[rcooper]

A question we recieved:
We’re redoing all of our policies and procedures. I have received materials regarding savings accounts that says to adopt procedures to monitor transfers on an ex post basis and contact customers who exceed the established limits on more than occasional basis. This is what I’ve been doing. I have another sample policy from another reputable source which says if the withdrawal limits are exceeded three times in a twelve month period the account must be closed or reclassified as a transaction account, interest bearing, if qualified. I need a third opinion.

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[rcooper]

The threshold of exceeding the limits more than 3 times in a 12 month period is not written in the regulation; rather, it is has become an industry standard and something that most examiners expect to see. If you diverge from that standard too much you may be scrutinized by your examiners. For example, if a customer exceeds six limited transactions in January that would be strike one; if that same customer exceeds 6 limited transactions in April that would be strike two; and if that same customer exceeds six limited transactions in October that would be strike three. Exceeding the limit more than 3 times within a 12 month period would be considered “more than occasional”.

Most banks will notify the customer each time they have a strike (e.g. exceed their transaction limit for the month), so in the above example that would be in January, April and October (this is generally done with a letter to the customer). Once the customer has three strikes (e.g. exceed their transaction limit for the month/ 3 months in a twelve month period), which is the industry standard for “more than an occasional basis” the account is either closed, reclassified to a transaction account or if you want to leave them in a savings account you must prohibit transactions in that account.

Here’s a q&a we had in the forum recently on this topic: https://mycomplianceresource.com/forums/topic/regulation-d-excessive-transactions/

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