Just confirming....

We only need to monitor a deposit account for overdrafts if the Insider is an owner of the funds, correct? We recently had an insider pop up on a report because he was designated as a POD beneficiary and I think we don't have to monitor this account.

Thanks!

An executive officer or director being named as a POD beneficiary would not prohibit overdrafts for that account. Just as an FYI, executive officers and directors are the only insiders where ODs are restricted. Principal shareholders and related interest insiders are not prohibited from overdrafts.

Agreed - confirmed.

To be honest, I would remove such filters as they can cause confusion and needless work when you get alerts which do not apply.

RVFlyboy - Can you point me to a citing where it states principal shareholders and related interests (an entity owned by an executive officer/director) are NOT prohibited from overdrafts? I've had an examiner tell me to monitor related interests and I would rather not.

See below, but if your principal shareholder or other insider and their related interests are subject to preapproval by the board of director if they exceed the thresholds for preapproval for any extension of credit, overdrafts would be included - so yes monitoring should be done.

Plus, if you have any of them in the overdraft, why? That means they are either sloppy or have a problem, and neither are good when associated with an insider. You need to know if it is happening.


215.4(e) Overdrafts.

(1) No member bank may pay an overdraft of an executive officer or director of the bank or executive officer or director of its affiliates (footnote 3) on an account at the bank, unless the payment of funds is made in accordance with:

Footnote 3: This prohibition does not apply to the payment by a member bank of an overdraft of a principal shareholder of the member bank, unless the principal shareholder is also an executive officer or director. This prohibition also does not apply to the payment by a member bank of an overdraft of a related interest of an executive officer, director, or principal shareholder of the member bank or executive officer, director, or principal shareholder of its affiliates.