Topic: Requests for Financial Information
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Are we required to respond to a citation to discover assets or garnishment order from a court in another state? Our bank’s attorney advised that we are not required to respond to an order issued from a Wisconsin court, but we wanted to confirm. If we are not required to respond, how do we communicate to the requester that we do not plan to respond?
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Whether your bank must respond to an out-of-state garnishment order or citation depends on several factors that require legal analysis, which we cannot provide. Consequently, we are not in a position to confirm or contradict your bank counsel’s determination that your bank was not subject to a particular out-of-state court’s garnishment order or citation. An…
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We received a letter from an approved Department on Aging provider agency requesting a customer’s financial information. Can we rely on this letter to release our customer’s financial records? The Illinois Banking Act requires the Department on Aging to present a subpoena, but the Adult Protective Services Act requires only a “written request.”
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No, we do not believe that you should rely on a letter to release your customer’s financial records to the Department on Aging’s approved provider agency. You may release your customer’s financial records only in response to a subpoena from the approved provider agency, or when your institution suspects that an elderly customer or customer…
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We received a non-wage garnishment for a business customer and froze its account. Subsequently, the customer presented a check from a third party made payable to the customer. Can the customer sign the check over to our bank to cover the customer’s loan payment, which is nearly 30 days past due?
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Yes, we believe that the customer may sign its check over to your bank to make its loan payment. The Illinois garnishment law creates a lien on the debtor customer’s property held by your bank as of the day you received the writ of garnishment. Illinois courts have interpreted this to mean that the only…
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Is there a minimum or maximum amount of time that we should freeze an account identified in a citation to discover assets?
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In general, your bank should freeze accounts identified in a citation to discover assets for six months from the date your bank responds to the citation, unless you receive notice from either party that the proceedings have been terminated or extended. Typically, a citation to discover assets includes language ordering the respondent (in this case,…
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We received a subpoena for a large amount of our customer’s financial records. It will be difficult for us to meet the subpoena’s deadline for providing the requested documents because many files must be retrieved from storage and scanned. We provided the requesting attorney with an estimate of our reimbursement costs and notified him that we will not provide the documents until we have received full payment. Is this permitted under the IDFPR rules regarding cost reimbursement? Or do we have to retain counsel to file a motion with the court for an extension of time?
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You may delay the delivery of documents until you have received reimbursement for the costs of production from the requesting attorney. The Illinois Banking Act’s privacy provisions allow a bank to be reimbursed for any costs it incurs in responding to a subpoena. The Illinois administrative rules provide additional detail on cost reimbursement, including that…
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We receive many citations to discover assets for individuals who have no accounts with us. Can we charge a fee for searching for and reviewing accounts to comply with the citation?
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No, we do not believe that it would be prudent to charge a fee for searching for and reviewing financial records of non-customers, although this practice is not expressly prohibited in Illinois or federal law. The Illinois Banking Act’s privacy provisions allow a bank to be reimbursed for any costs incurred in producing a customer’s…
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We know that we must notify a customer before responding to a subpoena, and we have a formal process in place for sending those notifications. Can a loan officer notify an applicant about a subpoena before we send our formal notice? It may be several days before the notice is generated through our typical process, and we want to notify the applicant as soon as possible. The subpoena involves civil matter in the county court and does not contain any language delaying or restricting notice to the customer.
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Yes, we believe a loan officer may inform an applicant that the bank has received a subpoena regarding the applicant. As you note, the Illinois Banking Act requires the bank to notify a customer before responding to a subpoena, but the law does not specify which bank employee or department must provide the notice. We…
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For our portfolio consumer mortgage loans, when borrowers receive insurance claim checks, we deposit the checks into escrow accounts from which we disburse funds directly to repair contractors. How should we set up these accounts? Currently, we set them up as savings accounts under the customer’s name, with our bank listed as the custodian. This creates some issues, because when we search our accounts in response to a subpoena or levy or for unpaid child support data matching, these accounts will be listed under the customer’s name, even though the funds in these accounts technically don’t belong to the customer. Should we instead set up the accounts using our bank’s TIN? Should they be deposit or savings accounts?
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We recommend reviewing your mortgage notes and related documents, which may specify your bank’s obligations as to insurance claim proceeds. For example, the Fannie Mae standard note states that the lender is not required to pay interest on property insurance claim proceeds. If your bank’s mortgage notes or other agreements include similar language, then your…
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We have an elderly customer. One of her children has sued another of her children in what appears to be a squabble over the customer’s money. Now, we have received a letter from a local nonprofit that provides services to elderly persons requesting the customer’s financial information (it asks us to provide a copy of a particular check). The letter states that it is from “Adult Protective Services,” but it does not list a government agency and is not a court order. We are not aware of any circumstances that would suggest elder financial exploitation. Are we required to respond to this request?
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No, we do not believe that your bank is required to provide your customer’s private financial information to the local nonprofit in response to its letter. Illinois law permits, but does not require, financial institutions to report suspected elder financial exploitation to the Illinois Department on Aging (DoA) or to the DoA’s “provider agencies.” The…