Post on 10-Dec-2021
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Beneficial Ownership Flow Chart Intellectual Property of IBA © Rev. 4/1/19
BENEFICIAL OWNER DATA COLLECTION FLOW CHART
1 FIN-2018-G001 issued 4/3/18; Question #7. 2 Five years after account closure for identifying information (i.e. name, address, DOB, identification number); five years after receipt for validation documents (e.g. driver’s license, passport, etc.); FIN-2018-G001; Question #9. 3 CD defined as having specific maturity date, cannot be withdrawn before that date without incurring penalty, no new funds added. FIN-2018-R004 issued 9/7/18. 4 May renew, modify or extend without substantively changing the terms or requiring additional underwriting. FIN-2018-R004. 5 Revolving loan (allows customer to pay down and redraw funds up to designated line amount). May change certain terms of commercial LOC/credit card (such as credit limit), without requiring additional underwriting. FIN-2018-R004. 6 Renewal of contract with minimal or no communication with customer other than payment of rental fee. FIN-2018-R004. 7 FIN-2018-G001 and FIN-2018-R004.
Legal Entity Customer (LEC)
“New” Account Opened
Legal Entity Customer (LEC)
Account Renewed/Rolled
Over
Beneficial Owner(s)
(BOs) not existing
customer(s)
Beneficial Owner(s) are
existing customer(s) (i.e.
Bank has performed CIP) -
Follow either path below
based on bank policy
Collect Name, Address,
DOB and Identification
Number and Validate
Info
If accurate and up-to-
date, have
BO/authorized
individual re-certify
its accuracy
If not accurate and
up-to-date, obtain
updated info and
validate with
acceptable ID
If CD product3, no
new money added;
OR
If qualifying loan
renewal,
modification,
extension;4 OR
Have
BO/Authorized
individual certify its
accuracy
Retain original and
re-certified info per
rule2
Retain original and
updated info per
rule2
If qualifying
commercial
LOC/credit card
renewal,
modification,
extension;5 OR
Renewal of Safe
Deposit Box
Contract6
Renewal/rollover
not meeting CD3,
loan4, LOC5, safe
deposit box6
definition
Not considered
“new account”
(i.e. No
requirement to
obtain BO
information)
Collect Name,
Address, DOB and
Identification
Number and
Validate Info
Retain original
(if applicable)
and re-
certified info
per rule2
Retain
original info
per rule2
Have
BO/authorized
individual
certify to its
accuracy
Review existing
identifying
information1
Have
BO/Authorized
individual certify
its accuracy
This tool explains the Data Collection Beneficial Ownership requirements only as permitted under the rule in 31 CFR 1010.230 and related FAQs.7 Bank should follow its policies and procedures regarding data collection, validation, certification, documentation, address discrepancies, OFAC, etc.
Reg. E Error Resolution Flow Chart
March 2, 2018
Customer reports
EFT error
The 10/45/90 day rules do not apply. However, Bank must
investigate and give credit to the customer for any unauthorized
transactions that occurred within 60 calendar days of the financial
institution's transmittal of the periodic statement on which the error
first appeared. See Reg. E Consumer Liability Guide
Was the error reported within 60
calendar days of the financial
institution's transmittal of the
periodic statement?
NO
Did an error occur?
YES
NO
Was error
reported orally?
1. Provisionally credit account within 10 business
days** of receipt of notice of error unless
exception above applies.
2. Notify the customer either orally or in writing of
the provisional credit within 2 business days of
providing unless exception above applies.
YES
FINISHED
Error resolved within 10
business days?
Bank now
has up to 45
calendar days
*** to
investigate
and resolve.
*Exception: If Bank does not receive the
written notice of error within 10 business
days, it does not have to provide
provisional credit if the investigation takes
longer than 10 days. However, it must still
investigate the error and make correction,
if applicable.
Bank must provide written explanation within 3 business days after
concluding investigation. The notification must inform the
customer that they have the right to see the bank’s documentation.
Investigate Error
FINISHED
YES
NO
Bank must:
1. Make correction within 1
business day after determining an
error occurred.
2. Within 3 business days, notify the
customer either orally or in
writing the results of the
investigation. Inform the
customer that provisional credit is
final.
Was provisional credit given?
Bank must:
1. Notify the customer of the date and amount debited
from their account.
2. Notify the customer that the Bank will honor
transaction against the account for 5 business days
after the notification. (Bank need only pay those items
that would have been paid if it had not debited the
account. Bank also cannot charge any overdraft fees
should an OD occur.)
