We monitor our savings and mmda accounts for excessive withdrawal activity and send a written notice letter when the limit has been exceeded. However, we are not always sending the notice as soon as we could be. For example if the customer appears on our excessive withdrawal report (exceeds limit) on the 22nd of the month (a monday), we technically would have knowledge of this excessive activity on Tues, the 23rd and could mail a letter at that time, however we may not mail the letter to the customer until the 25th (Thursday); in the meantime, there may be additional excessive withdrawal activity on the account. So my question is, how soon are we required to notify the customer of excessive withdrawal activity? Thanks.

I don't believe that the regulation gives any guidance as to how soon you are required to notify the customer. I would not think that a day or two delay would be unreasonable. Since our accounts cycle on different days, we get a daily listing of any account that has exceeded the limit during their current cycle or within a calendar month period. We use the results of the daily report to generate any necessary letters as soon as practical. This way they have time to change their ways and not have a re-occurence the next cycle (or calendar month).

The Fed at one point issued an opinion that there could be times when waiting until the end of a statement cycle could be a problem. For instance, if the customer goes on a check-writing binge near the beginning of the month, the bank should be able to catch that earlier than end of cycle so that more timely action might be able to alert the customer to a need to change his behavior sooner, rather than later.

Thanks to both of you, Doug and John, for your comments. One additional question. Are we required to notify customers in writing when excessive activity occurs (such as mailing a letter)? An employee who helps monitor this for the bank, has taken it upon herself to email these individuals when excessive activity occurs, even though our policy doesn't state that this particular method of notification is acceptable. Are there requirements surrounding the method in which customers are notified of excessive withdrawal activity?

One thing I would suggest is that if you are able, not wait to contact the customer until after they have violated the Reg. We've set up our daily reports to flag accounts when they reach five limited transactions in the counting period and our procedures are to call the customer at that point. We see this as a good chance to warn the customer before we start charging them with excess transaction fees and sending them nasty letters and warnings on their statements. My own opinion is that a call from a relationship manager is a better and more effective touchpoint than an email or a letter. It may be a good chance to discuss the customer's transaction needs and determine if a MMA is the right product for them.

The regulation doesn't specify how or whether you contact the customer. You can call instead of write, and if it's more effective because of the personal touch, so much the better.

If you use email for this purpose, be sure that you've got good restrictions on what personal information you include in the message. I'd avoid account numbers if possible, or truncate them.