Pre-authorized Transfer

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  • #2394

    Good Morning,

    I recently audited our Reg.O policy and I am concerned about overdrafts. We normally do not have problems with directors or EO’s overdrafting their personal accounts, but a lot of them own several different business and sometimes a large check mistakenly tries to clear against a personal account. Several of them have an overdraft LOC tied to their deposit accounts but we are doing away with this product. We are going to resort to the pre-authorized transfer agreement for directors and EOs that is allowed under Reg. O. I can’t find guidance anywhere on the type of language that needs to be included in the pre-authorized transfer agreement. Is it just something as simple as :

    In the event that my personal account or accounts become overdrawn over an aggregate amount of $1,000, I authorize_____ to debit account number ______________________to cover the full amount of the overdraft. This agreement shall automatically terminate when I am no longer an acting agent of the Board of Directors.
    Signature: __________________________________
    Date: ______________________________________


    Is there a certain language that should be included?

    Please Advise!




    I don’t think that the agreement is a compliance issue as much as it is a legal issue. This is something you might want to consult legal council on.

    In my opinion (not a lawyer) I would think what you’ve proposed would work.


    One additional suggestion – check with the company that provides your deposit account agreements. They may have a pre-authozied transfer agreement that is compatible with your other documents.

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