BSA. Q: We filed a Suspicious Activity Report (SAR) on a customer one day. Afterward, I discovered some account activity that was not included in our report (additional transactions that would increase the amount involved that would have been included in the narrative as well). Is there an option to amend the SAR, or do we wait until filing a 90-day ongoing activity SAR?

A: Yes, an SAR can be amended. It would be useful to wait until the bank gets the DCN for the initial SAR, which should come shortly. It is easier with that number since it cross-references the original filing within the database at the Financial Crimes Enforcement Network (FinCEN).

FinCEN’s FAQ on correcting or amending an SAR states that this is done by filing a corrected/amended SAR via the BSA E-Filing System. The banker should check “Correct/amend prior report” and enter the previous Document Control Number (DCN)/BSA Identifier (ID) in the appropriate field. The filer should complete the FinCEN SAR in its entirety, including the corrected/amended information and noting those corrections at the beginning of the narrative, save (and print, if desired) a copy of the filing, and submit the filing. FinCEN notes that the corrected/amended FinCEN SAR will be assigned a new BSA ID.

TILA. Q: We have an individual customer who is looking to purchase 56.4 acres of undeveloped/unimproved land. The purpose is consumer (personal, family or household).  He plans on either hunting on the land or building a house at some point in the future.

We have not done a recreational land loan in a while. This is still considered TRID, correct?

A: Yes, you are correct, the TRID rules apply. So, you need to issue a Loan Estimate (LE), and then a Closing Disclosure (CD), within the appropriate time limits. Since it is undeveloped/unimproved land, there will be no need for a flood hazard determination (assuming there are no insurable structures on the property).

Check 21. Q: We are getting ready to implement mobile deposit. Is there a regulatory requirement for how long the customer must retain the physical check before it can be destroyed?

A: The federal consumer protection rules have no provision related to the retention of original checks. You should consult with the bank’s legal counsel regarding any requirements in, or best practices based on, your state’s recordkeeping laws and court cases. In addition, be sure to follow any state requirements regarding notifying customers of this requirement (perhaps by including it in deposit account agreements or similar documents).

TISA. Q: The bank wants to start a savings program for students (K-6th grade). The program requires students to make 18 deposits of $1.00 or more per week for 20 weeks (allowing two missed weeks). If the student makes all 18 deposits, they will receive a trophy at the end of the program.

I have some questions after reviewing the proposed flyers/advertising and disclosures:

• If we are giving a $2.00 voucher to open the “Champion Savers” savings account, and they may earn (if they complete all 18 deposits in 20 weeks) a prize equal to $50 (a trophy), does that mean they will have earned $52.00 in bonuses?
• We are also giving each student a piggy bank when they open the account. Does that count as a bonus as well?
  • • If so, how should we disclose the APY? Currently, we say that the “bonus does not earn an Annual Percentage Yield,” but the $2.00 voucher (deposited into the account) will earn interest. The trophy cannot earn interest, though, obviously.
• Even though the child is receiving a voucher to open the account, do we still need to list that there is a requirement of $2.00 minimum to open a “Champion Savers” account?
• Since the program is supposed to be teaching students how to save, one of the requirements is that the student must be present at each deposit. Can we do this? Parents can make deposits whenever they want, but we will only count the deposits made by the child towards the 18-deposit minimum.

A: There is clearly a “bonus” with the voucher, piggy bank and trophy — their values must be aggregated because they are all related to the same promotion. This does not impact the APY because the APY is based solely on interest earned, not on any bonus payments, promotional items, etc.

The disclosure of any bonus is pretty straightforward, as spelled out in Regulation DD, 12 CFR 1030.4(b)(7). The bank must disclose the amount or type of any bonus, when the bonus will be provided, and any minimum balance and time requirements to obtain the bonus.

Your bonus disclosure gets a little longer since there are three elements to the total bonus, but you just need to disclose each. For example, “The bank provides a piggy bank at account opening, as well as a $2.00 voucher (which counts toward the required minimum opening deposit). Then, if at least 18 weekly deposits (of at least the required minimum amount) are made within the first 20 weeks, the bank will give the student a trophy.” Or similar language.

It might be best to drop the sentence about the bonus not earning interest since it is not a required disclosure and is not true for part of the bonus (the voucher amount).

Since there is a required minimum opening deposit (even though it is covered by the bank’s voucher), the minimum opening deposit of $2.00 should be disclosed.

The issue of whether the bank can require that the student be present for a deposit to count toward the needed 18 deposits within 20 weeks is not addressed by the Truth in Savings Act or the other federal consumer rules we cover on the hotline. You should consult with the bank’s attorney regarding what state law may provide in this instance.

TILA. Q: If we offer a preferred rate for using an automatic payment on a consumer installment loan, is that information required to be in the Truth in Lending (TIL) Disclosure or is having it listed in the note sufficient?

We’re changing to a new LOS, and the preferred rate verbiage that prints on the disclosure is calculating differently than what we typically use. I have the option to add custom verbiage to the note to rectify this; however, there isn’t a way for me to customize the disclosure.

A: The general rule is that the TIL disclosures must reflect the terms of the underlying note. So, if there is a preferred rate offered for agreeing to set up automatic repayment, and the customer opts for the auto-pay, then the disclosures (payment schedule, APR, finance charge, etc.) will be based on that preferred rate.

In addition, if the note provides that, should the customer cancel the auto-pay or not maintain enough deposit balance to accommodate the auto-pay or whatever, then the interest rate reverts to the full indexed/“un-discounted” rate in the note (presuming that this rate is in the note, otherwise it probably cannot be enforced), then that fact also must be disclosed in the TIL disclosure.

TISA/EFTA. Q: If a bank is converting its accounts due to a merger, would it just give the old TISA/EFTA disclosures and the TISA/EFTA disclosures that would go into effect after the conversion at the time a new account is opened during the 30-day period before the merger effective date? Regulation DD requires 30 days’ advance notice for changes in terms, while Regulation E requires at least 21 days’ notice. However, for accounts opened within 30 days of the effective change due to the merger conversion, I would assume giving both the old and the new disclosures at account opening would suffice, as this would then not technically be a change in terms from the forms given at account opening, as they received both. The bank would just need to ensure the customer was informed of when the new disclosures go into effect, correct?

A: From your description, these accounts are being opened by the bank being acquired/merged into another before the actual merger effective date. Yes, the bank could give two full sets of TISA and EFTA disclosures: one that will be effective for less than 30 days and one that goes into effect on the merger effective date. It would be prudent to clearly label the second set with an effective date so there will be no question in customers’ minds when they go into effect. An oral disclosure of that effective date may not comply, and would definitely be inferior to having the effective date printed on the disclosures.

ECOA. Q: We have recently implemented an online consumer secured loan application. We received an application from someone who lives in Pennsylvania, but we are located in Illinois. We are in the process of putting a hard stop on our online application program to prevent online applications for applicants from beyond our bordering states.

We tried to reach this applicant by phone and email to confirm that they intended to apply with our bank, but have not received a response. We do not want to send a notice of incomplete application (no income documentation provided) when we know that we would not approve a loan outside of our lending area, even if additional information is provided.

None of the standard denial reasons seem to fit this scenario. We have not used “other” in the past, but would it be acceptable to choose “other” and enter “applicant resides outside of lender’s lending area?”

A: Yes, that seems perfectly acceptable. You have probably heard the general “rule” to stay away from the “other” reason — unless nothing else fits. Well, in this case, none of the other reasons fit (though I believe some lenders will use the “we do not make that type of credit” — outside our area — reason). Your approach seems more informative to the applicant than the “we do not … ” approach, which is the point of the adverse action notice process.