The reference to "savings accounts subject to automatic transfers" is to ATS accounts, which are interest-bearing savings accounts that are classified as transaction accounts because they have no monthly transfer caps. ATS accounts were the interim response to NOW accounts when NOW accounts were not permitted in most of the country. Although the justification for ATS accounts disappeared with the enactment of the Monetary Control Act of 1980, which authorized NOW accounts nationwide, some banks still offer ATS accounts.
ATS accounts are legally available only to individuals. Presumably, they can be used by sole proprietorships, and thus it's possible (unlikely, but possible) that one of your Phase II exempt customers could have one.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8