Industry Letters

Check Imaging on Checking Accounts and Basic Banking Accounts

November 8, 2001

To The Chief Executive Officer of the Institution Addressed:

The purpose of this guidance letter is to clarify the New York State Banking Department's ("Department") position with regard to check imaging on checking accounts and compliance with Section 9-m of the Banking Law and Part 9.3(b) of the General Regulations of the Banking Board (GRBB). In the case of imaging, the consumer would only receive photostatted copies of the checks paid with the monthly statement.

Section 9-m of the Banking Law states that banking institutions that offer consumer transaction accounts, which can be accessed by check, negotiable orders of withdrawal or other similar written instrument, must offer a consumer transaction account that provides the consumer with the return of cancelled checks with the monthly statement.

Part 9.3(b) of the GRBB states that a Basic Banking Account shall be offered subject to the same rules, conditions and terms which are normally applicable to other consumer transaction accounts offered by a banking institution. Basic Banking Accounts were designed to provide basic banking service to consumers who do not make many transactions on a monthly basis.

The Basic Banking Account was never intended to be the account chosen for compliance with Section 9-m of the Banking Law. As such, we do not believe that the Basic Banking Account can be used to satisfy this requirement.

A Basic Banking Account can offer imaging rather than the return of cancelled checks only if the majority of the other consumer transaction accounts are also offering imaging of checks. This would prevent a violation of Part 9.3(b) of the GRBB by satisfying the requirements that a "majority" of the transaction accounts are being imaged, since the Basic Banking Account needs to be offered subject to the same rules, conditions and terms which are normally applicable to other consumer transaction accounts offered by a banking institution.

Your institution's compliance will be reviewed by New York State Banking Department examiners as part of their overall supervisory examination. The Department expects that all supervised institutions ensure that the requirements of laws and regulations are complied with. Should you have any questions regarding this topic, please contact Edward Valdes, Compliance Review Examiner, at (212) 618-6949 or by e-mail at [email protected].

Very truly yours,

Edward B. Kramer
Deputy Superintendent of Banks
Consumer Services Division.