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Sharing Kiting Info with the Other FI

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If a financial institution has evidence a customer is kiting, is it a violation of Reg P (or anything else) if that financial institution discusses information on the account to another financial institution? The only reason for these discussions would be to prevent both institutions from loss. It would also stop a criminal from further fraudulent activity.

One of the exceptions to the opt-out and disclosure rules under Reg. P section 216.15(a)(2) is the anti-fraud exception: "To protect against or prevent actual or potential fraud, unauthorized transactions, claims, or other liability..."

But remember that Reg. P is accurately described as a disclosure rule. Except for opt-out requirements, it doesn't proscribe or permit disclosures and information exchange.

First published on 10/17/2005

First published on 10/17/2005

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