What are some of you doing when the customer exceeds their transaction limits on their Savings and MMDA accounts? Some let the computer put a notice on the bank statement when the numbers trigger an excess, and in this case I think it would be better to maybe contact the customer "sooner" and then by a letter because they may not read the fine print on their statement. Also, the numbers on the banks statements re-set. By re-setting I would think it would be hard to detect customers that are trying to abuse the transaction limits and we are only catching the single months instead of consecutive months. On this note, I am trying to find the "best" monitoring system for this. Any opinions or ideas would be great!

we notify via a separate mailing that repeat offenses will result in a change in an account type so as not to mess up our reserve reporting.

Did you create your own letter or correspondence to the customer, or is there samples we can find online within the Reg or Commentary?

Carrie41704, I'm glad you asked this questiion. I found problems with this topic this week. When I talked about it with our Senior Management, they don't want to send over the limit notices for fear we will lose customers. (We do have some repeat offenders) Can anyone point me in a direction to find citations imposed for this violation? They feel it is insignificant and no one really looks at it anyway. I feel all Regs. are important.

http://ecfr.gpoaccess.gov/cgi/t/text/tex...2.7&idno=12

FRB Regulation Site

http://www.bankersonline.com/compliance/guru2007/gurus_cmp010207e.html
http://www.bankersonline.com/compliance/guru2006/gurus_cmp082106b.html

Check out these two summaries. It is important to give prompt attention to these accounts.

I am not aware of any bank that has specifically been penalized (monetarily) for failure to control these accounts. But this sort of violation first shows up on an exam with a requirement to develop and maintain internal controls and procedures to .... If the bank fails in that, the sanctions get worse. There may be banks that have had to go back and retroactively reclassify whole portfolios, but that doesn't show up in publicized $$ penalties. It shows up in reserve deficiency penalties.

I found in the regulation that a Bank can either "Prevent withdrawals or transfers in excess of the limits"
OR

Monitor on an ex-post basis....

Would you think that the first option here would mean that we would be "returning" the customer's checks that were in excess? Is anyone doing the first option here?

"Preventing" works best, I believe, with savings accounts, where the likelihood of dealing with a third party is remote.

Think of the ramifications of using "prevention" with a money market account with checks. A payee approaches a teller to cash a check issued by one of your customers. Your teller taps the transaction info into the terminal, gets an alert, and tells the third-party payee, "I'm sorry, Mr. Jones. Mr. Burnett has already written too many checks on this account this month. We can't cash this for you until next month."

Monitoring is the only practical choice for an account that allows third-party payments.

DQ...

Would you be willing to share your letter? We have one that we use when notifying the first time and haven't had to really incorporate a 2nd or 3rd/final letter that states their account is changing over. We now however, have several abusers and need to take action.