Compliance Question of the Week

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Regulations and Guidance

Compliance Question of the Week

QUESTION: The bank wants to provide a signature line on the account opening disclosures to obtain a consumer's affirmative consent for opt in to the institution's overdraft service. Is this permissible under Regulation E?


A bank may obtain a consumer's affirmative consent by providing a blank signature line or check box that the consumer could sign or select to affirmatively consent, provided that the signature line or check box is used solely for purposes of evidencing the consumer's choice whether or not to opt into the overdraft service and not for other purposes. A bank does not obtain a consumer's affirmative consent by including preprinted language about the overdraft service in an account disclosure provided with a signature card or contract that the consumer must sign to open the account and that acknowledges the consumer's acceptance of the account terms. Nor does a bank obtain a consumer's affirmative consent by providing a signature card that contains a pre-selected check box indicating that the consumer is requesting the service.

Reference: Official Staff Interpretation 1005.17(b) comment 6.


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Regulation P applies to consumers. It does not apply to information about companies or about individuals who obtain financial products or services for business, commercial, or agricultural purposes. Although a sole proprietor is an individual, if the sole proprietor obtains a loan from the bank for business purposes he or she is not a “consumer” for purposes of the Privacy Rule. Therefore, the bank does not have to provide any privacy notices to the sole proprietor.

Note that neither a business nor an individual who obtains a financial product or service for business purposes is a consumer or a customer under the Privacy Rule. A consumer means an individual who obtains or has obtained a financial product or service from you that is to be used primarily for personal, family, or household purposes, or that individual's legal representative. A customer is a subset of consumers. Customer means a consumer who has a customer relationship with you.

Reference: Regulation P 12 CFR 1016.1(b); 1016.3 Federal Reserve Regulation P: Privacy of Consumer Financial Information Frequently Asked Questions, page 4.


1. Definitions as defined under Subpart A 25.03 which include new size thresholds (Small Bank - $600 million; Intermediate-Small Bank - $2.5 billion)

2. New Qualifying Activities List/Criterian and Confirmation Process listed under Subpart B 25.04-25.08

The remainder of the new rules (Assessment Areas, Data Collection & Reporting, Performance Evaluations) may be complied with at any time, however Large Banks must comply with all new rules by January 1, 2023 and Small Banks and Intermediate-Small Banks must comply by January 1, 2024.


Yes. A financial institution may exempt the account of a sole proprietor if the account is for business purposes. This would be a Phase II exemption although the sole proprietor business account must meet the Phase II criteria and not be considered an 'ineligible business'.

Reference: 31 CFR 1020.315(e)(7).



The interpretive rule states that in general, creditors are to look to the provisions of Regulation Z in determining whether a product or service is considered "consumer credit" (232.3) for the purposes of MLA. While the definition of consumer credit is not exactly the same as in Regulation Z, it is consistent with the definition under Regulation Z. To determine whether the bank’s overdraft product or service is “consumer credit” under the MLA, depends on whether the product or service meets each element of the definition of “consumer credit” and whether an exception applies.

Reference: Interpretive Rule issued August 26, 2016 Q1.



If the bank’s program meets the criteria set forth in Regulation B 1002.15(d)(3): Notwithstanding paragraph (d)(1) of this section, the self-test report or results and any other information privileged under this section may be obtained and used by an applicant or government agency solely to determine a penalty or remedy after a violation of the Act or this part has been adjudicated or admitted.

Disclosures for this limited purpose may be used only for the particular proceeding in which the adjudication or admission was made. Information disclosed under this paragraph (d)(3) remains privileged under paragraph (d)(1) of this section.

Reference: Regulation B 1002.15(d)(3); see also the Official Staff Interpretation 1002.15 for additional information about what information is privileged and not privileged under self-testing.



Throughout 2019 and 2020 the federal government has allowed the NFIP funding to lapse on several occasions. Currently the NFIP is active until November 3, 2020. Banks are not restricted from originating loans in which a property securing the loan is in a SDFHA when the National Flood Insurance Program lapses. Guidance was issued in 2010 and in 2017 to address this issue. 



The CDD Rule under the Bank Secrecy Act requires financial institutions to obtain information about the beneficial owners of a legal entity from the individual seeking to open a new account at the covered financial institution on behalf of the legal entity customer. This individual could, but would not necessarily, be a beneficial owner. 

Reference: FinCEN Guidance, FIN-2016-G003, Q10.



When a financial institution obtains or creates two or more credit scores for a single applicant or borrower but relies on only one score in making the credit decision (for example, by relying on the lowest, highest, most recent, or average of all of the scores), the financial institution complies with by reporting that credit score and information about the scoring model used.

When a financial institution obtains or creates two or more credit scores for an applicant or borrower and relies on multiple scores for the applicant or borrower in making the credit decision (for example, by relying on a scoring grid that considers each of the scores obtained or created for the applicant or borrower without combining the scores into a composite score), the financial institution is required to report one of the credit scores for the applicant or borrower that was relied on in making the credit decision.

In choosing which credit score to report in this circumstance, a financial institution need not use the same approach for its entire HMDA submission, but it should be generally consistent (such as by routinely using one approach within a particular division of the institution or for a category of covered loans). In instances such as these, the financial institution should report the name and version of the credit scoring model for the score reported. Note: This data field is not required for banks that qualify for a partial exemption for reporting data as stated under HMDA. Banks that qualify for the partial exemption may report the data or enter the appropriate exemption code based on the Filing Instruction Guide.

Reference: 12 CFR 1003.3(d); 1003.4(a)(15); Comments 4(a)(15)-2.

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