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2020 Bank of Hawaii Compliance

Terms in this set (134)

A Currency Transaction Report (CTR) must be completed for single or multiple cash transactions totaling more than $10,000 on the same business day.
-CTR Form must be completed at the time of the transaction.
-Conductor must be identified each time. Tellers do not have pre-filled CTR's or ID information saved.
-Foreign Currency (banknotes) are subject to CTR reporting (based on USD value).
-Certain types of customers may be exempt from CTR reporting. The Exemption List is found on HBD website->Service Manager link.
-If a customer refuses to provide info for the CTR, refer to a supervisor and transaction will be refused. -Be familiar with Notice to Customers: A CTR Reference Guide Handout which can be provided to customer who have questions or concerns about the CTR filing requirement.
-If customer proceeds with lowered amount to avoid reporting, process transaction and immediately after refer deposit to a supervisor who will file an EIR. Never disclose to a customer that an EIR will be filed for suspicious activity.
-FCU daily cash deposit limit is $1,000.00.
-For clients doing multiple deposits involving cash, always use the "Next Tran" feature (including change orders) to capture CTR as a "Multiple".
-At the end of the day, review the branch's Large CurrencyTransaction Report from TI to ensure transactions captured by TI are repottabte currency transactions. It is not necessary to print or file the report if all CTR's were submitted electronically. If a CTR had to be submitted manually, fax or scan/email the manual CTR to DL 0118 DMC CTR. Retain the CTR hard copy for manual CTRs (including emails of scanned CTRs) for 30 calendar days, then shred/delete. Emails for CTRS scanned to DMC must be deleted after 30 days.
The Monetary Instrument Log (MIL) must be completed when customers purchase Cashier's Checks, Travelers Checks or Foreign Drafts with cash in amounts between $3,000 - $10,000.
-When completing the MIL, if service fee is paid in cash, the fee amount is also included in the MIL cash in total.
-The purchaser must be identified.
-If you are aware of the customer doing multiple draft purchases in cash on the same day, Teller must aggregate the transactions and file MIL if total cash involved totals $3000-$10,000. -If a cash purchase for a bank draft is more than $10,000, a CTR is filed instead of an MIL.
-Bank policy prohibits cash purchases of monetary instruments by a nonbank customer. Only a Vice Chair can make an exception to this policy.
-If the purchaser of a monetary instrument asks why the bank needs personal information (ID) about him/her, inform the purchaser that banks are required by BSA regulations to request this information from anyone purchasing Cashier's Checks, TC's or Foreign Drafts with cash in amounts totaling $3000-$10,000. You may also refer to a supervisor for help explaining the policy.
-If customer deposits $8000 cash to his checking account and then requests to purchase $5000 worth of
TC's (or any other type of monetary instrument), a manual MIL must be completed (e-Form MISC-2161). The system will not automatically prompt the MIL so teller must remember to report transaction to a supervisor for assistance in completing this manual form.
-A client who frequently purchases monetary instruments in cash or purchases multiple monetary instruments in cash less than $3000 to avoid MIL reporting should be considered suspicious and EIR filed. -Fax logs to BSA #306 at 694-4215 or email DL 0306 Monetary Instrument Log. Destroy the logs after faxing/emailing and verifying that the fax/email was successfully completed.
-Retain End of Day Monetary Instrument Recap Report in branch file for three months.
BSA-related suspicious activity must be reported to reduce the risk that the Bank will be used as a conduit for money laundering, narcotics trafficking, terrorism financing, or other illegal activities. All suspicious activity must be reported via an Electronic Incident Report (elR) within 24 hours of discovery.
-Tellers and CBR's should immediately refer the situation to a supervisor who will prepare and submit the EIR to Security within 24 hours.
-Examples of reportable BSA Suspicious Activity:
Significant increase in the number of transactions, cash deposits, wire transfers or purchase of monetary instruments.
Numerous transactions conducted by the customer in "round" dollar amounts (e.g. $9,900, $7,500, etc.) Any type of activity that a customer would not normally be expected to engage in.
Activity that has no reasonable explanation.
