Topic: Pandemic Preparedness and Response
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Are banks required to provide employees with paid sick leave if they must be quarantined due to having contact with someone who tested positive for COVID-19? Are employees also entitled to paid leave if they are caring for a child whose school or daycare is closed due to COVID-19? If so, for how long must banks provide paid leave, and can employees be required to use their vacation, sick leave, or personal days?
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Yes, an employer with between fifty and five hundred employees may be required to provide up to two weeks of paid sick leave to quarantined employees and up to twelve weeks of paid leave to employees caring for a child whose school or daycare was closed due to COVID-19 under the Families First Coronavirus Response Act (FFCRA).…
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We have begun to detect fraud related to the CARES Act stimulus programs. Often, these customers did not obtain their loans or stimulus through our bank. Apparently, fraudsters are approaching individuals and encouraging them to fraudulently apply for SBA loans, then taking a percentage of the funds. We have worked with the Secret Service and other law enforcement agencies and have been successful in recovering some of this fraud, but we are unsure what the extent of our responsibility is with respect to fraud detection. If we simply file a suspicious activity report (SAR), the fraudulently obtained funds likely will be long gone before the proper authorities have time to act. How should we balance policing these federal stimulus programs with the reputational risk of offending customers with legitimate transactions?
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Your bank might consider reporting suspected fraud involving Paycheck Protection Program (PPP) loans and Economic Injury Disaster loans (EIDLs) to the Small Business Administration, in addition to your current efforts to file SARs and report fraud to law enforcement agencies. When you suspect fraud related to an EIDL, you may contact or submit a complaint…
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Does the CARES Act’s Employee Retention Credit apply to banks that have closed their lobbies? We have been paying numerous tellers and customer service representatives who didn’t work due to our reduced lobby traffic.
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We do not believe that the Employee Retention Credit is available to an essential business (such as a bank) on the basis of a voluntary suspension of the business or reduction of hours — although such a business may qualify for the credit on the basis of a modification of its operations in response to…
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Has the SBA released guidance on the procedures banks should use to request PPP loan forgiveness? We are familiar with the forgiveness application, but we would like to know more about the process for requesting forgiveness. For example, should we use the Capital Access Financial System (CAFS) or should we use the 1502 reporting process?
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The SBA recently released a procedural notice containing guidance for lenders related to submitting PPP loan forgiveness decisions. The SBA will provide a secure PPP Forgiveness Platform for PPP lenders to submit loan forgiveness decisions, supporting documentation, and requests for forgiveness payments. The platform is scheduled to go live on August 10, 2020. PPP Lender…
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We expect to begin receiving credit applications from individuals who are currently receiving unemployment benefits. Is there a way to verify how long an individual will continue to receive such benefits, and is there any documentation from the State they can provide with this information?
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To verify an applicant’s unemployment insurance (UI) benefits being administered by the Illinois Department of Employment Security (IDES), we recommend requesting a copy of their “UI Finding,” which indicates their weekly benefit amount (and dependent allowance, if applicable) and their maximum benefit balance. Generally, individuals in Illinois may not collect unemployment benefits for a period…
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Under the Governor’s current Executive Order that runs through June 27, 2020, is there a moratorium on turning over charged off deposit accounts to collection agencies?
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No, you are not currently prohibited from turning over charged off deposit accounts to collection agencies. However, debt collection has effectively been halted during the Gubernatorial Disaster Proclamations. Executive Order 2020-25 suspended the service of garnishment summons, wage deduction summons, and citations to discover assets during the duration of the Gubernatorial Disaster Proclamations. This Executive…
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We are considering reopening our lobbies. Can you recommend any resources on lobby protocols, such as floor markers, signs, masks, etc.?
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We recommend reviewing the Illinois Governor’s Phase Three Reopening Order (EO-38), the Department of Commerce & Economic Opportunity’s (DCEO) Phase Three Recovery Retail Guidelines, and the Illinois Department of Public Health’s (IDPH) Workplace Health and Safety Guidance for Employees and Staff of Businesses. EO-38 provides that businesses should: (1) ensure that employees practice social distancing…
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We learned that a customer fraudulently obtained an economic injury disaster grant from the SBA, despite not owning a business. The customer used the funds to purchase a cashier’s check that was mailed to a recipient who cashed it at an out-of-state bank. We learned of the fraud approximately one week after issuing the cashier’s check and put a stop payment on it. When the check came into our bank, we returned it due to the stop payment. However, the depository bank claims that it called our bank to verify the authenticity of the cashier’s check and was advised that it is valid. Are we liable for the cashier’s check?
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Yes, we believe your bank is liable for the cashier’s check. The Illinois Supreme Court has held that a cashier’s check is the equivalent of cash. As a general rule, once a cashier’s check enters the stream of commerce, the issuer (your bank) is liable under the Uniform Commercial Code (UCC) if it refuses to…
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Are we still prohibited from repossessing vehicles from consumer borrowers who are delinquent on their vehicle loan payments? If so, can you direct us to the relevant executive order? Also, are we prohibited from repossessing collateral from delinquent commercial borrows, such as semis and trailers?
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Please note that as of August 23, 2020, the portion of Executive Order 2020-16 referenced in our answer below has been rescinded by Executive Order 2020-48 (“Executive Order 2020-16 is re-issued in its entirety and extended through August 22, 2020, whereafter Section 1 shall be rescinded”). Yes, lenders still are prohibited from repossessing vehicles (including…