A Standby Letter of Credit
Answered by BOL Gurus Mary Beth Guard and Jack Holzknecht Bios
Question: Is a standby letter of credit considered an account for purposes of determining covered accounts?
Answer: The regulations and the guidelines only provide a few examples of covered accounts, and "letters of credit" are not included in those examples. Letters of credit do have a reasonably foreseeable risk of identity theft so they fit the second paragraph of the definition. It is debatable whether a letter of credit constitutes a continuing relationship, which is a necessary element in the definition of "account." We believe that a letter of credit probably is not a covered account or, if it is, it's not one where the risk is thought to be particularly high, by any means.
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