Any activity that is not normal or related to the customer's banking transactions.
Any odd or unusual request/activity.
Cash deposits containing unusual odors (marijuana, acetone, Clorox, perfume/cologne)
Frequent deposits or withdrawals of currency with no apparent business source or type of business typically does not generate substantial amounts of cash.
Structuring — Breaking down cash deposits or withdrawals into smaller amounts or depositing at various locations to avoid CTR reporting.
Reluctance or refusal to proceed with a transaction or cancelling a transaction after being informed that a CTR will be filed.
Accessing a safe deposit box and immediately making a cash deposit under $10,000.
•Consumer protection is the root of the laws targeting UDAAP. With a constant stream of product solicitations, consumers have a tough time making well informed decisions when applying for credit or making purchases. They may fall victim to misleading information, and are caused financial harm as a result. The financial services industry must ensure that product representations are straightforward, accurate and easy to understand.
There is no single "UDAAP Act" or UDAAP law. Instead prohibitions on unfair, deceptive or abusive acts or practices are found in the Fair Trade Commission Act (FTC Act), in state law, and banking regulations.
An act or practice is UNFAIR...
• When it causes or is likely to cause substantial injury, usually monetary, to consumers Example: It is unfair to treat a payment as late when consumers have not been provided with a reasonable time to pay, the regulatory agencies focus on the harm that consumer experience from the fees imposed when a payment is received after the due date. The harm that consumers experience from these late fees is widespread, therefore, the agencies determined that failure to provide a reasonable amount of time to make payment caused substantial monetary injury to a
significant number of consumers.
When consumers cannot reasonably avoid the injury (interferes with consumers ability to make effective decisions)
Example: If material information about a product, such as pricing, is withheld from a consumer until after the purchase is made, so that the consumer cannot reasonably avoid the injury.
When the resulting injury is not outweighed by benefits to consumers or competition To be unfair, the injury must not be outweighed by any offsetting benefits that are also produced by the act or practice. Offsetting benefits may include lower prices or a larger availability of products and services. Unfair acts or practices injure both consumers and competition because consumers who would have otherwise selected a competitor's product or service, are wrongly directed by the unfair act or practice.
An act or practice is DECEPTIVE...
When the representation, omission, or practice misleads or is likely to mislead the consumer
-Omitting information if the information is necessary to prevent a consumer from being misled may be deceptive -Directing the consumer away from limitations or telling the consumer not to read disclosures may be deceptive
-Making oral statements or using fine print to qualify misleading representations does not reduce the deceptiveness of the representations
When the consumer's interpretation of the representation, omission or practice deems it unreasonable under the circumstances
Determine whether an act or practice is deceptive depends on how a reasonable member of the target audience interprets the representation or marketing material. If two or more members read the material and one determines it to be deceptive, then the material may be deceptive. Additionally, a consumer's interpretation or reaction may indicate that an act or practice is deceptive under the circumstances. This is true even if a consumer's interpretation is not shared by a majority of the consumers, so long as a significant minority of such consumers is misled.
When the misleading representation, omission, or practice is material
A representation, omission, or practice is material if it is likely to impact a consumer's decision to purchase or use a product or service. Information about costs, benefits, or restrictions on the use or availability of a product or service is considered material.
An act or practice is ABUSIVE..
Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service;
Takes unreasonable advantage of:
1. a lack of understanding on the part of the consumer of the material risks, costs or conditions of the product or service
2. the inability of the consumer to protect his or her interests in selecting a consumer financial product or service or
3. the reasonable reliance by the consumer on the Bank to act in the interests of the consumer.
monetary injury to a substantial amount of people)
1. Posting late fees for on-time payments.
2. Not accurately quoting payoff amounts or otherwise misrepresenting the amount owed.
3. Collecting unauthorized fees (e.g., for insurance that is already in place).
information or mislead customer to make a poor decision)
1. Rates "as low as" or "as high as" were not available to the majority of customers.
2. Including the available balance of an overdraft line of credit when disclosing a deposit account balance, particularly at ATM's.
3. Teaser rates that did not explain the duration.
4. Using the word "free" (when charges are imposed) and other misleading representations in overdraft protection advertisements.
