Topic: Automated Clearing House (ACH) Transactions
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Under the new unclaimed property law, when determining which individual retirement accounts (IRAs) we have to report as unclaimed property, do we have to do anything beyond checking that IRA customers over the age of 70½ have distributions to confirm that the accounts are active? Do we have to look into IRAs held by customers under that age?
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Yes, we recommend at least widening your search to also include inherited IRAs for which the mandatory distribution date has begun. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) requires tax-deferred retirement accounts, including IRAs, to be reported and remitted as unclaimed property on the later of: Three years after the date that a…
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We have a credit card program for which we currently do not impose daily spending limits, fallback limits, or holds on ACH payments. As a fraud prevention measure, we would like to impose these limits and holds. Do we need to disclose these changes to our existing cardholders? If so, how much notice do we need to give cardholders prior to making the change?
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We are not aware of any laws or regulations that expressly require prior disclosures of the changes in terms you have described. However, we recommend disclosing these changes to existing cardholders at least 45 days before imposing them. Both the Truth-in-Lending Act and Illinois law require 45 days’ notice before the effective date of various…
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We have a business customer that would like to use our online banking ACH origination system to make payments to businesses located in India. Currently, the customer pays these businesses by wire transfer. Is there a way for us to originate ACH transactions to India? Does the FedGlobal ACH system offer ACH origination to India?
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No, we do not believe that your bank would be able to originate ACH transactions to India. The Federal Reserve’s FedGlobal ACH system allows banks to originate ACH transactions to several countries outside of the U.S., most of them located in Europe, but its services do not extend to India. To originate ACH payments outside…
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A customer discovered that her daughter stole a box of checks and used them at a local grocery store. The checks were converted into back office conversion (BOC) ACH entries. Can we return these as unauthorized transactions, using NACHA reason code R10, since the grocery store did not validate the customer’s identification when accepting the checks? Do we have 60 days since settlement to return the transactions?
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Yes, we believe that the NACHA Operating Rules and Guidelines permit your institution to return the BOC transactions under Return Reason Code R10 as unauthorized entries. Your bank should follow the same procedures it would for other returns under code R10, such as obtaining a written statement of unauthorized debit (WSUD) from your customer. The…
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We have a potential customer that is a video gaming parlor. Our understanding is that the video game machines receive money used for gambling as ACH payments. Would this be a money transmitter subject to the requirements for a money services business?
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We do not believe that a video gaming establishment operating under Illinois law would meet the definition of “money transmitter,” unless the terminals or the establishment offer ancillary services that would trigger the money services business requirements. The definition of a money transmitter includes a business that accepts funds and transfers those funds to a…
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Are we required to send a receipt of loan payment when we originate an ACH debit to deduct a loan payment from our loan customer’s deposit account held at another bank?
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No, we are not aware of any requirement to issue a receipt when initiating an ACH debit transaction, unless your loan agreement includes such a requirement.
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We recently signed an agreement to purchase two bank branches. The selling bank has agreed to provide us with two years’ worth of documents related to the acquired accounts. However, we are aware that Illinois law requires some documents to be retained for seven years. Are there any special exceptions to record retention requirements that apply to branch acquisitions? What are our record retention obligations for these acquired accounts?
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We are not aware of any special record retention exceptions that apply when acquiring branches from another institution. As such, we believe your bank will be held to the same record retention requirements as if it had originated the acquired accounts. There are several record retention provisions that will require more than two years’ worth…
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We record our collection calls and authorizations for one-time ACH loan payments. Are there any specific Illinois laws that would govern the record retention relating to recorded collection calls?
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We recommend retaining ACH authorizations for two years, as required by Regulation E and the NACHA Operating Rules. We are not aware of any record retention requirements applicable to recordings of collection calls. While Illinois law does require customer consent before recording such calls, it does not set any time period for retaining the call…
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We are going through our list of inactive accounts under the new Illinois unclaimed property law. If a customer has an active safe deposit box account but has an inactive deposit account, can the deposit account be treated as active? Some of the customers with active safe deposit box accounts pay their leases with automated ACH payments, but we have a signature log showing that the customers accessed their boxes. Can we treat those as active?
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Yes, we believe that activity on safe deposit box accounts would constitute activity for a deposit account sharing the same “apparent owner” and mailing address at your bank. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) provides that activity directed by an apparent owner for an account “shall be an indication of interest in…