I am trying to determine whether or not we are handling our passbook accounts in compliance with Reg E and am confused by the Reg E Commentary referencing section 9(c). I know there is a periodic statement exception for passbook accounts whereby only EFTs into the account are permitted, and there is an exception for transfers between accounts at the same institution (provided the transfer is adequately documented in the other account's periodic statement). But the commentary for 9(c) seems to be saying that while there is an exception for intra-institutional transfers, you still must provide a qtrly statement if the accoutn allows payroll deposits. Is that correct? And what is meant in the commentary by "certain" intra-institutional transfers? ARRRRGH! Thanks for any help!

This is one of those times when you need to flip back and forth between the regulation itself and the staff interpretations ("commentary").

The statement exceptions found in 9(c)(1) (passbooks) and in 9(c)(2) (intra-institutional transfers can work together (see 9(c)(3)). But comment 2 to 9(c)(1) confuses the issue by saying that direct-deposit-only accounts require a quarterly statement.

Direct-deposit-only accounts require a quarterly statement UNLESS they happen also to be passbook accounts.

So, using examples:

1. Passbook account has no EFT activity except direct deposit of payroll and social security. This account is exempt from the statement requirement under 205.9(c)(1)(i).
   
2. Statement account has no EFT activity except direct deposit of payroll and social security. This account must get a quarterly Reg. E/DD-compliant statement, because it's not a passbook account (see 205.9(c)(1)(ii)).
   
3. Non-passbook account has no EFT activity except intra-institutional transfers to and from other accounts of the same depositor(s), which transfers are documented on statements of the other accounts. This account has no statement requirement because of 205.9(c)(2). If this account then begins to receive direct deposit of social security payments, it will become subject to a quarterly statement requirement. If it starts receiving pre-authorized debits or ATM activity, it becomes subject to a quarterly statement requirement (monthly for any month in which this activity occurs).
   
4. Passbook savings account, with only EFT activity being direct deposit of social security and intra-institutional transfers to/from other accounts of the same depositor(s) that are appropriately documented on the monthly statements of the other accounts. No statement is required, because of 205.9(c)(3).