Excessive Transaction Monitoring

Federal requirements regarding excessive transactions have changed. What changes has your institution made?

In response to the ongoing Covid-19 pandemic, federal regulators removed the requirement for banks to monitor excessive transaction limitations in Q2 of 2020. While these requirements are no longer mandated at a federal level, banks have the option to alter or enforce these transaction limitations and all related fees through their own internal policy and procedures. Let’s take a look at how this change affects your bank and your customers and figure out how best to implement the available options.

Here are your options:

1. Discontinue All Excessive Transaction Limitations, Monitoring, and Fees:
This option would allow you to simply no longer monitor for excessive transaction limitations, as the federal regulatory compliance mandate for this activity has been lifted. Following this path would afford employees the ability to shift time and energy previously devoted to monitoring and issuing notices to customers toward other activities. What the bank would lose in collecting excessive transaction fees, it may gain in positive word of mouth amongst customers and in the community at large.

2. Alter the Current Excessive Transaction Limitation Policy
Now that there is no longer a federal regulatory requirement for monitoring excessive transaction limitations, you are free to customize your excessive transaction limitation policy to better fit the needs of your customers and the bank. You may alter the number of transactions a customer may make before reaching the limit, change the time period in which transactions are counted towards the limit, or adjust the associated fees when a customer does go over the transaction limit. These changes must be reflected in all policy documents, procedures, and notices, and we would suggest that you consider informing all affected customers once the decision has been made to alter your excessive transaction limitation policy. The bank must remove references to federal law as it relates to withdrawal limitations, noting rather that the limitations are the bank’s internal policy. This option allows you to keep in place current monitoring standards while also giving your customers more flexibility and the awareness that you are striving to meet their banking needs.

3. Maintain Current Excessive Transaction Limitation Policy
The removal of the federal requirement to monitor excessive transaction limits does not mean your bank must cease this activity or change it in any manner. If you ultimately decide to maintain your current system of excessive transaction monitoring, you may continue doing so without changing any limitations or fees. You will, however, have to update your policy and customer notices to state that this is no longer a federal regulatory requirement, but rather the bank’s internal policy. The removal of this federal regulation also removes the requirement to send notices to customers who repeatedly engage in excessive transactions, but we would advise that just because the requirement is no longer enforced, the bank should consider keeping its customers informed of why they are receiving fees related to excessive transactions. In line with the Truth in Savings Act – Regulation DD requirements, we encourage you to detail and provide a clear description of all excessive transaction fees incurred on the customers’ periodic statements, and continue to mail notices to customers who engage in repeated excessive transactions.

Photo by Toa Heftiba on Unsplash

Copyright © 2021 Sentry Advisors, LLC, All rights reserved.

(No claim to original U.S. government material.) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher. This article is intended to inform recipients of new or changed laws, rules or regulations. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have. Regulatory guidance is subject to change or modification, retroactively or prospectively, by varying interpretation and by subsequently issued pronouncements, legislation, and regulatory, administrative, or judicial decisions. Any such change or modification could affect the accuracy of this article.

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close