday through Friday from 8:00 a.m. to 8:00 p.m., Eastern Time. For the hearing-impaired, the number is 1-800-925-4618.

Visit the FDIC chapter of The Gold Book for details.

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June 10, 2010

What’s New: New Rules for Gift Cards

Filed under: Compliance, Operations, What's New — Admin User @ 8:39 am

New Federal Reserve rules provide important protections for the purchase and use of gift cards. The final rules under Regulation E that implement the Credit CARD Act of 2009, restrict the fees and expiration dates applicable to gift cards and apply to gift cards sold on or after August 22, 2010.

Content on this topic has been added to The Gold Book.

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May 28, 2010

OTS Assesses Penalty and Restitution for Unfair Overdraft Protection Program

Filed under: Compliance — Admin User @ 12:25 pm

The Federal Reserve’s final amendments to Regulation E enable consumers to limit the costs of overdraft services assessed on their deposit accounts. The amendments require financial institutions to provide a clear disclosure of the fees and terms associated with its overdraft services and to provide customers with a choice regarding the payment of overdrafts for ATM and one-time debit card transactions. The institution must provide a notice that allows a customer to opt in, or affirmatively consent, to the institution’s payment of overdrafts for these types of transactions.

These amendments took effect on January 19, 2010, and carry a mandatory compliance date of July 1, 2010.

Last month, the OTS illustrated the affect of noncompliance by taking action against Woodforest Bank, a thrift institution based in Refugio, Texas. To avoid a lengthy dispute, Woodforest Bank agreed to repay more than $12 million to current and former customers “who were misled about the cost of overdraft protection and charged excessive overdraft-protection fees.” According to the OTS, Woodforest’s business relied “upon an unreasonably high level of aggregate fees.”  Woodforest will also pay the federal Office of Thrift Supervision $400,000, the toughest penalty ever imposed by the regulator regarding overdraft fees.

“We believe that our overdraft protection programs now set a new industry standard for customer friendliness and consumer focus,” James Dreibelbis, Woodforest’s chief executive officer, said in a statement. OTS spokesman William Ruberry said Woodforest was incorrectly marketing overdraft protection as free, when it was really charging $34 per overdraft, plus additional daily fees if a customer failed to pay off the original penalties. Woodforest was also offering loans to repay overdraft fees, and the bank was requiring automatic account deductions to repay the loan. Such a requirement is against federal rules. Under the order, Woodforest has to limit fees and the number of transactions for which it can charge fees, overhaul marketing materials and clearly disclose rules, stop claiming that overdraft protection is good for people who have had financial trouble and give customers a chance to stop additional daily charges on overdrawn accounts.

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April 29, 2010

Revised BSA/Anti-Money Laundering Examination Manual Available

Filed under: Compliance, Operations — Admin User @ 11:01 am

The Federal Financial Institutions Examination Council (FFIEC) today released the revised Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The revised manual reflects the ongoing commitment of the federal and state banking agencies to provide current and consistent guidance on risk-based policies, procedures, and processes for banking organizations to comply with the Bank Secrecy Act and safeguard operations from money laundering and terrorist financing. The 2010 version further clarifies supervisory expectations since the August 24, 2007, update. The revisions again draw upon comment from the banking industry and examination staff.

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and State Liaison Committee revised the manual in collaboration with the Financial Crimes Enforcement Network, the administrator of the Bank Secrecy Act, and the Office of Foreign Assets Control.

Revisions were made throughout the manual. The sections of the manual with more significant updates are again noted in the table of contents.

The manual is located on the FFIEC BSA/AML InfoBase at: http://www.ffiec.gov/bsa_aml_infobase/default.htm. Banks and credit unions should direct questions about the manual to their primary federal regulator.

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April 28, 2010

Consider Benefits of BSA E-Filing

Filed under: Compliance — Admin User @ 11:50 am

The Financial Crimes Enforcement Network (FinCEN) continues to encourage financial institutions to electronically file Bank Secrecy Act (BSA) reports, and has issued a new brochure that highlights the benefits of using the Bank Secrecy Act Electronic Filing System (BSA E-Filing). E-Filing BSA information increases the timeliness of data availability, reduces the cost of paper processing, and improves data quality.

“FinCEN is committed to working with financial institutions to increase their understanding of the value that E-Filing provides across a variety of forms,” said FinCEN Director James H. Freis, Jr. “We are continually enhancing the system to ensure that the filing process is efficient and user-friendly, and accomplishes our joint efforts to get important information relating to money laundering and terrorist financing to law enforcement in the quickest manner possible.”

BSA E-Filing is a free, Web-based system that is user-ID and password protected. Financial institutions subject to BSA reporting requirements use the system to electronically file a variety of BSA forms, either individually or in batches, through a FinCEN secure network. Currently, more than three out of four BSA filings are electronically submitted. When an institution submits a form through the E-Filing system, it is available to and searchable by law enforcement in two days, rather than up to 11 days if filed on paper.

