Topic: Requests for Financial Information
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We received a tax levy for a deposit customer. The only deposits in the account are from the Illinois Department of Employment Security (IDES), so we assume they are unemployment payments. Are we permitted to freeze these funds in response to the tax levy?
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Yes, we believe that unemployment benefits are subject to a tax levy and should be frozen as required by the tax levy. Unemployment benefits do not receive the same protections that federal benefit payments receive against state tax levies. For resources related to our guidance, please see: Illinois Income Tax Act, 35 ILCS 5/1109 (“Any officer or…
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Is a memorandum prepared as part of our process for drafting a suspicious activity report (SAR) discoverable in a civil suit? We received a subpoena seeking documents created “in connection with” a recent incident of check fraud. We know that a former bank employee has stated in a deposition that we filed a SAR related to the check fraud. We suspect that this subpoena is an attempt to obtain internal documents created by that employee in connection with the SAR filing.
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We believe that an internal memorandum prepared as part of your process for filing a SAR should be treated as confidential and not produced in response to a subpoena. SARs and “any information that would reveal the existence of a SAR” are confidential and should not be disclosed to third parties, even in response to…
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We received an attorney’s subpoena requesting a huge amount of information in a short amount of time. We responded and then billed the attorney approximately $600 for our time and costs spent responding to the subpoena. More than three months now have gone by, and the attorney has not responded to our invoice. What can we do to force payment?
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The Illinois Banking Act requires you to charge for the direct costs incurred in producing your response to the subpoena. Unfortunately, it does not provide for recourse in a situation like yours, if payment is not made, and you would need to pursue reimbursement in the same manner as you would for other small unpaid…
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We received a subpoena for information for a vulnerable adult. The subpoena is signed by an attorney, but there is no court filing stamp on the document. Do we need to respond to a subpoena that doesn’t have a court stamp?
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Yes, your bank should respond to the subpoena, assuming it was issued in connection with a pending case and the attorney who signed the subpoena is counsel of record for a party in the case. In Illinois, a subpoena may be issued by the clerk of a court or by an attorney admitted to practice…
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When we receive a levy or a garnishment that requests an “account balance,” should we use the memo ledger balance or available funds balance? May we remove the funds to be paid out at a later date, or does a hold on the account mean that funds need to be held upon request?
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We recommend using the ledger balance, which should include intraday items such as ATM or cash withdrawals, as opposed to the available balance, which may not reflect pending such intraday items. For purposes of citations to discover assets and wage garnishments, Illinois law requires banks to freeze funds in their “possession or control” or their…
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When we receive a subpoena for financial records, are we always required to notify the customer before responding? What is the definition of financial records, and should these include financial statements and tax returns that were provided to the bank by the customer, or by a third party (such as an accountant)? Or are financial records only those records produced by the bank, such as checking account statements, loan history statements, and the like?
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Yes, generally the Illinois Banking Act requires a bank to notify a customer before responding to a subpoena. However, this requirement does not apply when the “bank is specifically prohibited from notifying the person by order of the court or by applicable State or federal law.” A bank also is prohibited from providing notice of…
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We received a subpoena from an Illinois circuit court for financial information about a customer. The subpoena includes a statement that our bank should “make no disclosure of this subpoena as any such disclosure could impede the investigation being conducted and thereby interfere with the enforcement of the law.” Does this statement override the requirement in the Illinois Banking Act to notify customers before responding to requests for financial information?
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Yes, the statement in the subpoena overrides the general rule that banks must notify a customer before sharing the customer’s financial information in response to a subpoena. You are correct that the Illinois Banking Act generally requires the bank to notify a customer before responding to a subpoena. However, this requirement does not apply when…
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Our bank received a tax levy notice regarding a customer’s account. As we went through the process of preparing to hold the funds, the levy was released. Can our bank still charge a processing fee related to responding to the levy notice?
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We are not aware of any Illinois law that would prevent your bank from charging this fee, provided that your customer has agreed to this type of fee in the account agreement. Under the Illinois Banking Act, the setting of account fees is a business decision, subject to the terms established in the account agreement.…
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We have received an updated agreement from the Illinois Department of Healthcare and Family Services (DHFS) regarding Financial Institution Data Match (FIDM) services. Are we required to enter into this new agreement? Our core processor prepares and submits our current FIDM file to DHFS. Do we need to follow up with them regarding this new agreement?
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No, your bank is not required to enter into this new agreement with DHFS, which authorizes multistate child support data sharing, although we believe most Illinois banks will do so. Federal and Illinois law require financial institutions to share customer data under written agreements with the DHFS, which uses this data to “match” responsible relatives…