3. Notify the customer that he/she has the right to request
copies of the documentation used in the error
resolution.
NO
YES
Was error reported in writing?
FINISHED **If disclosed, can extend to 20 business days for new
accounts.
***If disclosed, can extend to 90 calendar days for
POS or foreign initiated transactions or new accounts.
Does Bank require written
notice of error? (Bank can
require notice in writing
within 10 business days if
requested at the time
customer reports the error.)
Intellectual Property of the IBA - All Rights Reserved.
Regulation E Consumer Liability Guide1
12 CFR 1005.6
01.27.16
Trigger If consumer notifies2 financial institution…
Then the consumer’s maximum liability is…
Loss or theft of access device3
Within 2 business days after learning of loss or theft (timely notice)
Lesser of $50 or total amount of unauthorized transfers
More than 2 business days after learning of loss or theft (timely notice NOT given)
Lesser of $500 or the sum of:
$50 or total amount of unauthorized transfers occurring before learning of the loss and during the first two business days after learning of the loss, whichever is less, plus
The amount of unauthorized transfers occurring after the two business days and before notice to the financial institution.
More than 60 calendar days after the first periodic statement is sent to the consumer detailing the first unauthorized transfer using the access device (timely notice NOT given)
For transfers occurring on the first statement where the unauthorized transaction occurred and within the 60-day period4, the lesser of $500 or the sum of:
The lesser of $50 or the amount of unauthorized transfers before learning of the loss and during the first two business days after learning of the loss, whichever is less, and
The amount of unauthorized transfers occurring after two business days during the 60-day period,
PLUS, the amount of ALL unauthorized transfers occurring after the 60-day period4 until the financial institution is notified.
Unauthorized transfer(s) appearing on the periodic statement (no use of access device)
Within 60 calendar days after sending the periodic statement on which the unauthorized transfer first appears (time notice given)
No liability
More than 60 calendar days after sending the periodic statement on which the unauthorized transfer first appears
No liability for unauthorized transactions in first 60 calendar days after statement. Unlimited liability for all unauthorized transfers occurring more than 60 calendar days after the first period statement on which unauthorized transfers occurred and before notice to the institution.
1 This guide only reflects Regulation E error resolution timeframes and liability and does not take into consideration MasterCard, VISA or NACHA liability provisions.
2 Notice is given when consumer takes reasonable steps necessary to provide financial institution with pertinent information. Customer may notify institution in person, by telephone, or
in writing. If in writing, notice is given at time customer mails the notice or transmits it to the institution. 3 Includes debit cards, personal identification numbers (PINs), telephone transfer and telephone bill payment codes, and other means that may be used by a consumer to initiate an
electronic funds transfer (EFT) to or from a consumer account. 4 The “60-day period” starts the day the first periodic statement was sent to the consumer detailing the first unauthorized transfer using the access device.
Iowa Bankers Association Intellectual Property – All Rights Reserved 8/7/17
Raffles, Lotteries, Promotional Games
Contest Definition Allowable? Requirements
Lotteries/Raffles Offer of a prize
Distribution of prize by chance – random selection
Giving something of value (“consideration”) in exchange for chance to win such as purchase ticket, opening account, obtaining a loan (legal consideration)
Not all that enter will win
No – Section 20 of the FDIA prohibits banks from conducting or participating in lotteries Bank may display items subject to raffle
Prohibited Activity:
Making, taking, buying, selling, redeeming tickets
Advertising lottery
Announcing, advertising or publicizing participant/winner
Allowing sale of tickets on premises
Determining prize winner
Promotional Games of Chance
Offer of a prize
Distribution of prize by chance
No requirement of payment or thing of value to enter (no “consideration”)
Open to customers and non-customers
Yes – allowable under Iowa code chapter 714B and Iowa Administrative Code 61-32.1(b)(1)
Clearly disclose no purchase, payment, donation, account required to win
Make entry forms available to non-customers (lobby, newspaper or online)
Ensure customers don’t have significantly better chance of winning
Advertisements include odds of winning (may be dependent on number of entries)
State prize is subject to 1099-MISC reporting if FMV of $600 or more
No limitation on value of prize as long as not given in relation to amount of any deposit or length of time a deposit remains at bank
Prizes must be delivered to winner within 30 days of drawing.
