My Bank Received a Subpoena For Customer Records—How Do I Respond?

QMy bank received a civil subpoena for records pertaining to one of our customers. The subpoena asked if the bank had filed “any” reports with government agencies pursuant to this customer’s activities. The subpoena did not ask specifically if we filed a suspicious activity report, so it seems that citing the SAR non-disclosure provisions of the Bank Secrecy Act hints that we did indeed file. How should we respond? 

ACiting the specific non-disclosure provisions of the law implies there is a SAR. Its not settled law, but the consensus seems to be that such a citation is best avoided. The response should be that your bank is complying, to the best of its ability. The bank needs to consult an attorney familiar with these types of subpoenas, as each court has its own protocols. (Response provided March 2019 


QUsing FICO scores as part of the selection criteria, the bank sent prescreened offers of credit to those with higher FICO scores. The offer stated an annual percentage rate. If a recipient applied for the loan, the bank—in some cases—honored the APR stated in the offer even if the applicant’s FICO score had dropped since the prescreeningHowever, if the FICO score had dropped significantly, the bank issued a denial. The bank did not provide riskbased pricing notices to these customers, since the ultimate credit score did not affect the pricing. The bank’s auditor is now questioning whether the bank complied with Regulation V’s requirements to provide risk-based pricing notices. Was this process compliant?  

AYes. Regulation V’s §1022.72(a) provides that (unless an exception applies) risk-based price notices are required if the creditor uses a consumer report (including a FICO score) in connection with an application of consumer credit and, based in whole or in part on that report, grants credit to the applicant on material terms that are materially less favorable than the most favorable material terms available to a substantial proportion of consumer from that creditor. The key words here are “grants credit.” In this case, the bank denied the credit based on the score. Indeed, the bank did not use any form of risk-based pricing. It applied a single APR to all of those who received credit. (Response provided March 2019 


QThe 2018 amendments to the TILARESPA integrated disclosure rule allow revisions to the Closing Disclosure for valid changed circumstances. The bank is considering issuing the initial Closing Disclosure shortly after issuing the Loan Estimate. The bank is aware that other lenders issue Closing Disclosures almost immediately after loan approval and issuance of the Loan Estimate which means, in most cases, the fees on the Closing Disclosure are based upon the best information available standard and most likely do not reflect the actual terms of the transaction. 

Is it acceptable to issue the initial Closing Disclosure shortly after issuing the Loan Estimate based on the best information available at that time and still be compliant?  

 ANo. It is clear in Regulation Z §1026.19(f)(1) that “the actual terms of the transaction” must be disclosed on the closing disclosure. In addition, the Consumer Financial Protection Bureau has emphasized the importance of accuracy on the Closing Disclosure. For example: “The Bureau will continue to monitor the market for practices that do not comply with the rule’s Closing Disclosure accuracy standard” (emphasis added). 

The bureau agrees with commenters who stated that the practice of providing very early Closing Disclosures with terms that are nearly certain to be revised would be contrary to the underlying purpose of the closing disclosure (emphasis added). (Response provided March 2019)  

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, senior compliance analyst, ABA Regulatory Compliance and Policy. 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.