July
July 22

Question:  From a federal regulatory perspective, can a convenience signer on an account have access to a debit card with their name on it? If there happens to be fraudulent charges on that card with the signer’s name, are they able to dispute the charges?

Answer:  Generally, whether a debit card can be issued to a convenience signer will depend on the terms of the accountholder agreement. With that said, there does not appear to be any explicit prohibition against doing so at the federal level, though the bank would want the account owner's permission to permit the convenience signer to perform these transactions.  If a debit card is ultimately able to be issued to the signer in question, the bank would subsequently be subject to the error dispute and resolution procedures of Regulation E (particularly § 1005.6, § 1005.8 and § 1005.11), as well as the account agreement and any applicable internal policies and procedures, and the holder of the debit card would be able to make the bank aware of any error / disputed charges.

July 15

Question: Under Regulation D, the requirement of charging for charging transactions on non-transaction accounts was suspended (indefinitely); if a bank still charges fees for excessive transactions, is that bank still required to monitor them?

Answer: While a bank is no longer required to limit or monitor these transactions under Regulation D, monitoring and enforcement should still be consistent from a UDAAP/UDAP perspective. The FRB’s FAQ suggests that charging fees for excessive transactions likely would not pose an issue under the current suspension rules: “Regulation D does not require or prohibit depository institutions from charging their customers fees for transfers and withdrawals in violation of the six-transfer limit. Accordingly, the deletion of the six-transfer limit does not have a direct impact on the policies or account agreements of depository institutions that charge such fees to their customers." FRB - Savings Deposits Frequently Asked Questions However, it may be worth considering that if the bank is not monitoring these transactions, then this could possibly lead to these fees not being charged in a consistent manner to all similarly situated accountholders, which could expose the bank to potential UDAAP/UDAP concerns.

July 8

Question: Under the Department of Labor’s new Retirement Security Rule, how has the definition of “fiduciary” changed?

Answer: Under the new final rule, a person is an investment advice fiduciary if they provide a recommendation in one of the following contexts:

The person either directly or indirectly (e.g., through or together with any affiliate) makes professional investment recommendations to investors on a regular basis as part of their business and the recommendation is made under circumstances that would indicate to a reasonable investor in like circumstances that the recommendation:

is based on review of the retirement investor’s particular needs or individual circumstances, reflects the application of professional or expert judgment to the retirement investor’s particular needs or individual circumstances, and may be relied upon by the retirement investor as intended to advance the retirement investor’s best interest; or

The person represents or acknowledges that they are acting as a fiduciary under Title I of ERISA, Title II of ERISA, or both with respect to the recommendation. https://public-inspection.federalregister.gov/2024-08065.pdf

This is considered to be a departure, and a likely non-insignificant expansion, of the scope of what type of employees may be deemed fiduciaries.

June

June 21: 
Question: We have a business customer that has 4 owners, each owning 25%. Three are individuals, and the last is a trust. We have always listed the trustee when a trust is involved in the ownership. Can you verify if this is correct?   
Answer:  You are correct-- when an entity is owned by a trust, the guidance offered by FinCEN indicates that the bank would not be required to identify the beneficiary and could satisfy the ownership prong by collecting and verifying the identity of the trustee. Further, we offer a Compliance Minute outlining the Beneficial Ownership rule and its effects on trusts, it may be accessed here. 


June 17: 
Question: Does FinCEN’s new beneficial ownership information (BOI) rule impact a bank’s existing BOI requirements, specifically as it pertains to those entities that are “exempt” from BOI reporting?

Answer: FinCEN's BOI Reporting Rule (31 CFR 1010.380) and FinCEN's BOI Requirements for Legal Entity Customers (31 CFR 1010.230) are two separate, though conceptually related, regulatory requirements. As such, a bank must still establish and maintain written procedures reasonably designed to identify and verify beneficial owner(s) of legal entity customers and include such procedures in its anti-money laundering compliance program. Certain entities are exempt/excluded from the definition of "legal entity customer” (Exclusions from the definition of Legal Entity Customer) and there is overlap with the entities that are exempt from being “reporting companies” under the BOI rule (https://www.fincen.gov/boi-faqs#C_2), but ultimately, the BOI rule will not impact a bank’s current obligations for identifying and verifying beneficial owner(s) of legal entity customers.


June 13: 
Question: We have a business customer that has 4 owners, each owning 25%. Three are individuals, and the last is a trust. We have always listed the trustee when a trust is involved in the ownership. Can you verify if this is correct?

Answer: You are correct-- when an entity is owned by a trust, the guidance offered by FinCEN indicates that the bank would not be required to identify the beneficiary and could satisfy the ownership prong by collecting and verifying the identity of the trustee. Further, we offer a Compliance Minute outlining the Beneficial Ownership rule and its effects on trusts, it may be accessed here: https://compliancealliance.com/training/ca-minutes-video/beneficial-ownership-and-trusts-compliance-minute/

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