ABUSIVE Examples (Takes advantage of customer's lack of understanding of product cost/risk or takes advantage of customer's reliance on bank to provide the right product)
1. Approving a loan without consideration of the borrower's true ability to pay and/or based upon fraudulent information.
2. Repeatedly refinancing a loan within a short period that isn't beneficial to the client and charging high loan fees with each refinance.
3. Selling a borrower a sub-prime loan product when they qualify for a prime loan product.
Check 21 allows financial institutions to exchange electronic images of checks ("Substitute Checks"), rather than the paper items, during the collection process. This improves overall efficiency and speed in processing checks and saves money by reducing paper processing and transportation costs. Check 21 does not require banks to convert to check truncation or imaging. These decisions are left to each institution. US Denominated checks can be converted to substitute checks including but not limited to: Bank Official checks, business checks, consumer checks, money orders, travelers cheques, US Treasury Checks. Foreign checks cannot be converted.
Deposited items that are returned unpaid are converted to substitute checks. A substitute check [AKA Image Replacement Document (IRD)I is a paper reproduction of the original check. To be valid, a substitute check must have:
1. An image of the front and back of the original check
2. A MICR line containing all the information appearing on the MICR line of the original check
3. A substitute check identification code at the beginning of the MICR line with a special code of 4 representing a substitute check. For a returned check, a code of "5" appears at the beginning of the MICR line.
4. Required legend that states "This is a LEGAL COPY of your check. You can use it the same way you would use the original check."
5. Contains endorsement by the Bank of First Deposit (BOFD) and by banks subsequently handling the check. If a substitute check meets the requirements of the Check 21 Act, then it is the legal equivalent of the original paper check. Parties cannot refuse to accept a substitute check that meets the requirements of the Act.
Under the Check 21 Act, a consumer may make a claim for expedited recredit if the consumer asserts in good faith that:
1. The bank charged the consumer's deposit account for a substitute check that was provided to him/her
2. The substitute check was not properly charged to the consumer's account or the consumer has a warranty claim for the substitute check.
3. The consumer suffered a resulting loss and
4. The original check or a sufficient copy is necessary to determine if the substitute check was improperly charged or the consumer's warranty claim is valid.
Expedited recredit is NOT applicable to businesses. Claims for recredit of substitute checks that are improperly charged back to a business deposit account are handled in the same manner as claims involving original check.
A claim for expedited recredit can be filed 1) In person 2) by mail 3) over the phone (written claim must be received within 10 days of the date of oral claim) by completing DDA-731_E Expedited Recredit Claim Request. The claim must be made within 40 days of the date BOH sent the "Deposited Item Returned" substitute check or the statement on which the substitute check was posted, unless extenuating circumstances such as illness apply. Terms of the provisional recredit are listed on the DDA-731 E form.
DDA-731 E is faxed on same day of claim to DMC Exceptions 694-5210 then interbranched to DMC Exceptions #115.
In a nutshell, Expedited Recredit Claim Request would be used for Consumer Deposit Account customers who received a "Subsitute Check" as a "Deposited Item Returned" and claim one of the following:
1. Request for a "Better" Copy of the Chargeback Item (Customer cannot determine from the "substitute check" that the item was deposited to his/her account or was cashed for him/her.)
2. Claim of a Duplicate Chargeback
3. Claim Chargeback Posted for Wrong Amount
Reg E applies to consumer customers and Electronic Funds Transfer transactions. Reg E provisions do not apply to business accounts. EFT transactions include:
ATM or Point of Sale (POS) transactions
Pre-authorized transfers via ACH
Bankphone transfers
Bill payment and transfers through e-Bankoh
Debit card transactions
The following are considered EFT errors:
Unauthorized EFT (unauthorized ATM or debit card transaction) Incorrect EFT (incorrect amount, date, duplicate charge, etc)
EFT not credited, credited for incorrect amount or credited late (direct deposits)
Pre-authorized EFT posted over a stop payment
Incorrect amount of money received by customer from electronic terminals (e.g., ATM)
Customer request for documentation, additional information or clarification concerning an EFT in which customer suspects an error may have occurred.
