Topic: Certificates of Deposit (CDs)
-
We have an existing legal business entity customer whose CD is due to auto-renew. One of the beneficial owners of the business is an estate with one beneficiary. To comply with the beneficial ownership requirements of FinCEN’s new customer due diligence rule, should we verify the identity of the estate beneficiary or the estate executor?
—
by
We believe the executor of the estate should be treated as the beneficial owner of the CD, based on informal guidance we received from a representative of FinCEN, who advised us that this would be the appropriate treatment in the situation you are describing. Also, we note that FinCEN created a temporary ninety-day exception from…
-
Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), is it an indication of interest when interest is automatically deposited into a certificate of deposit (CD) account?
—
by
No. Under the Illinois RUUPA, an automatic deposit of interest is not considered an indication of interest. Unlike cashing or depositing an interest check (which is considered an indication of interest), the automatic posting of interest does not require any activity by the customer. Consequently, for CD accounts with automatic interest deposits, your bank must…
-
We are in need of clarification regarding automatically renewable time deposits under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). If our customers consent in writing to an automatic renewal feature, would their accounts be considered dormant three years after the first automatic renewal, even though the customer has consented to the auto renewal?
—
by
Yes, absent any qualifying activity for the account, an automatically renewing time deposit account must be treated as unclaimed property once three years have passed from the first renewal date. The Illinois RUUPA does provide that automatically renewable accounts will not be considered unclaimed if “the apparent owner consented in a record on file with…
-
For a certificate of deposit (CD), is cashing an interest check sufficient to count as activity on the account under the new Illinois unclaimed property law? What if we call and speak to the customer to confirm that they want to renew the CD? What if the customer logs into online banking to look at a checking account balance, but we can’t confirm that the customer looked at the CD balance? Our online banking system does not automatically show account information for CDs by default — viewing a CD’s balance would require an additional click after logging in.
—
by
Yes, cashing a check for CD interest is a valid indication of interest under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). The “presentment of a check” for an “interest payment” is one of many activities that serve as an “indication of interest” under the Illinois RUUPA. However, note that if the CD’s interest…
-
Are we correct that under the new Illinois unclaimed property law, the presumed abandonment period for a certificate of deposit (CD) begins after the initial renewal date — not allowing for one automatic rollover as under the previous law?
—
by
Yes, you are correct. The new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) calculates the presumed abandonment period for CDs from the “initial date of maturity.” Unlike the previous Illinois unclaimed property law, the Illinois RUUPA does not allow for one automatic CD rollover or renewal before the presumed abandonment period begins to run.…
-
Can a joint account owner remove another joint owner from a deposit account?
—
by
No, we do not believe it would be advisable to permit one joint account owner to remove another joint owner from a joint deposit account. There is conflicting case law in Illinois as to whether joint account owners may unilaterally remove other joint owners from an account without their consent or signatures. At least two Illinois cases…
-
Do we need to obtain certified beneficial ownership information under the new customer due diligence (CDD) rule every time a business customer renews a certificate of deposit? If so, how do we handle situations when a business customer with an automatically renewing CD refuses to provide this information at the time of renewal? Should we send new disclosures converting automatically renewing CDs to term CDs unless we receive the beneficial ownership information?
—
by
No, your bank does not need to obtain certified beneficial ownership information each time a CD automatically renews. In a recently issued guidance, FinCEN stated that if a customer: (1) certifies their beneficial ownership information once after the new CDD rule takes effect, and (2) agrees to notify your bank of any changes when it…
-
We provide deposit services for a county treasurer and collateralize the deposits that are not FDIC-insured with certificates of deposit (CDs) issued by other banks. We have engaged a third party to obtain eligible collateral for the county’s uninsured deposits. We recently found that the third party had arranged for two $250,000 CDs with the same bank. The issuing bank told us that the CDs are fully insured through a state depositors’ insurance fund backed by a private insurance company. Are these CDs eligible collateral for the county’s funds?
—
by
We believe that Illinois law would permit a county to collateralize its funds with privately-insured CDs from a qualifying issuer, but we strongly recommend reviewing the county treasurer’s investment policy to ensure that its guidelines authorize the use of this collateral. The Illinois Public Funds Investment Act requires all public agencies to adopt written investment…
-
Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), we are sending out a form when certificates of deposit (CD) accounts renew to satisfy the requirement to have a consent “in a record on file with the holder to renewal at or about the time of the renewal.” Should we send this consent form to CDs with a longer maturity period than the three-year presumed abandonment period? If the CD owner dies, should we consider the date of death as the last contact date?
—
by
No, in our view it is not necessary to obtain written consent for an automatic renewal immediately before the initial maturity date of a CD (although this may be a good practice). Even if no consent for renewal is obtained at or about the time of a CD’s automatic renewal, the presumption of abandonment and…
-
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?
—
by
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…