For more detail, see Iowa Banking Guide Article at
https://www.iowabankers.com/userdocs/IBAPrivate/Raffles,_Lotteries,_Promotional_Games_and_Prize_Drawings.doc
Questions: Contact primary regulator or Iowa’s Department of Inspections and Appeals, Gaming Division. 515-281-6848 or www.state.ia.us/government/dia
Reg. E Error Notices© Page 1 of 2 April 2014
Sample Notices – Reg. E Error Resolution
Notice – Provisional Credit (Must be provided to consumer within two business days after provisional crediting.)
Date
Customer Name Address City, State, ZIP
Re: Electronic Fund Transfer Investigation Account #
Dear: [Bank Name] has received your notice of possible Electronic Fund Transfer (EFT) error to your account. We have begun our investigation and have today provisionally credited your account with $--, the amount you identified as a possible error [or: the amount you identified as a possible error, less your maximum liability of $50]. This information is available for your use while we conduct our investigation.
Once our investigation is complete, we will notify you of the final resolution. In the interim you may contact [Bank or designated employee] at [phone] should you have questions.
Sincerely,
Name/title
Notice – Final Resolution – Error Occurred (Must be provided to consumer within three business days after completing investigation.)
Date
Customer Name Address City, State, ZIP
Re: Electronic Fund Transfer Investigation Account #
Dear: In response to your notice of possible Electronic Fund Transfer (EFT) error to your account, we have investigated the transaction you identified as erroneous and have determined the transaction was in fact in error.
Provisional credit in the amount of $-- was deposited to your account on [date]. Please be advised this provisional credit has been made final.
Should you have any questions about our investigation of your notice of error, please contact [Bank or designated employee] at [phone].
Sincerely,
Name, Title
Reg. E Error Notices© Page 2 of 2 April 2014
Sample Notices – Reg. E Error Resolution
Notice – No Error or Different Error Occurred (Must be provided to consumer within three business days after completing investigation.)
Date
Customer Name Address City, State, ZIP
Re: Electronic Fund Transfer Investigation Account #
Dear: In response to your notice of possible Electronic Fund Transfer (EFT) error to your account, we have investigated the transaction you identified as erroneous and have determined the transaction was not in error. Our investigation concluded [describe records obtained by bank that prove the transaction was conducted by the consumer, authorized by the consumer, or was in an amount different that as described by the consumer]. You have a right to request copies of the documents we relied upon in making our determination. If you would like copies of these documents, please contact [Bank or designated employee] at [phone].
Today, we debited (removed the funds from) your account in the amount of $--, reversing the provisional credit deposited to your account on [date]. If this reversal results in a negative/overdrawn balance, we will not charge our standard overdraft fee. We will honor all checks, drafts or similar payments to third parties and preauthorized transfers from your account to the extent of the reversal of provisional credit, for five business days from today’s date. There will be no overdraft or insufficient check charge to your account during this five business day timeframe as a result of any overdraft or insufficient funds, to the extent that the item would have been paid if the provisional credit had not been reversed.
Should you have any questions about our investigation, please contact [Bank or designated employee] at [phone].
Sincerely,
Name, Title
Reg. E Error Resolution Worksheet © Revised 10/2019
Regulation E – Error Resolution Worksheet
** Attach copies of all supporting documentation to this form and retain for 2 years.
Customer Name: Account #: Date customer notified bank of error: If notification was provided orally, date of written notification (if applicable): Date of error: / / Description of error: Provisional credit provided? Y N If yes, date account is credited: Date customer notified of provisional credit: Method of notification: (Consumer must be notified of the credit within two days of the provision) Date of final resolution: Description of resolution: (If it has been determined that an error occurred, it must be corrected within one business day after determination and the results of the investigation reported to the consumer within three business days. The consumer must be informed whether or not any provisional credit is final) Date customer notified of resolution: Method of notification: Oral___ Written___ Other _____________________________________ (Notification required no matter the outcome of investigation. If it has been determined that an error did not occur, written explanation of the bank’s findings is required.) If no error was discovered, date provisional credit was debited: (The bank may debit the account and send a letter to the consumer advising of the date and amount of the debit and must honor overdrafts for five business days after the date of debit. Only those items that would have cleared had the account not been debited need to be honored. Conversely, the bank may send a letter notifying the consumer that the account will be debited five days from the date of the mailing. If this option is used, the letter must tell the consumer the actual date the debit will occur.)
