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Reg D Transfer & Withdrawal Limitations Letter
Andy Zavoina and John Burnett, BOL Gurus
Guru Bios
Question: In accordance with Reg D, can you direct me to the part in the part of the regulation that covers the timeframe of issuing letters to the customer for going over their transfer and withdrawal limits? Do we send the first letter when it is first detected and so on?
Answer by Andy Zavoina: You can stop transactions as they happen, or you can review these on an ex post basis. (204.2, footnote 4(b)). The latter is generally done by reviewing the statement and sending your letter series or otherwise contacting the customer within a reasonable period thereafter. I would consider this to be a week, perhaps two. Reaching another statement though, would seem to be unacceptable and allow more abuse and too little time to allow for correction on the part of the customer. The sooner you remind them, the sooner they can stop writing excessive checks.
Answer by John Burnett: Your regulator may also require you to act on excessive transfer activity before the end of the statement cycle. For example, if you pay five checks within the first five days of the statement cycle, you should be alerted to that, because the customer has already used more than the permitted three checks in the cycle (assuming all are to third parties). You should communicate with the customer right away, to lessen the chance that the customer will issue more checks during the balance of the cycle. That kind of monitoring calls for system reports that alert you when transfer counters have hit seven and check counters have hit four in the cycle.
First published on BankersOnline.com 8/21/06
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