And it’s one, two, three strikes you’re out at the old ball game … or is it? You are probably already aware that Regulation D limits savings and money market accounts to six preauthorized withdrawals or transfers 
per month or statement cycle of at least four weeks. You do have choices; however, when it comes to compliance. Option one is to implement controls that prevent an account from exceeding the withdrawal/transfer thresholds. Option two is to monitor applicable accounts to see if they exceed the withdrawal/transfer threshold and then follow up with the customer. Option two and the customer follow up portion is what we’re going to take a swing at today.
Withdrawal/Transfer Thresholds – Exceeded Three Consecutive Months:
Accounts exceeding the transfer limitations for three consecutive months should be converted to a transactions account. The guidance states, if the depositor exceeded the transfer limit for a third consecutive month, the institution would send a letter informing the customer that the account has been converted to a transaction account. [February 15, 1990 Federal Reserve Board Staff Opinion]
In this scenario, the guidance suggests it’s three strikes and you’re out.
Withdrawal/Transfer Thresholds – More than Three Months/12 Month Period:
…an institution may continue to consider an account an MMDA even there are excess transfers so long as those excess transfers are not the result of an attempt to evade the transfer limits, and if the excess transfers occur in not more than three months during any 12-month period. This working rule is not absolute; however, and the facts and circumstances must be considered in each case. [February 15, 1990 Federal Reserve Board Staff Opinion]
In this scenario the guidance suggests it’s four strikes and you’re out.
Withdrawal/Transfer Thresholds – Deliberate Excess/Single Month:
When a customer ignores the transfer limits applicable to an MMDA, the depository institution should take steps to close the account more quickly than it would an account from which the depositor inadvertently, and occasionally, exceeds the transfer limits by a single transfer. [February 15, 1990 Federal Reserve Board Staff Opinion]
In this scenario the guidance suggests it’s a single strike and you’re out.
These rules are not complicated; however, we find that they are sometimes forgotten and sometimes just plain ignored. Has it been awhile since you reviewed your Regulation D savings and money market account withdrawal/transfer controls and/or monitoring procedures? If so, it’s a good idea to do so.
Published
2018/12/24
Jerod Moyer
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!