ABA Banking Journal - April 2008 - (Page 54)
Compliance Clinic I t’s the rare bank that does not have a website, and most banks have evolved beyond a basic informationonly website that displays static information. The industry has moved from the innovator phase through the rapid growth phase to the current maturing phase of sophistication and refinement of web banking features as depicted in this month’s cover story (p. 35). As the bank websites have matured, so have the compliance requirements and responsibilities that are associated with establishing and maintaining the websites. Compliance requirements affect just about all phases of the bank-customer relationship. Possibly the only aspect of the bank-customer relationship that is not typically associated with the internet is the collections function. With all of these relationships there are compliance issues of disclosure, privacy, security, risk assessment, fairness, and accuracy. There are technical requirements and there are broad regulatory expectations that are harder to put a finger on. In some cases, banks have solved the basic compliance issues by finding ways to simplify or streamline website presentation. For example, instead of trying to figure out which web pages need to have the Member FDIC language based on the requirements of the applicable regulation, many banks have decided to put the FDIC statement in the footer of every page of the site (which can create another problem if the site contains information about investments). Many banks have built tables for rate disclosures for their websites that comply with Regulation DD or Regulation Z requirements that can be more easily updated with the latest rates plugged into them each time rates are changed. In other cases, banks have solved their compliance issues by avoiding troublesome areas. If a bank has been criticized by reg- Better websites mean tougher compliance ulators or auditors for inaccurate disclosures based on triggering terms of Regulation Z, it might simply eliminate the triggering terms from the site and direct consumers to call the bank for specific information. Four web compliance trouble spots With aging (pardon me, maturing) comes different aches and pains in website compliance. While missing FDIC and Equal Housing Lender logos may not be common compliance problems anymore, there are still plenty of compliance concerns to watch for in the area of internet website compliance. Here are four to watch: By Nancy D. Castiglione, contributing editor and principle, D-C Compliance Services, Highlands Ranch, Colo., firstname.lastname@example.org 54 APRIL 2008/ABA BANKING JOURNAL E-Sign The Electronic Signatures in Global and National Commerce Act (E-Sign) has been in effect since 2001. In essence, E-Sign provides validity to electronic documents and electronic signatures and contains requirements for the use of electronic disclosures in consumer transactions. The Federal Reserve attempted to create rules to establish uniform standards for the electronic delivery of disclosures required under the consumer protection regulations of Z (Truth in Lending), B (Equal Credit Opportunity), E (Electronic Funds Transfer), M (Consumer Leasing), and DD (Truth in Savings). Interim rules were finalized in 2001, but were subsequently made voluntary by the Fed later that year. Most recently, in November 2007, the Federal Reserve Board issued final rules relating to electronic disclosures that conform to ESign requirements. Furthermore, these new rules amending Regulations Z, B, E, M and DD are no longer voluntary. Compliance with the provisions will be required by Oct. 1, 2008. Banks are in the process of determining what, if any changes are needed to their internet banking services and disclosures in order to comply with the changes to the regulations. Because the amendments are mandatory, there is less confusion about the status of the regulations. According to one examiner I spoke with, the final rules provides examiners with teeth. Some of the most troublesome aspects of E-Sign that are not Subscribe at www.ababj.com
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