Scenario:
The financial institution offers Remote Deposit Capture to business customers of the bank. After review of the business customers financial records, it is determined that the financial risk of offering the remote deposit capture product to the customer is low. The financial institution provides the business customer with a legal agreement that specifies numerous items but also includes the requirement for anti-virus software, to use commercially reasonable method approved by the financial institution to destroy checks, and to promptly notify the financial institution if an authorized person with access to the remote deposit capture is not longer with the company.

Should this financial institution have a process in place to visit the business customer on at least an annual basis? Should the financial institution have the business customer sign a certification on at least an annual basis specifying their compliance with the terms of the contract?

Thanks

1. I thik the bank should visit the customer at least annually - unless (because RDC makes possible) the customer is soooo far away the expense is prohibitive. Of course that should be discussed in the customer underwriting and why they are so strong that you won't need site visits.
Our contract gives us the right to visit and inspect at any time.
2. I just read the FFIEC Guidance on RDC and don't see that an annual certification is required. IMO - a site visit that is documented would be better because a bank officer is verifying they are following your contract requirements.

While it is true that there is no explicit requirement for an annual look at the business, how can you enforce compliance with your contract provisions if you don't make such a visit? It seems to me that your ability to make such on-site checks is a must as a risk-mitigation control.

For what it's worth, you could include in your contract a requirement for a review by a qualified third party if the customer is so remote as to make your bank's visits impractical.

But it would be neat, would it not, to sign up a depositor in Hawaii and charge the cost of your personal on-site visit to, let's see, the marketing department???

HEY...
hands OFF the marketing budget...we are always the first to get cut

While the FFIEC Guidance states that an onsite visit should be based on whether the risk warrants or not, best practice is to annually schedule a site visit. Use it as a "marketing" opportunity or to show good will and strengthen the relationship. While you are there you can go through a security checkup. If the customer location is in another state or city where an onsite visit isn't feasible, then develop a "security check sheet" for the customer to complete and send back to you. Maybe include a phone call to check in as well.

I'll be presenting a webinar that will cover these issues and give some more ideas on how to accomplish this task in April, hope you will join me.

Thanks. Susan Orr