Yes, the Bank Service Company Act requires banks to notify their primary federal regulators when contracting with a new provider for core accounting and processing services.
The Bank Service Company Act requires depository institutions to notify their primary regulator when they contract with a vendor for the following types of bank services: “check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions performed for a depository institution.”
Accounting is expressly included on the list of bank services requiring notification, and core processing typically encompasses one or more bank services. Consequently, if you contract with a new accounting service provider or core processing service provider, your bank must notify your primary regulator within thirty days of entering the new contract or the performance of those services, whichever occurs first.
We are not aware of any provisions in the Act or related regulations and guidance specifying which bank employee is responsible for completing the notification. We recommend that an officer of the bank sign the notification, as indicated in a sample form provided by the FDIC (which may be helpful as a template for your notification, even though the FDIC is not your primary federal regulator).
For resources related to our guidance, please see:
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Bank Service Company Act, 12 USC 1867(c) (“[W]henever a depository institution that is regularly examined by an appropriate Federal banking agency . . . causes to be performed for itself, by contract or otherwise, any services authorized under this chapter, whether on or off its premises . . . the depository institution shall notify each such agency of the existence of the service relationship within thirty days after the making of such service contract or the performance of the service, whichever occurs first.”)
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Bank Service Company Act, 12 USC 1863 (“[A] bank service company may perform, the following services only for depository institutions: check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions performed for a depository institution.”)
- FDIC, Financial Institution Letter 49-99 (June 3, 1999) (Providing a link to an optional sample notification form, which also is available as a PDF.)