Compliance: Do faxed instructions fall under Reg D?

WASHINGTON (7/30/07)—Credit unions want to provide convenient service to their members, but they must proceed with caution when considering whether members' requests for certain types of service puts them at odds with regulatory compliance, advises the Credit Union National Association (CUNA).

CUNA's Compliance Challenge looks at such a paradox: At hypothetical ABC FCU, a member wants to fax instructions to the credit union whenever he needs to transfer funds from his share account to his share draft account or when he wants to withdraw funds.

The credit union is aware of potential fraud issues in accepting faxed instructions. However, the credit union wants to know if transfers or withdrawals initiated by faxed instructions should count as Regulation D transactions. Reg D addresses reserve and reporting requirements.

Heather, the compliance officer, blasts into research mode and finds that transfers or withdrawals when requested by fax must be limited to no more than 6 per month. Reg D imposes monthly transfer limits on a share and savings accounts so the share account will not be categorized as a transaction account (share draft account) subject to monetary reserve maintenance requirements.

To see what else Heather discovered, and for up-to-the-minute compliance information, use the resource link below to visit CUNA's Compliance Challenge.

coutesy of cuna.org