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#2265553 - 02/01/22 02:58 PM Wire disclosure
dutchbltz Offline
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Joined: Oct 2015
Posts: 207
So far as I can tell/am aware, Reg J does not require the issuance of any disclosure regarding wire transfers. Wires could be covered under Reg E; but only if there are over 500 a year that are going to be received in a foreign country. I am unaware of anything else that would be relevant to wires (other than BSA-type interests) from a regulatory perspective.

Here's my question: Many (if not all) banks have a wire transfer disclosure. WHY do they have this/where does it come from? I have been asked to review ours and hopefully slim it down, but it's challenging because I'm not able to identify what it's based on/why it's issued. Is it just a legal thing to cover the Bank if something goes wrong? Or is anyone aware of any guidance anywhere that requires this?

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Operations Compliance
#2265557 - 02/01/22 03:25 PM Re: Wire disclosure dutchbltz
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
I just sat in a webinar about wires in the last 2 weeks. It was frightening - I did not realize that financial institutions can be held liable for customer errors. The webinar was presented by our bond insurance carrier. They cited UCC 4A. I have not yet done all of my research.

Hope this helps.

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#2265560 - 02/01/22 03:45 PM Re: Wire disclosure dutchbltz
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
Start with Regulation E and 1005.30—Remittance transfer definitions, if you want to figure out the disclosure issues.

Valley Girl, I am confused. Why would a bank be liable for a customer error?
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#2265562 - 02/01/22 03:56 PM Re: Wire disclosure dutchbltz
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,689
Illinois
I share Randy's confusion. The Regulation does say we have to try and help recover the funds as a result of a consumer error, but that doesn't mean we are liable.

See 1005.33(a)(iv)(D) and 1005.33(h)

(iv) The failure to make funds available to a designated recipient by the date of availability stated in the disclosure provided to the sender under § 1005.31(b)(2) or (3) for the remittance transfer, unless the failure to make the funds available resulted from:

(D) The sender having provided the remittance transfer provider an incorrect account number or recipient institution identifier for the designated recipient's account or institution, provided that the remittance transfer provider meets the conditions set forth in paragraph (h) of this section;

(h) Incorrect account number or recipient institution identifier provided by the sender. The exception in paragraph (a)(1)(iv)(D) of this section applies if:

(1) The remittance transfer provider can demonstrate that the sender provided an incorrect account number or recipient institution identifier to the provider in connection with the remittance transfer;

(2) For any instance in which the sender provided the incorrect recipient institution identifier, prior to or when sending the transfer, the provider used reasonably available means to verify that the recipient institution identifier provided by the sender corresponded to the recipient institution name provided by the sender;

(3) The provider provided notice to the sender before the sender made payment for the remittance transfer that, in the event the sender provided an incorrect account number or recipient institution identifier, the sender could lose the transfer amount. For purposes of providing this disclosure, § 1005.31(a)(2) applies to this notice unless the notice is given at the same time as other disclosures required by this subpart for which information is permitted to be disclosed orally or via mobile application or text message, in which case this disclosure may be given in the same medium as those other disclosures;

(4) The incorrect account number or recipient institution identifier resulted in the deposit of the remittance transfer into a customer's account that is not the designated recipient's account; and

(5) The provider promptly used reasonable efforts to recover the amount that was to be received by the designated recipient.
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#2265573 - 02/01/22 04:56 PM Re: Wire disclosure dutchbltz
ACBbank Offline
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ACBbank
Joined: Jul 2006
Posts: 4,344
New York City
Our wire disclosures make it very clear that we are not responsible for errors made by clients.
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#2265578 - 02/01/22 05:21 PM Re: Wire disclosure dutchbltz
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
Our bond insurer stated that liability can be shifted back to us if it is not disclosed how wires settle at beneficiary banks. That the sending and receiving institutions may rely solely upon the identifying number rather than the name to make the payment even if the name does not match the number. This disclosure is included in our wire transfer request form, but they also reminded us that the form cannot be e-signed - it must be a wet signature.

Our bond insurer is a known worry-wart, but since so many institutions have this language in their wire agreement/transfer request, I think there must be something to it such as a court case. Or our bond insurer is very convincing.

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#2265585 - 02/01/22 05:52 PM Re: Wire disclosure dutchbltz
dutchbltz Offline
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Joined: Oct 2015
Posts: 207
We are not covered by the remittance transfer rule in Reg E, as we do not exceed the thresholds therefore do not meet the definitions of a 'Remittance Transfer Provider', therefore, the disclosures indicated there are not required for us. (we aren't even faintly close to the threshold.)

I feel too like there must be a precedent for these disclosures.... otherwise everyone would not be providing them.... but I'm not sure it is based on a regulatory requirement. We currently don't get customer signatures on them though so I'm thinking if this is a legal/liability thing, legal should be reviewing them; and also if we really had a problem we might have a difficult time with them holding up with no signature or proof of delivery.

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#2265586 - 02/01/22 05:53 PM Re: Wire disclosure dutchbltz
dottiec Offline
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Joined: Jul 2007
Posts: 305
We have information in our terms and conditions that explains the reliance on account number for both wires and ACH.
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#2265600 - 02/01/22 07:31 PM Re: Wire disclosure dutchbltz
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
Very few financial institutions have volumes that low. Sitting down with your own legal counsel sounds like the solution.
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