Six federal agencies, including the NCUA and Consumer Financial Protection Bureau (CFPB), published guidance last week designed to ensure all depository institutions are aware of expectations when it comes to deposit reconciliation. CUNA’s compliance staff has examined the guidance, and explains what it means for credit unions in a recent CompBlog post.
The agencies expect financial institutions to adopt deposit reconciliation policies and practices that are designed to avoid or reconcile discrepancies, or designed to resolve discrepancies so that consumers are credited the full amount of their deposits.
Financial institutions are expected to effectively manage their deposit reconciliation practices to comply with Regulation CC and other applicable laws or regulations and to prevent potential harm to their customers.
In addition to policies and procedures, effective compliance management systems for financial institutions include internal controls, training and an oversight and review process.
Financial institutions should also provide accurate information to consumers about these policies and procedures.
The guidance exists so that when a consumer makes a deposit into an account they are credited with the full amount and are not penalized for any discrepancies.
Such discrepancies can occur when the consumer accidentally writes an amount on the deposit slip that differs from the amount on the check. Poor image capture and encoding errors can also cause discrepancies.
For example, if a member deposits a $110 check but writes “$100” on the deposit slip and the credit union does not reconcile this error, then the member has $10 less than the check deposited into their account.
Deposit discrepancies are an important area of focus for the CFPB, as evidenced by this guidance, as well as an August 2015 action by the bureau and other agencies against Citizens Bank.
The bank must pay $18.5 million in civil money penalties and restitution for allegedly failing to credit consumers the full amount from deposited funds and keeping the money from these discrepancies when the receipts did not match the actual money transferred.