Topic: Online Banking
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What disclosures are we required to make available on our bank’s website?
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Below is a non-exhaustive list of the disclosures and notices that you may choose to post or may be required to post on your bank’s website. This list may be incomplete depending on the products and services you offer or advertise on your website, some of which may trigger additional disclosure requirements. Privacy Notices The…
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In Illinois, can the sole member of a limited liability company (LLC) change the LLC’s ownership or add an additional member at any time without notifying their bank? We are concerned about our potential liability if a sole member of an LLC adds a member without notifying us and doesn’t wish to allow them to make transfers between a personal account and the business account using internet banking.
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Under the Illinois Limited Liability Company Act, a single-member LLC may agree to admit new members at any time. We are not aware of any laws or regulations that would require an LLC to notify their bank whenever they add a new member. However, you may require your customers to provide such notification if they…
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Are we required to delete copies of driver’s license images used to verify customer identities for online account openings? Are there any exceptions that apply under the Bank Secrecy Act (BSA)? If we are required to delete them, can we request that customers provide us with another image after account opening that we can retain? The retention of licenses or identification is currently part of our BSA policy.
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Yes, we believe that you are required to delete images of driver’s licenses or personal identification cards used to verify customer identity for the purposes of online account opening. Further, we do not believe that you may request and retain those images again after account opening. The 2018 Economic Growth, Regulatory Relief and Consumer Protection…
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We are planning on establishing a “virtual” branch where we will take online loan applications and allow individuals to submit applications to open deposit accounts. Accounts opened at the virtual branch will be transactional accounts capable of accepting deposits and making loan payments. All accounts opened online will be associated with the virtual branch, whereas all other accounts opened at our physical branches are associated with the branch at which they were opened. Does this “virtual” branch fit the definition of a “branch” under the FDIC rules and regulations pertaining to establishing a domestic branch, and do we need to apply for approval pursuant to the Federal Deposit Insurance Act to open this branch? Also, do we need to file an FR Y-10 report for changes in organizational structure?
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Whether the “virtual branch” you described would be considered a branch by the FDIC depends on whether the virtual branch is performing an online banking function, which would not be considered a branch, or performing the functions of an interactive teller machine (ITM), which would be considered a branch. The Federal Deposit Insurance Act requires…
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Are we prohibited from allowing customers to transfer funds from a business account to a personal account through online banking transfers?
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No, we are not aware of any law or regulation that would prohibit you from allowing a customer to transfer funds from a business account to a personal account using online banking — provided the customer is authorized by the business to make such transfers from the business account, and your bank is unaware of…
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Does the Uniform Commercial Code (UCC) require us to reimburse commercial customers when they report an unauthorized check within thirty days of receiving their account statement? Due to the availability of online banking, can we require commercial customers to report an unauthorized check no later than one day after it posts to their account?
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Generally, banks are liable under the UCC for the full amount of an unauthorized check reported by their customers (whether consumer or commercial) with “reasonable promptness” — a reporting period which by default is “within one year after the statement or items are made available to the customer,” but which can be reduced to a…
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We are considering using cookies on our website. Are we required to have a separate website privacy policy to disclose the use of cookies to visitors of our website, in addition to our general privacy policy under the Gramm–Leach–Bliley Act (GLBA)?
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We are not aware of a requirement that a bank post either the GLBA privacy notice or a website privacy policy on its website. However, we do recommend adopting and posting a website privacy policy that describes your bank’s privacy practices with respect to the collection and use of consumer information, including through the use…
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The company that hosts our website suggested we add an “Accessibility Statement” to our website, which would encourage users to report accessibility concerns to our bank by phone, email, or letter. Do you recommend that we add such a statement to our website to comply with the Americans with Disabilities Act (ADA)?
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It may be prudent to provide your customers with information on how to report website accessibility concerns to your bank — and to adopt procedures to address such concerns. Unfortunately, there are no hard and fast requirements regarding ADA website accessibility, but this appears to be a low-cost way to assist customers with disabilities in…
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When a customer opens a consumer deposit account, we provide an initial disclosure with all eleven of the Regulation E disclosures required in 12 CFR 1005.7(b). After opening a deposit account, our customers can choose at any time to enroll themselves in online banking, which includes the ability to transfer funds between accounts, use online bill pay to make electronic payments, and make person-to-person (P2P) payments. One of our vendors provides suggested language to use in the contracts that our customers must agree to when enrolling in online banking, but the language does not include all eleven of the Regulation E disclosures. Do our contracts for online banking services need to include all eleven disclosures?
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Your contracts for online banking services do not necessarily need to include all eleven of the Regulation E disclosures for electronic fund transfer (EFT) services if some of those disclosures are inapplicable. The disclosures also may be provided in a separate document from your contract. You are required to provide only the “applicable” disclosures of…
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Can an agent with a power of attorney (POA) use online banking to transact on a customer’s account?
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Yes, we believe that an agent with a valid POA (that is signed by your customer, notarized, and witnessed) may use online banking to transact on a customer’s account, but only if the POA authorizes the agent to execute financial institution transactions. Additionally, your bank may wish to require the agent to produce certain information…