ABA Banking Journal
By Leslie Callaway, CRCM, CAFP; Mark Kruhm, CRCM, CAFP; and Rhonda Castaneda, CRCM
Q My bank is changing its branch lobby hours to close 30 minutes earlier, although the drive-through hours will remain the same. What public notice must the bank post and what is the timeframe? Does the bank need to notify its regulator prior to implementing this change? A The bank needs to check state law, but federal law has no requirements related to banking hours unless the reduction results in the branch being considered as closed.You should have the decision to reduce hours reflected in the minutes of the board of directors and, although not legally required, it is always a good idea to notify your examiner-in-charge via a “courtesy” letter. (And don’t forget to update your Community Reinvestment Act public file!)
For the convenience of the bank’s customers, the bank should post a notice in the branches affected. The bank can decide how much advance notice is appropriate, but if any affected branches contain safe deposit boxes, the bank should provide longer advance notice. Some states require written notice when safe deposit box hours are affected. (Response provided March 2018.)
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Q Our bank is making a loan secured by an old farmhouse and some other structures, of which only the outhouse and an old chicken coop are located in a special flood hazard area. The property will not be used for agricultural purposes. Is the bank required to obtain flood insurance on the low-value outhouse and chicken coop? If so, how much flood insurance should the bank require given that neither building has much value? A It depends. For example, if the two structures are not affixed to a permanent site, they are not “buildings” under the rule. Thus, the loan would not be subject the flood insurance coverage requirements.Even if they are affixed, they may be excluded from coverage under the “detached structure” exemption for structures that: (1) are part of a residential property (e.g., not used for agricultural purpose); (2) are detached from the primary residential structure; and (3) do not serve as a residence.
If, however, the buildings/structures are not eligible for one of these or other exclusions, the bank must determine whether there is any “insurable value” associated with the buildings or if they are otherwise insurable. If so, they would technically require flood insurance coverage even though the value may be low. It may be prudent to consult with a flood insurance professional. ABA continues to request guidance from the regulatory agencies on this matter as well as advocating for legislative reforms to address this and other issues. (Response provided March 2018.)
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Q My bank has a Native American population, some of whom would like to open accounts at my bank. The issue is that they do not have a physical address, as they live on the reservation and there are no “911 addresses” there. (We use the 911 address for CIP purposes.) Is there another option that we can rely on in order to meet the needs of these individuals? A FinCEN recognized that there will be occasions when a bank does not have a physical address like 123 Main Street. For example, in a footnote to the requirement (footnote 47 of the BSA/AML Examination Manual), servicemembers can use an Army Post Office or Fleet Post Office address. The footnote goes on to state that it’s possible to use the residential or business street address of next of kin or of another contact individual, or a description of the customer’s physical location.Also, see the FinCEN January 2004 FAQ, which states that that banks could use a rural route number which, unlike a post office box number, describes the approximate area where the customer can be located. The FAQs go on to state that a description of the customer’s physical location is sufficient.
Although it’s not specifically addressed in the existing guidance, you should be able to use the address of the reservation since that’s consistent with the regulatory requirements. Note, however, that if your bank does not currently use this alternative, then your bank’s current CIP policy will need to be updated and reapproved by your board. (Response provided March 2018.)
Answers are provided by Leslie Callaway, CRCM, CAFP, director of compliance outreach and development; Mark Kruhm, CRCM, CAFP, senior compliance analyst; and Rhonda Castaneda, CRCM, compliance analyst, ABA Center for Regulatory Compliance. Answers do not provide, nor are they intended to substitute for, professional legal advice. Answers were current as of the response date shown at the end of each item.