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#1925286 - 05/21/14 06:38 PM Property Manager of HOA is a TPPP?
WonderWoman Offline
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gone fishin'
Have an auditor that is suggesting that all of our Property Managers of HOAs are considered Third Party Payment Processors.

They state this because they accept payments on behalf of the HOA owner and they "establish deposit accounts to process the transactions" (see FIL-127-2008).

I do not believe an HOA is a "merchant" & I definitely don't feel a Property Manager is a TPPP - but is there any specific language anywhere I can direct the auditor to - to slam dunk that they don't apply?

This is the strangest interpretation I've ever heard ... cry
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#1925343 - 05/21/14 08:09 PM Re: Property Manager of HOA is a TPPP? WonderWoman
edAudit Offline
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Really?

Ok (sorry no slam dunk but this is not all that they do)

Non-Bank, or third-party, Payment Processors are financial institution customers that provide payment processing services to merchants and other business entities, typically initiating transactions on behalf of merchant clients that do not have a direct relationship with the Payment Processor’s financial institution. Payment Processors use their own deposit accounts at a financial institution to process such transactions and sometimes establish deposit accounts at the financial institution in the names of their merchant clients.

http://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-A010.html
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#1925345 - 05/21/14 08:12 PM Re: Property Manager of HOA is a TPPP? WonderWoman
edAudit Offline
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You are here
http://www.ag.ny.gov/real-estate-finance-bureau/hoa

A homeowners association is an organization created by a real estate developer for the purpose of developing and managing a community of homes, town homes and/or condominium units. It is given the authority to enforce the covenants, conditions, and restrictions as well as manage the common elements of the development. The NYS Office of the Attorney General requires that the sponsor file an offering plan for the homeowners association, and that the sponsor maintain commitments which it made in the offering plan. The Attorney General’s jurisdiction would be limited to ownership and maintenance of HOA common property.

I do not see this as a merchant your "auditor" may not like it because it is a NY definition but our Attorney General is tougher than most regulator (ask Standard Chartered) laugh
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#1925376 - 05/21/14 08:37 PM Re: Property Manager of HOA is a TPPP? WonderWoman
WonderWoman Offline
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I've read all the guidance & I agree that Property managers do not fit into the definition.

When I read the regulation I feel it's obviously clear?? but I'm still getting the question.
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#1925393 - 05/21/14 09:05 PM Re: Property Manager of HOA is a TPPP? WonderWoman
edAudit Offline
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I can however see where someone with limited banking experience (your auditors) may misinterpret this. Can you stress that they do not "initiating transactions on behalf of merchant clients"?

In prior banks we generally start the property managers out as elevated risk when the account is first opened and then after initial monitoring they fall back to normal risk. Is that part of the process for you? (to get them off your back)
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#1925400 - 05/21/14 09:20 PM Re: Property Manager of HOA is a TPPP? WonderWoman
WonderWoman Offline
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Oh thank you - I think that's the key phrase "Initiating transactions". I'm going to roll with that & expand on that notion.

Our Property Managers (of HOAs) are considered very low risk.
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#2089324 - 07/21/16 08:30 PM Re: Property Manager of HOA is a TPPP? WonderWoman
Goodland Offline
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Bump. Would any of you consider property management companies TPPP if they initiate ACH debits to renters on behalf of property not owned by the property management companies? Below are two types of ownership designation I question and on the first I can see that if there is ACH debits sent to the renters of Joe Shmos (Merchant Client?) property originating from ABC Property Management Company it may appear as a TPPP, but if the FBO designation was not there it could be possibly seen as payment to the property management company and not considered a TPPP?

ABC Property Management Company
FBO Joe Shmo
or
ABC Property Management Company

Thoughts?

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#2089354 - 07/21/16 09:26 PM Re: Property Manager of HOA is a TPPP? WonderWoman
rlcarey Online
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Galveston, TX
Whether a customer is a TPPP has nothing to do with the way accounts are titled. It has to do with what they are doing.
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#2089369 - 07/21/16 10:03 PM Re: Property Manager of HOA is a TPPP? WonderWoman
Goodland Offline
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rlcarey, ignore the vesting part .... If the PMC initiates debits on the renters accounts on behalf or the property owners (3rd Party), would they in turn be a TPPP.

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#2089374 - 07/21/16 11:05 PM Re: Property Manager of HOA is a TPPP? WonderWoman
rlcarey Online
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Galveston, TX
Sure sounds like it to me:

Description of Third-Party Payment Processors

Non-Bank, or third-party, Payment Processors are financial institution customers that provide payment processing services to merchants and other business entities, typically initiating transactions on behalf of merchant clients that do not have a direct relationship with the Payment Processor's financial institution.

https://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-A010.html
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