Employee: _________________________________________________ Date: _______________
Regulation D: NOW Account Eligibility
Regulation D sets out very specific guidance regarding eligibility for negotiable order of withdrawal (NOW) accounts. The following individuals and entities are eligible for NOW accounts. Under the Dec. 16, 1987, Federal Reserve Board Interpretation of Reg. D (12 CFR 204.2(b)(3)(ii)(A)), NOW account eligibility includes: 1. Individuals. Any individual may maintain a NOW account regardless of the purpose of the funds. The
account may be used by the individual in the conduct of his or her business, including a sole proprietorship, but not a partnership or a corporation. The account may be maintained in the individual’s name or the “DBA” or trade name.
2. Nonprofit organizations. Any organization that is operated primarily for religious, philanthropic, charitable, educational, political or other similar purposes is eligible for a NOW account. Such organizations include: a) Tax-exempt Organizations. The following tax-exempt organizations are eligible for NOW
organizations include: i) Any corporation, community chest, fund or foundation operated exclusively for religious,
charitable, scientific, public safety, literary or educational purposes, or to foster amateur sports competition, or for the prevention of cruelty to children or animals.
ii) Civic leagues or organizations operated exclusively for the promotion of social welfare, and local associations of employees of a particular employer or from a particular municipality the net earnings of which are devoted exclusively to charitable, educational or recreational purposes.
iii) Labor, agricultural or horticultural organizations. iv) Business leagues, chambers of commerce, real estate boards, boards of trade or
professional football leagues which are not organized for profit. v) Clubs organized for pleasure, recreation and other non-profitable purposes if none of the
net earnings of the club benefits any private shareholder. vi) Fraternal beneficiary societies, orders or associations. vii) Voluntary employees’ beneficiary associations. viii) Domestic fraternal societies, orders or associations operating under the lodge system if
the net earnings are devoted exclusively to religious, charitable, scientific, literary, educational and fraternal purposes.
ix) Teachers’ retirement fund associations of a purely local character. x) Benevolent life insurance companies of a purely local character, mutual ditch or
irrigation companies, mutual or cooperative telephone companies or life organizations, if 85 percent or more of the income is collected from members for the sole purpose of meeting losses and expenses.
xi) Cemetery companies owned and operated exclusively for the benefit of their members or which are not operated for profit.
xii) Organizations of past or present members of the U.S. Armed Forces, or an auxiliary unit of such an organization, if none of the earnings of the organization benefit any private shareholder or individual.
b) Political organizations, including a party, committee, association, fund or other organization. c) Home owners’ and condominium owners’ associations, including housing cooperative
associations. d) Other nonprofit organizations operated primarily for religious, philanthropic, charitable,
educational, political or other similar purposes. 3. Governmental Units. Governmental units are eligible to maintain NOW accounts if the entire beneficial
interest is held by the United States, any state, county, municipality or political subdivision, the District of Columbia or any territory or possession of the United States.
4. Pension Funds, etc. Pension funds, escrow accounts, security deposits and other funds may be classified as NOW accounts if the entire beneficial interest is held by individuals or other entities eligible to maintain NOW accounts directly.
5. Fiduciaries. Funds held in a fiduciary capacity (either by an individual fiduciary or by a corporate fiduciary such as a bank trust department or a trustee in bankruptcy) may be held in NOW accounts if all the beneficiaries are otherwise eligible to maintain NOW accounts.
6. Grandfather Provision. NOW accounts established on or before Aug. 31, 1981, that represent funds of an ineligible entity that previously was eligible to maintain a NOW account may continue to maintain such NOW account.
Entities not eligible for NOW accounts: 1. For-profit organizations. All organizations operated for profit, such as corporations, partnerships,
associations and business trusts (but not sole proprietorships) are ineligible to maintain NOW accounts. 2. Certain tax-exempt organizations. Some organizations that are exempt from tax are nevertheless
ineligible to maintain NOW accounts. These organizations include: a) Credit unions and other associations described in section 501(c)(14) of the Internal Revenue Code
(the “Code”). b) Mutual insurance companies described in section 501(c)(15) of the Code. c) Crop financing organizations described in section 501(c)(16) of the Code. d) Organizations created to form a qualified group legal services plan described in section
501(c)(20) of the Code. e) Farmers’ Cooperatives described in section 521 of the Code.
The FDIC interprets Reg. D the same way as the Federal Reserve Board. In its rules at 12 CFR 329.1(b)(3), the FDIC states:
“An individual may maintain a NOW account regardless of the purposes that the funds will serve...However, other entities organized or operated to make a profit may not maintain NOW accounts regardless of whether they are corporations, partnerships, associations, business trusts or other organizations.”