To comply with timing requirements Under Reg E, the appropriate forms must be processed the same day the notification is received. The bank must accept all customer notifications of errors, regardless of when the error occurred.
When a customer reports an EFT error or requests information that meets the definition of an error under Reg E, proceed as follows:
1. If the customer asks about the procedures for resolving errors and disputes, give form EFT-IOE (Bankoh Consumer Electronic Financial Services Agreement and Disclosure Statement) or the e-Bankoh Consumer Agreement and Disclosure Statement.
2. Complete the applicable dispute form. (Tellers refer disputes to platform)
3. In Person — Have customer review and sign the form.
By Telephone — Advise that written confirmation must be received within ten business days to be eligible for provisional
credit. Customer should include name, account number, date, error amount, and reason he/she believes it is an error. Internet email is not acceptable as a means of EFT error notification.
4. On the day of notification, fax or scan the documents to appropriate department and follow up by sending the hard copy via interoffice mail.
5. If customer reports an unauthorized transaction or their card as lost/stolen, block the card.
Timing requirements begin the business day after the day the bank receives notification.
10 Business Days — Federal regulations require the bank to investigate EFT errors within 10 business days of receiving a notice.
-Errors must be corrected within one business day after determining that an error occurred.
-Results must be reported to the customer within three business days after completing the investigation.
20 Business Days — If the error involves an EFT to or from a new account (opened within 30 days), the bank has 20 days (instead of 10 business days) to complete the investigation.
45 Calendar Days — If the investigation is not completed within 10 business days, the institution has up to 45 calendar days from receipt of the claim to investigate provided the institution grants provisional credit to the customer's account in the amount of the alleged error (including interest and fees) within 10 business days of receiving a notice of error. Customer must be given full use of the provisional credit and must be notified of the provisional credit amount granted and effective date within two business days.
* If a written confirmation (signed dispute form or letter) is not received within 10 business days of the notification of error, the bank is not required to grant provisional credit to the customer.
90 Calendar Days — The bank has up to 90 calendar days (instead of 45 days) to investigate an EFT error that Was not initiated within a state, territory, or possession of the U.S.
• Resulted from a POS debit card transaction (PIN based)
• Occurred within 30 days after the first deposit to the account (New Account)
A customer may be held liable, within the limitations described in the applicable disclosure notice, for an unauthorized EFT if the bank has provided the required disclosure notice.
DDA-721 E Consumer Deposit Account Agreement and Disclosure Statement is provided at account opening.
EFT-IO_E is provided to customers when they enroll in EFT services (issuing new Bankcard/Checkcards)
The e-Bankoh Consumer Agreement and Disclosure Statement is provided to customers when they enroll in e-Bankoh.
Timely Notice Given — If the customer notifies the bank within TWO business days after learning of the loss or theft of the bankcard or PIN, the customer's liability will not exceed the lesser of $50 or the amount of unauthorized transactions that occur before notifying the bank.
* Visa has a zero liability and expedited provisional credit policy for Visa debit card transactions processed over the Visa network. The Visa policy does not apply if a Visa Check Card is used with a PIN (e.g. at an ATM).
Timely Notice Not Given to the Bank — If the customer fails to notify the bank within TWO business days after learning of the loss or theft of the bankcard or PIN, the customer's liability can range up to $500 (provided the bank establishes that the transactions would not have occurred had the customer notified the bank within the two-business-day period.
Periodic Statement: Timely Notice Not Given — A customer must report an unauthorized EFT that appears on an account statement within 60 calendar days of the bank mailing the statement to avoid liability for subsequent transactions. If the customer fails to do so, the customer's liability will not exceed the amount of the unauthorized transfers that occur after the 60-day period if the bank can prove that it could have prevented the loss if the customer had informed the bank within the 60-day period.
* Provisional credit authorization and timing requirements do not apply if the error goes unreported by the customer within the 60-day period.
Exceptions — If the customer's delay in notifying the bank is due to extenuating circumstances (e.g. extended travel, hospitalization), the bank shall extend the liability time limit to a reasonable period.