I have searched but didn't see this addressed. We are in the process of allowing deposit accounts to be opended online and wondered what others are doing with regard to geographical capacity. What are my concerns for allowing persons in border states to open accounts?

Border state or not, what processes are you going to use to mitigate your CIP requirements.

We keep our same service area. Our vendor allows us to specify zip codes and/or states and/or radius from a point.

I did not recommend that we extend this to other states simply because I am not familar with laws that could affect this, and I am trying to build a case to prevent it, just didn't know where to start.

The CIP process as I understand will be conducted through a verification process thru the vendor utilizing credit and other information available.

We are in the process of implementing online acct opening and we also limit to our service area. We are able to limit by zip codes in the counties we serve.

When you say service area, do you mean your CRA assessment area?

When opening deposit accounts in bordering states, would I need to be concerned with any laws pertaining to those states or would our state saw take presidence?

Typically, governing law is established within the contract and it is usually based on your home State as that is where the account is maintained, regardless of where the customer lives.

Thanks everyone for your help!

My understanding is that on a deposit you can specify that the laws of the state of your bank apply. This wouldn't be the case for a mortgage loan.

The CIP is a huge issue in my mind and I would recommend enhanced monitoring on those new accounts. And to control the loan to deposit ratio, I would keep the CRA assessment area in tact and restricted for these accounts.

As far back as 1995 (as I recall) we had "burger flippers" in CA wanting to open accounts at our Central Texas bank. Why? It made no sense. And we adopted the term "burger flippers" because these were fast food cooks. Remember back then we had websites, we didn't have internet banking or the BSA concerns present with e-money.

The other consideration is how your FI is chartered. As a state-chartered community bank (with branches in 3 states), we limit online account opening to clients in those 3 states. We did evaluate through legal review widening our circle, but it was determined that doing so would result in additional chartering requirements and to comply with additional state-specific laws. Keep in mind that while your bank is based in a given state, the client is opening the account from their location.