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#992676 - 07/10/08 08:03 PM Yet another Reg D Question
OpsGuy Offline
New Poster
Joined: Jul 2008
Posts: 18
Hi everyone, new to this (only 2nd post)

I tried reading previous posts, but couldn't find an answer.

Question regarding notification letters.

Once a customer violates the reg in a calendar month...do we need to send a notice on each additional check that clears the account in the same month?

For example: Customer uses their moeny market account to pay bills by accident. They write 15 checks in the same month to pay the bills. Once the 4th check clears, they've violated the reg and we send a written notice. Do we need to send a written notice on the 5th, 6th, 7th...etc, check that clears???

Can anyone direct me to the reg or clarify....Thanks everyone!!!

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Operations Compliance
#993038 - 07/11/08 02:00 AM Re: Yet another Reg D Question OpsGuy
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,044
Galveston, TX
The Fed has opined that significant abuse in one month is sufficient to transfer the account or close it. One or two over and you get the 3 strikes and you are out rule.
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#993722 - 07/11/08 06:24 PM Re: Yet another Reg D Question rlcarey
Rocky P Offline
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Joined: Jun 2003
Posts: 7,772
Florida
It appears that your new accounts department did not put the customer in the correct account /or/

your customer is confused on a money market account. The problem might be solved real quick if a customer service person calls customer, explains the difference and opens the right account.
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#994397 - 07/14/08 03:35 PM Re: Yet another Reg D Question rlcarey
OpsGuy Offline
New Poster
Joined: Jul 2008
Posts: 18
Yes rlcarey, we are aware of the 'Super Abuser' rule, but that still doesn't address if we need to send multiple notices once they violate the reg.

If the customer writes 7 checks to third parties, after the 4th check clears, he's in violation. What about the 5th, 6th, and 7th check. Does that count as 1 violation because it's in the same month, or is the 5th check the (2nd Violation), 6th check the (3rd Violation) etc.... etc....

I just don't want to send 5 notices to the same customer in the same month if it's not necessary.

anyone???

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#994404 - 07/14/08 03:38 PM Re: Yet another Reg D Question OpsGuy
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
I don't know if there is a limit by any guidance or not, but our software will only generate 3 notices in one month (the 4th - 5th - 6th item for example, if they clear on different days).
We are regulated by Fed and State & they have been fine with this.
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#995099 - 07/15/08 12:49 AM Re: Yet another Reg D Question ktac MITCH
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 85,044
Galveston, TX
There really is very little guidance on this issue. About the only direct guidance appeared in 1990:

Ideally, controls on excess transfers should be sufficiently flexible to address both excess transfers in nonconsecutive months as well as the level of excess transfers in a particular month. Such controls would help depository institutions distinguish inadvertent violations of the transfer limits from abuses of the transfer limits. Thus, when a customer ignores the transfer limits applicable to an MMDA, the depository institution should take steps to close the account more quickly than it would an account from which the depositor inadvertently, and occasionally, exceeds the transfer limits by a single transfer. Nevertheless, a monitoring system that would detect and prevent all excess transfers may be costly to administer. For this reason, the staff 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.

STAFF OP. of Feb. 15, 1990.
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