For more information about the system or how to enroll, please call the BSA E-Filing Help Desk at 1-888-827-2778 and select option number 6.

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April 26, 2010

Board to Hold Four Public Hearings on Home Mortgage Disclosure Act

Filed under: Compliance, Consumer Lending — Admin User @ 12:24 pm

The Federal Reserve Board has announced that it will hold four public hearings, beginning in July, on potential revisions to Regulation C, which implements the Home Mortgage Disclosure Act. The act requires mortgage lenders to provide detailed annual reports of their mortgage lending activity to regulators and the public. Consumers, community and consumer organizations, mortgage lenders and other interested parties will be invited to participate in the hearings.

The hearings will serve three objectives. First, the Board will gather information to evaluate whether the 2002 revisions to Regulation C, which required lenders to report mortgage pricing data, helped provide useful and accurate information about the mortgage market. Second, the hearings will provide information that will help the Board assess the need for additional data and other improvements. Finally, the hearings will help identify emerging issues in the mortgage market that may warrant additional research.

All hearings will include panel discussions by invited speakers.

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April 20, 2010

What’s New: Transaction Account Guarantee Program Extended

Filed under: Compliance, Operations, What's New — Admin User @ 10:41 am

On April 13, 2010, the FDIC adopted an interim final rule extending the Transaction Account Guarantee (TAG) program through December 31, 2010 for institutions participating in the program. Institutions that wish to opt out of the TAG extension must submit a request to opt out on or before April 30, 201o.

The FDIC Board of Directors has the authority to grant an additional 12-month extension of the program, through December 31, 2011, without further rulemaking, if it determines that continuing economic difficulties warrant such extension.

The maximum interest rate limit for NOW accounts guaranteed under the TAG program will be 0.25 percent, effective July 1, 2010.

Financial institutions currently participating in the TAG program should review its disclosures and modify them as necessary to ensure that they will be accurate after June 30, 2010.

This topic is further addressed in the Standard Maximum Deposit Insurance section of The Gold Book.

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What’s New: Revised Privacy Notice (Reg P)

Filed under: Compliance, What's New — Admin User @ 10:09 am

Federal regulators released an Online Form Builder that financial institutions can download and use to develop and print customized versions of a model consumer privacy notice.

The Online Form Builder, based on the model form regulation published in the Federal Register on December 1, 2009, under the Gramm-Leach-Bliley Act, is available with several options. Easy-to-follow instructions for the form builder will guide an institution to select the version of the model form that fits its practices, such as whether the institution provides an opt-out for consumers.

To obtain a legal “safe harbor” and so satisfy the law’s disclosure requirements, institutions must follow the instructions in the model form regulation when using the Online Form Builder.

Click here for additional information including compliance requirements and dates.

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March 26, 2010

What’s New: Final Reg E Rules on Overdraft Services

Filed under: Compliance, Operations, What's New — Admin User @ 12:47 pm

The final rule will enable consumers to limit the costs of overdraft services by providing consumers a choice regarding their institution’s payment of overdrafts for ATM and one time debit card transactions. Consumers will also be provided a clear disclosure of the fees and terms associated with the institution’s overdraft service.

Opt-In. The final rule requires consumers to opt in, or affirmatively consent, to the institutions’ overdraft service for ATM and one time debit card transactions, before overdraft fees may be assessed on the account. The rule also provides consumers an ongoing right to revoke consent.

Consumers Covered. The opt-in right applies to all consumers, including existing account holders.

Conditioning the Opt-In. The final rule prohibits financial institutions from tying the overdraft payment of overdrafts for check and other transactions to the consumer opting into the overdraft service for ATM and one time debit card transactions.

Same Account Terms, Conditions and Features. The final rule requires institutions to provide consumers who do not opt in with the same account terms, conditions and features, including price, as provided to consumers who do opt in.

Mandatory Compliance Date. The mandatory compliance date is July 1, 2010.

The Gold Book has been updated for these new rules. See Bounce Protection and Reg E notice requirements for additional details and requirements.

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March 24, 2010

Final Rules Restrict Fees, Expiration Dates on Gift Cards

Filed under: Compliance — Admin User @ 7:30 am

The Federal Reserve Board on Tuesday announced final rules to restrict the fees and expiration dates that may apply to gift cards. The rules protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated.

The final rules prohibit dormancy, inactivity, and service fees on gift cards unless: (1) the consumer has not used the certificate or card for at least one year; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.

The Board’s rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.

The final rules are issued under Regulation E to implement the gift card provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009.

The final rules are effective August 22, 2010.

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