Must safe deposit boxes be in a vault?

Answered by:

Question:

We need to add more Safe Deposit Boxes in one of our branch locations. Since the branch's vault is not big enough for boxes we put the boxes into a vault in a room. Must we put the boxes in a "vault"? We have an abudance of boxes at our Main Office, Can we move these into the branch, without the vault?

Answer:

Answer by Ken Golliher:

At one time, implementing regulations for the Bank Protection Act effectively required that safe deposit boxes be inside a vault. That reg was revised several years ago to allow financial institutions to simply develop "appropriate" security programs. Federal law does not affect your decision.

Thus, like most other safe deposit issues, look to state law (even if you are a national bank). Your department of banking is probably the best place to start your inquiry.

Increasingly, financial institutions that have run out of vault space are offering more casual storage facilities, including the equivalent of single key "bus lockers" in the lobby. (No dual entry, no record of accesses etc. - the whole concept is heresy to dedicated safe deposit personnel.)

If you resolve the state law issue, spend the rest of your time reviewing the contract. Make certain it does not stipulate access procedures or a level of physical security your new boxes do not offer. Contracts for the "bus lockers" are primarily a list of disclaimed responsibilities.

Answer:

Answer by Mary Beth Guard:

Also, check with your insuror. Some have very specific requirements your safe deposit boxes must meet before coverage applies.

Consider how your alternate location may make you more vulnerable to losses and lawsuits. Would a customer be able to convince a jury that tampering could have occurred because traffic was not adequately controlled?

A few years ago, a bank I'm familiar with wanted to put safe deposit boxes in a closet-like room that also housed a copy machine that was used frequently. Their insuror was not willing to take the risk.

Answer:

Answer by Dave McGuinn:

Check with your bonding and liability insurance provider. They will be the final word on what you should do. If you sustain a loss or disappearance claim their approval of your operation will be critical.

This is a very large case going on now, where the bank elected to offer Self Service boxes and didn't get this "insurance carriers" prior approval. They are now facing potential 7million loss because the insurance company is declining all coverage.

First published on BankersOnline.com 2/4/02