Learn More - Click Here!

Thread Options
#2175988 - 05/01/18 12:51 PM Closing accounts for Reg D excessive transactions
corporate audit Offline
Junior Member
Joined: May 2008
Posts: 31
Is there any requirement around how much time a Bank has to close an account after the 3rd Reg D excessive transaction violation?

Return to Top
Operations Compliance
#2176000 - 05/01/18 01:41 PM Re: Closing accounts for Reg D excessive transactions corporate audit
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,631
Galveston, TX
Since you have already sent them warning letters, I would not expect much of a delay after discovery. Anything more than a couple of days is going to raise the examiner's eyebrows.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2176041 - 05/01/18 03:13 PM Re: Closing accounts for Reg D excessive transactions rlcarey
corporate audit Offline
Junior Member
Joined: May 2008
Posts: 31
So I guess waiting 2-3 weeks is a bit excessive? Seems that is what we are finding during our Audit.

Return to Top
#2176076 - 05/01/18 04:22 PM Re: Closing accounts for Reg D excessive transactions corporate audit
burkemi Offline
Platinum Poster
Joined: Nov 2013
Posts: 522
I would think 2 - 3 weeks is too long. Our process here is: Strike 1 - We send a letter that states after 3 strikes the account will be changed to checking. Strike 2 - We send a letter that states after 3 strikes the account will be changed to checking. Strike 3 - On the day we send the letter, the account has been converted. We send a letter that states this is your third offense, here is your new checking account features.
_________________________
I reject your reality and replace it with my own.

Return to Top
#2176080 - 05/01/18 04:36 PM Re: Closing accounts for Reg D excessive transactions corporate audit
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,612
Originally Posted By corporate audit
So I guess waiting 2-3 weeks is a bit excessive? Seems that is what we are finding during our Audit.
It may be, depending on the particular circumstances. The three strike rule is not a requirement of Regulation D, but an accepted best practice which comes from a Fed staff opinion:

"For this reason, the Board has applied a general rule that an institution may continue to consider an account an MMDA even if there are excess transfers so long as those excess transfers are not the result of an attempt to evade the transfer limits, and if the excess transfers occur in not more than three months during any 12-month period. This working rule is not absolute, however, and the facts and circumstances must be considered in each case."

Is this an audit you are writing, or is the auditor writing you up?
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Return to Top
#2176111 - 05/01/18 05:42 PM Re: Closing accounts for Reg D excessive transactions Adam Witmer
corporate audit Offline
Junior Member
Joined: May 2008
Posts: 31
I'm the auditor. Trying to determine if the 2-3 week timeframe is to long.

Return to Top
#2176160 - 05/01/18 07:05 PM Re: Closing accounts for Reg D excessive transactions corporate audit
BrianC Offline
Power Poster
BrianC
Joined: Nov 2004
Posts: 6,206
Illinois
If we are talking a money market account, then giving a customer 10 business days before closing an account may be reasonable to ensure that any outstanding checks can clear. Also, if the account receives direct deposit of social security benefits, the Green Book requires that we give the customer 30 days.

Since in 25 years of banking I have yet to read an enforcement action that involves a Reg D violation, as an auditor, I'd be chasing higher risk fish than this.
_________________________
Sola Gratia, Sola Fides, Sola Scriptura, Solus Christus, Soli Deo Gloria!
www.tcaregs.com

Return to Top
#2176166 - 05/01/18 07:08 PM Re: Closing accounts for Reg D excessive transactions corporate audit
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,631
Galveston, TX
Just change the product code for internal accounting to an interest bearing DDA account and move on - it takes 10 seconds - no muss - no fuss with the customer. Some banks have gone to doing that at the first violation - it eliminates any letters or further tracking.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2176203 - 05/01/18 08:34 PM Re: Closing accounts for Reg D excessive transactions corporate audit
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:
Since in 25 years of banking I have yet to read an enforcement action that involves a Reg D violation, as an auditor, I'd be chasing higher risk fish than this.

Good point!
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top

Moderator:  Andy_Z, John Burnett