Topic: Fair and Accurate Credit Transactions Act of 2003 (FACTA)
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We are a national bank, and we recently moved our wealth and farm management groups into a separate, state-chartered trust company that will be regulated by the IDFPR and the Federal Reserve. Do the ID theft/red flag requirements and the FACT Act apply to the trust company? Also, if our trust company obtains cash from an estate in a fiduciary capacity and deposits the cash at our bank, which entity is responsible for the CTR filing? Would both the bank and the trust company file the CTR? If the trust company files a SAR on its own, could it use the bank’s filing number?
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State-chartered trust companies are subject to the Fair and Accurate Credit Transactions Act of 2003 (FACTA), including its identity theft/red flag requirements. With respect to who should file currency transaction reports (CTRs) in the scenario in your question, we believe that either the bank or the trust company may choose to file the CTRs for…
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We are a national bank, and we recently moved our wealth and farm management groups into a separate, state-chartered trust company that will be regulated by the IDFPR and the Federal Reserve. Which compliance regulations apply to a trust company? Do the following apply? BSA, OFAC, AML, CIP, USA Patriot Act, FACT Act, Elder Financial Abuse, UDAAP, and GLBA.
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Trust companies are subject to all the laws mentioned in your question. Broadly speaking, there are no exemptions for trust companies in the laws and regulations that generally apply to banks, bank holding companies, and their subsidiaries. Also, you mention in your question that the trust company will be regulated by the IDFPR and the…
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An unidentified individual recently cashed several checks totaling about $10,000. The individual used a customer’s ID to cash several forged checks that were drawn on another person’s account. We reimbursed the payor bank for the losses but are not charging the customer. This incident prompted us to review our identity theft policy. When a customer is a victim of identity theft, we generally require them to fill out an ID Theft Affidavit. However, our policy is not clear on whether this incident constituted identity theft. Are there any regulations that would clarify when identity theft occurs? Also, do we need to file a SAR?
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If your institution’s ID Theft Affidavit is used for purposes of fulfilling the FCRA’s obligations to provide certain records to consumers who are victims of identity theft, we recommend using that law’s definition of an identity theft victim: “a consumer whose means of identification or financial information has been used or transferred (or has been…
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When we report negative information about a customer to a credit bureau, what notice must we provide to the customer? Do we have to provide a disclosure for every delinquent loan? Should we provide the disclosure before reporting, or within a specified number of days after reporting?
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The Fair Credit Reporting Act (FCRA) requires you to provide customers with a notice before furnishing negative information to a credit bureau. Regulation V provides two model forms of notice for this purpose. While the FCRA and Regulation V do not require the use of these model notices, they do provide a safe harbor when…
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Does the Fact Act (FACTA) prohibit us from considering an applicant’s medical collections affecting the applicant’s credit rating? If so, should we incorporate language to that effect into our loan procedures?
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No, the FACTA does not prohibit financial institutions from considering an applicant’s credit information relating to medical or hospital accounts, but the use of this information is subject to limitations and requirements in the FACTA and its implementing regulation, Regulation V. The FACTA limits the use of collection-related medical information about a credit applicant, with…
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When a loan is up for renewal, are we required to obtain evidence of joint intent? Or is that required only at the initial application?
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Yes, Regulation B requires creditors to collect evidence of joint intent anytime there is an application for an extension of credit, including an application for a renewal. Regulation B defines the term “extension of credit” to include a “refinancing or other renewal of credit,” as well as “the continuance of existing credit without any special effort to collect…
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We have been reporting driver’s license discrepancies as red flags on our annual reports, even if they are resolved after obtaining proof of the customer’s current address. However, one of our sister institutions does not report resolved discrepancies on its annual report. Which is the correct approach?
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We do not believe that the Interagency Guidelines on identity theft “red flags” require that your annual board reports include every instance of a discrepancy between the addresses provided on an account application and the applicant’s driver’s license. Of course, this type of instance would be considered a “red flag” under Supplement A to the…
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Can we run a credit report on an individual who is a personal guarantor for a business lease after the business missed a payment?
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We believe that a bank may obtain a credit report on the guarantor of a business lease under the Fair Credit Reporting Act (FCRA), but only for the purpose of reviewing the lease terms to decide whether to retain or modify the current lease terms, and provided that the lease agreement permits you to modify…