Y COMPLIANCE Q&A FALL 2023 BY BILL SHOWALTER, SENIOR CONSULTANT, YOUNG & ASSOCIATES, INC. Young & Associates provides banks and thrifts with support for their compliance programs, independent reviews, and in-bank training, as well as a full menu of management consulting, loan review, IT consulting and policy systems. BSA. Q: Are we required to verify the identity of the beneficial owners that are listed on the beneficial ownership certification document? There are times when the beneficial owners are not on our account, so our account-opening staff are not getting identifiable information on the owners listed. A: Yes, the BSA regulation requires a covered financial institution to verify the identity of each beneficial owner identified to it, according to its risk-based procedures, to the extent reasonable and practicable. As the BSA examination procedures note, requiring legal entity customers seeking access to banks to disclose identifying information (e.g., name, date of birth and Social Security number) of natural persons who own or control them will make such entities more transparent, and thus less attractive to criminals and those who assist them. TILA. Q: If I am reading Regulation Z correctly, rescission applies to all home equity lines of credit (HELOC). So, even if we refinance one HELOC with another HELOC and do not advance any new money or increase the line amount, rescission still applies. Is that correct? A: Yes, for a bank as lender, the only exemption from rescission for a HELOC is if the transaction is a “residential mortgage transaction” (used to purchase the dwelling). Other exemptions from the closed-end side of Regulation Z do not exist for open-end credit, including the closed-end exemption for a refinancing by the same lender (with no new funds advanced). EFTA. Q: We have a customer who is disputing multiple in-app purchases for the same app. She is disputing only some of the purchases for this app but not all. Because of the way the dates of the purchases fell, we had to open multiple cases in our dispute system to get them all covered. Google has since replied with compelling evidence for two of the six disputes filed. We are still waiting for communication regarding the other transactions. Since they are all the same transactions for the same app and account, is the evidence we have so far received from Google enough to revoke all of our provisional credits? A: No, it would probably be best to keep the other provisional credits in place until final word is received from Google for each transaction. It may seem reasonable to extend the result for the first two disputed transactions to the remaining four, but it certainly is possible that one or more of those transactions could prove to be fraudulent or otherwise be unauthorized. Insider Credit. Q: A director’s commercial line of credit of more than $500,000 was due to mature on August 1. However, on July 28, the term was extended by two months. Extending the term like this for a short period of time is a common practice within our commercial area. The Community Banker 25
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