Pub. 8 2020 Issue 2

ISSUE 2. 2020 7 Even though not specifically required by regulation, providing notice is consid- ered a best practice from a customer relationship and UDAAP perspective when significantly changing the terms of an account. Additionally, for those institutions that will be suspending enforcement of the transfer limitations only temporarily, generally Reg. DD would require advance notice when re-implementing the transfer restrictions, as this would adversely affect the consumer. We have heard from many banks that plan to temporarily suspend enforcement of restrictions that they plan on providing a statement notice inform- ing the customer of the change and indi- cating the date on which the restrictions will be re-implemented. Another issue presented by the change is whether it is necessary to amend ac- count agreements. While the Interim Final Rule does not specify the manner in which account agreements may be amended, the issue of whether they should be amended remains open. If choosing to suspend enforcement of the restrictions, this would arguably lead to a conflict between the depository insti- tution ’ s practices and the current terms of the account agreement. Additionally, even if not suspending enforcement of the restrictions, it is common to cite Reg. D as a source of the restrictions, which is no longer the case. Either of these issues could cause compliance issues for a depository institution and, therefore, should be taken into consideration in determining how to proceed. Lastly, it initially appeared that the Reg. D amendments had caused an unintended consequence concerning Regulation CC. Because Reg. CC de- fines “account” by referencing Reg. D ’ s amended definition of “transaction ac- count,” it appeared that this had caused conf lict within Reg. CC and presented a question of whether saving deposit accounts were now subject to Reg. CC. The Board clarified the impact of the Reg. D amendments on Reg. CC in a recent FAQ. The Board provided that because Reg. CC continues to exclude savings accounts from Reg. CC ’ s “ac- count” definition, the amendments did not result in savings deposits now being covered by Reg. CC. While banks still have to decide whether they will suspend enforcement of the restrictions as well as tackle compliance considerations either way, ultimately, the elimination of the convenient transfer restriction will relieve banks choosing to suspend enforcement the burden of hav- ing to monitor for excessive transactions. Additionally, for bank ’ s opting to suspend enforcement, the changes will benefit account holders by providing greater accessibility to funds. While there will be effort and resources required in imple- menting these changes, overall, it appears the Reg. D changes have the potential of providing a net benefit to banks and account holders alike. n While banks still have to decide whether they will suspend enforcement of the restrictions as well as tackle compliance considerations either way, ultimately, the elimination of the convenient transfer restriction will relieve banks choosing to suspend enforcement the burden of having to monitor for excessive transactions. Michael Perez, Associate General Counsel Michael presently serves as Associate General Counsel for Compliance Alliance. He holds a bachelor’s degree in Business Administration in Finance from the University of Texas McCombs School of Business. While attending Baylor Law School, he further pursued his interest in finance by taking a variety of courses that focused on transactional and business issues. After law school, Michael worked at a litigation firm with a specific focus on collection matters.