Banks and the Servicemembers Civil Relief Act (SCRA)
Question: What does the bank need to know about the Servicemembers Civil Relief Act (SCRA)?
Answer:
The Office of Comptroller of the Currency (OCC) recently issued a bulletin that contains new legal requirements regarding the Servicemembers Civil Relief Act (SCRA). The SCRA was enacted to suspend certain financial and legal obligations (such as the payment of taxes) of individuals entering active military duty. The Act is intended to allow military personnel to devote their full attention to the service of our country by alleviating concerns regarding financial obligations.
The SCRA offers short-term financial and legal relief to military personnel and their dependants by placing specific requirements on the financial services industry and legal system. The Act applies to individuals who have been detailed for duty with a branch of the military or who are on active duty with the:
Army.
Navy.
Marine Corps.
Air Force.
Coast Guard.
Officers in the United States Public Health Service Commissioned Corps (USPHS).
National Oceanic and Atmospheric Administration (NOAA).
As with most laws and regulations, failure to follow the requirements of the SCRA can expose institutions to significant liability and litigation. Penalties for failure to comply with the major provisions of the Act include being assessed the forfeiture of revenue, and fines and imprisonment of up to one year. In addition, violating this act may lead to long-lasting negative public relations for the institution. To ensure that your bank is compliant with the SCRA, institute a training program to educate all employees on the requirements of the Act, or include this material in the bank's annual compliance training.
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