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#118857 - 09/30/03 06:34 PM CIP and Accounts that close due to zero balance
Anonymous
Unregistered

I'm sure other banks have a similar situation where they have accounts that close due to a zero balance and the customer's direct deposit comes in. We are currently re-opening these accounts. Probably shouldn't do this anyway but with CIP we cannot. We have Jack Henry CIF 20/20 and I'm told we cannot set a time limit of 31 days, etc to remain open. Does anyone have a suggestion?

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#118858 - 09/30/03 07:24 PM Re: CIP and Accounts that close due to zero balance
complyguy Offline
Gold Star
complyguy
Joined: May 2001
Posts: 494
PA
Our situation is a little different than yours, but maybe some principles will transfer.

Our club accounts are closed so that the checks can be mailed. We decided that this operational procedure should not serve as an impediment to customers, so we are giving credit for "existing customer" even if the club account is in its "closed" weeks.

The risk is minimal that a club account will be used for terrorism financing since it is not a transactional account, and a check is mailed to the address of record.

Disclaimer - We have a lower risk profile than many banks, and I'm not sure if the examiners will agree with our risk assessment on this.

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#118859 - 09/30/03 07:35 PM Re: CIP and Accounts that close due to zero balance
Anonymous
Unregistered

Since I posted this question, I've been informed that our Jack Henry CIF 20/20 does allow us to set a time limit before the account goes to a "closed" status. Of course we can override this to close immediately, if needed. We will set to close after 35 days to eliminate the issue with having these same customers come in each month to open an account. I can't think this would cause any type of violation due to the fact that it's in the customer's best interest. Any thoughts???

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#118860 - 09/30/03 07:46 PM Re: CIP and Accounts that close due to zero balance
BrendaC Offline
Power Poster
BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
On JHA you can drive account closing timeframes through your parameters on the service charge (i.e., account) level. On our Christmas Club accounts, we allow the accounts to remain in an active status through year end. If no deposit is made prior to 12/13, the account closes due to zero balance. We disclose this information in our account TISA.

Customers like to be able to use the same account from year to year and it is much more efficient than closing and reopening accounts.

By the way, if you do decide to reopen a closed consumer account, don't forget to provide the customer with account opening documents, such as a TISA. We are required to redisclose.

Also, think through the policy of allowing an account to be reopened. If I am on my daughter's account and I learn that the account is closed, I could be very relieved. I might not be willing to accept responsibility for the "automatic reopening" of the account...and without my anything in your file acknowledging my willingness to be a joint owner, you might have a little difficulty making me take responsibility for any losses. The signature card you have in file may even be stamped "CLOSED" (which of course you marked through--right??) You might even give me just cause for a legal action against the bank.

Is it really in the best interest of the bank to automatically reopen an account? Just a few thoughts!
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