One type of business entity not specifically named in the regulation in the limited liability company (LLC). Under Iowa Code § 490A.102(13), a “limited liability company” is defined as, “an unincorporated association having two or more members.” If the LLC is organized for profit, it will fall under the general restriction in Reg. D prohibiting entities organized or operated to make a profit (such as corporations, partnerships, associations, business trusts, etc.) from maintaining NOW accounts. If the LLC meets the eligibility requirements as a nonprofit association operated primarily for religious, philanthropic, charitable, educational, political or other similar purpose (evidenced by a copy of IRS 501(c) determination letter), it may maintain a NOW account. Depository institutions violating the prohibitions on eligibility for NOW accounts may be cited in an examination and fined $1,000 per violation.
REG. CC HOLD FLOW CHART – Most Restrictive Order
Intellectual Property of IBA 9.11.2018
New Account §229.13(a)
•Must include this option in Funds Availability Policy to use.•Does Account Qualify for "New Account Hold? (First checking account - consumer or business -
open for 30 calendar days or less).• If account qualifies, place NEW ACCOUNT hold for reasonsable time period (typically 9 business
days) on full deposit for non-official checks. ($200 rule does not appy)• If account qualifiies and Official Check is deposited, place NEW ACCOUNT hold for 9 business days on
all but first $5,000 of deposited checks.• If account does not qualify for New Account hold, continue to next step.
Redeposit§229.13(c)
•Does the deposit include a previously returned deposit item (returned for reason other than for endorsement or post date)?
•If previously returned item is deposited, place EXCEPTION HOLD for REDEPOSITED Check for 7 business days on full amount of deposited checks. ($200 rule does not apply)
•If transaction does not include a redeposited check, continue to next step.
Repeat Overdrafts§229.13(d)
•Has the account been repeatedly overdrawn or would have been repeatedly overdrawn had the checks been paid (6 banking days or more in previous six months or 2 banking days or more in previous six months in amount of $5,000 or more)
• If account has repeat overdrafts, place EXCEPTION HOLD for REPEAT OVERDRAFT for 7 business days on full amount of deposited checks. ($200 rule does not apply)
• If customer is not a repeat overdrafter, continue to next step.
Reasonable Cause
§229.13(e)
•Is there reason to doubt collectibility of deposit item (paying bank indicates it won't pay, check is altered, stale dated more than six months, post dated)?
•Cannot place hold just because type of check (credit card advance, insurance check, etc.)• If reason to doubt collectibility exists, place EXCEPTION HOLD for REASON TO DOUBT
COLLECTIBILITY for 7 business days on full amount of deposited checks. ($200 rule does not apply)•Document reason bank doubts collectibility on internal forms.• If check is paid, refund any NSF/OD fees assocaited with hold.• If no reason to doubt collectibility, continue to next step.
Emergency Conditions§229.13(f)
•Is the bank unable to make funds available due to emergency conditions (computer malfunction, natural disaster, war, etc.)?
• If emergency exists, place EXCEPTION HOLD for EMERGENCY CONDITIONS for 7 business days on full amount of deposited checks (or a reasonable period after emergency has ceased if longer than 7 business days after date of deposit). ($200 rule does not apply)
• If not, continue to next step.
Large Deposit§229.13(b)
•Does the deposit include checks totaling more than $5,000?•If yes, place LARGE DEPOSIT HOLD on amount EXCEEDING $5,000 of deposited checks for 7 business
days•NOTE: Case-by-case hold may be placed for $4,800 for two business days on first $5,000. The first
$200 must be made available the next business day.• If no, continue to next step.
Case-by-Case
§229.10(c)
•Must include this option in Funds Availability Policy to use.•May be used for any reason (hold amount under $5,000 for large deposit hold, want to verify funds,
unable to use any of the reasons above)•Must make first $200 of checks deposited available next business day ($200 total - not per check)•Place CASE-BY-CASE HOLD for all but $200 of checks deposited for 2 business days.
REMINDER
NEXT Day Items - first $5,000 not subject to New Account hold: • U.S Treasury
Checks • Teller Checks • U.S. Postal
Service Money Orders
• Federal Reserve Bank Checks
• Federal Home Loan Checks
• Cashier’s Checks Certified Checks
REMINDER
Not Subject to Exception/Case-by-Case Holds:
• Electronic Payments (Wires , ACH)
• Cash • On-Us Checks