Our marketing department brought in a national chain bank advertisement which promises $100 gift for opening a non-interest bearing Demand Deposit account that must remain open for 6 months, or else the 'gift' is deducted from the balance. There is also a minimum opening deposit amount requirement.

Now they want to offer the same, despite the potential Reg Q implications, in the interest of competition.

My questions are:
1) How is the big bank getting away with this? Is there a loophole I'm not seeing?
and
2) If we follow suit and are later found to be in violation of Reg Q, what are the worst possible consequences as a result? I can't seem to find any concrete mention of any fines that may be imposed.

Thanks in advance to all who reply!

1) - They haven't been caught by their regulator yet, or have something in the promo plan that lets it skate by under 217.101(b).

2) Given the fact that Regulation Q will disappear in less than a year, the likely consequences might be a citation in an exam report, if the exam takes place before Q is gone.

Thanks, John. Tricky devils.....

I have been asked many times "how does XYZ bank get away with it". Generally, what John says is my response, along with they have a very large legal department willing to fight the issue...we don't."

Also, they might not have run it by Compliance. That happens even at big banks.