Accounts - Incorrectly Opened as Interest Bearing - John Burnett

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Accounts - Incorrectly Opened as Interest Bearing
by John Burnett, BOL Guru
Guru BIOS

Question: In reviewing accounts for Reg Q I found that Corporation and Partnership accounts were opened as interest bearing accounts. We are in the process of cleaning up these accounts.

My questions are:

Do we have to notify the customer before changing the account from interest bearing to non-interest bearing?
What is the bank's liability if these are not changed? My understanding of the reg the bank has to change the account.

Answer: There is no Regulation DD requirement that you provide advance notice, since these are not consumer accounts. However, you will undoubtedly save your bank a lot of aggravation by sending a letter explaining the error.

As for penalties for not making the correction, you are looking at the potential for a $1000 penalty for each such violation.

First published on BankersOnline.com 6/20/05

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