I have a customer that would like to waive all interest payments due to religious reasons. Customer would like to open 2 savings accounts for their children. I don't offer a savings account that doesn't pay interest, however my core system allows for me to "turn off" interest payments at the account level. Here are my questions:

1) Can anyone see any compliance reasons to not do this? Considering I will now have 2 accounts in my system that will not earn interest.
2) I had anticipated asking the customer to write and sign a simple request asking for this to be done. Anyone know of a better way to handle this?

As always, I appreciate any feedback. .

Thank you!!

Rather than changing up your entire system, what is preventing the customer from putting the funds in a non-interest bearing checking account and not ordering checks?

We would not do this. If we don't offer the product we don't rework our system to accommodate one person.

For us, a minor can't have a checking account. These would be custodial savings accounts. But that would be a perfect solution if I could use it!

There is nothing stopping you for setting up a checking account using the UTMA with the parent as the only signer.

Thank you for your suggestions!!

would it be too flippant of me to suggest just giving the customer 2 piggy banks...they can load it up with as much cash as they'd like and it pays no interest

The customer wants the safety of keeping funds in the bank, probably also provide the education to their child about keeping a bank book, responsible use of money, etc. but happens to have a belief regarding the payment of interest. There are more benefits to a bank account than earning interest.

For those of us who do not share those beliefs it's generally assumed that the custodian would invest the funds on the minor's behalf to maximize its value when the child reaches the age of majority, but I don't see anything n the UTMA that requires this. It's just a way to transfer property to a minor. It's unusual to have a UTMA account in a checking account, but nothing in the UTMA that prohibits it.

I hope this approach can help accommodate the customer while at the same time keeping the bank from jumping through unnecessary hoops (which as chenin posted) I would not do.

Definitely not my area of expertise, but if all else fails, i wonder if the customer might be made aware (i'm just suggesting this....i'm not super-familiar with his ethical or moral objections, so he might be unmoved) of the possibility of making a monthly donation to charity in the amount of the interest earned.

article in ABA journal today about a bank that does just this

https://americasbanks.aba.com/stori...p;utm_medium=email&utm_source=Eloqua

Yeah, you need to be careful and think about this seriously. While there are no fair deposit laws, giving them an account that does not pay interest does not seem like such a big deal in my mind. You might want to consider a reasonable accommodation rather than be a test case in a Civil Rights action. This seems like an easy request over structuring a loan that includes a "lender profit" rather than paying the lender interest.

https://www.minneapolisfed.org/arti...r-lenders-and-interestaverse-populations