Topic: Certificates of Deposit (CDs)
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If a customer comes into our bank and requests that we match another bank’s higher interest rate for a certificate of deposit (CD), we generally comply with the request, within reason. However, we do not offer the higher interest rate to customers who do not request it. Could this be a UDAAP violation?
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We note that the characterization of an act or practice as an unfair, deceptive or abusive act or practice (UDAAP) is highly subjective and sometimes unpredictable. We believe that agreeing to match a competitor’s CD interest rate for customers who request the match presents a relatively low risk of being considered a UDAAP violation, provided…
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The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) provides that an automatically renewable deposit is not considered abandoned if the “apparent owner consented in a record on file with the holder to renewal at or about the time of the renewal.” What is an acceptable way for an apparent owner to consent to the renewal? Can the consent be written or verbal, in person or by phone call?
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The general rule in the Illinois RUUPA requires an apparent owner’s written “consent” for the automatic renewal of a time deposit, such as a certificate of deposit (CD). However, the Illinois RUUPA also provides several other methods for an apparent owner to “indicate an interest” in an account, including CDs, which include written and verbal…
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We have a certificate of deposit (CD) held by a grantor trust (our bank is not serving as trustee). When the account was set up, we used the grantor/customer’s social security number. The trust recently was amended to replace the original trustee (the grantor/customer) with his daughter as trustee. The daughter wants us to retitle the account and does not want to obtain an EIN for the trust. Can we retitle a trust account without obtaining an EIN?
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Yes, we believe that your bank may retitle this trust account without requiring an employer identification number (EIN), provided that the trust will continue to file an individual tax return (Form 1040) using the grantor’s social security number (SSN). Generally, the IRS does not require a trust to obtain an EIN if it is a…
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Are we required to obtain both signatures on a certificate of deposit (CD) when two people open an account jointly? This could be for married or unmarried individuals. Is one signature sufficient as long as we have the necessary CIP information for both individuals?
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We are not aware of any rules requiring signatures from all co-owners when opening a joint certificate of deposit (CD) account. The FDIC expressly excludes CDs from the general rule in its deposit insurance regulations that requires all co-owners of a joint deposit account to sign a signature card. Nonetheless, we do recommend obtaining all…
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A customer asked whether we sell certificates of deposits (CDs) to other banks, similar to what is done with mortgage loans. He also requested that we type “FDIC Guarantee” on the CD. How should we respond?
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It is possible for banks to sell CDs. For example, large depositors may authorize their banks to participate in the Certificate of Deposit Account Registry Service (CDARS), which distributes CDs to multiple banks to ensure that the customer’s total deposits are fully insured by the FDIC. But if your bank has no intentions of selling…
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We have several dormant certificates of deposit (CDs) that are in the middle of a renewal period. We understand that we may report these CDs as unclaimed property without remitting them to the Illinois Treasurer. But once the CDs mature, do we have to send them in on the maturity date, or can we wait until the next November 1?
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Based on the Illinois Treasurer’s recently published proposed administrative rules, your bank may wait until the next reporting date (November 1) following a CD’s maturity before remitting the funds to the state. Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), automatically renewing CDs that are reportable as unclaimed property do not have to…
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For certificate of deposit (CD) accounts that automatically renew, if we have other active accounts with the same ownership and address, do we still need to obtain the customer’s acknowledgment of each renewal?
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No, the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) does not require a bank to obtain written acknowledgments from CD owners for each CD renewal. Even in the absence of such written acknowledgements, CDs will not become unclaimed if there are other qualifying indications of interest in the CDs. The Illinois RUUPA would…
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Under the new Illinois unclaimed property law, if a certificate of deposit (CD) customer also has an active safe deposit box, would the activity on the safe deposit box count as activity for the CD?
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Yes, we believe that activity on a safe deposit box would constitute activity on the CD sharing the same “apparent owner” and mailing address at your bank. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) provides that activity “in any other account” at your institution counts as activity on an account to which Section…
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We have a customer with an IRA at our bank. The customer is not yet 65 years old and has not made any deposits since opening the IRA four years ago. The customer also holds certificates of deposit (CDs) at our bank sharing the same mailing address as the IRA. Because the new Illinois unclaimed property law would treat the IRA as active, can we also treat the CDs as active?
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No, we do not recommend treating the CDs as active unless the customer has communicated with the bank or made some other indication of interest in one of the CDs or the IRA. We agree that the IRA should not be treated as abandoned under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), which…
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Under the new Illinois unclaimed property law, if we mail monthly statements for checking accounts that also display certificate of deposit (CD) balances, is that an “indication of interest”?
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No, mailing a statement to a customer does not constitute an indication of interest by that customer. Under the Illinois RUUPA, generally an “indication of interest” requires some activity by the customer, such as increasing or decreasing the account balance or communicating with your bank. Also, in this scenario, both accounts appear on the same…