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F E D E R A L RESERVE B A N K OF D A LLA S
DALLAS, TEXAS

75222

Circular No. 79-194
December 4, 1979

NEW REGULATION S
Reimbursement Proce dures for Financial Institutions
Providing Customer Records to the Federal Government

TO ALL BANKS, OTHER CREDITORS,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Effective October 1, 1979, the Board of Governors of the Federal
Reserve System adopted Regulation S to set reimbursement rates for costs
in cur re d by financial institutions in assembling and pr oviding customer
financial record s to an authority of the federal government. Under Regu­
lation S, a financial institution's s ea rc h and proce ss ing costs will be reim­
b u r s e d at the rate of $10.00 p e r hour pe r p e r so n , computed on the basis
of $ 2 .5 0 p e r q u a r t e r hour or fraction thereof. Reproduction costs will be
set at $ .15 p e r page, and reimbursement for transpo rtatio n costs will be
limited to actual costs.
Enclosed is the printe d pamphlet for Regulation S. Member
banks and oth er s that maintain Regulations Binders should file this pam­
phlet in their b i n d e r s . Any questions concerning Regulation S should be
dire cted to the Consumer Affairs Section of our Bank Supervision and
Regulations Department, Ext. 6171.
Sincerely y o u r s ,
Robert H. Boykin
F irs t Vice President

Enclosure

B a n k s and o th e rs are e n c o u ra g e d to use th e fo llo w in g in c o m in g W A TS n u m b e rs in c o n ta c tin g th is Bank:
1-800-442-7140 (in tra s ta te ) and 1-800-527-9200 (in te rs ta te ). F or c a lls p la c e d lo c a lly , p le a se use 651 p lu s th e
e x te n s io n re fe rre d to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

BOARD OF GOVERNORS
o f the
FED ER A L RESER V E SYSTEM

REIMBURSEMENT TO FINANCIAL INSTITUTIONS
FOR ASSEMBLING OR PROVIDING FINANCIAL RECORDS

R E G U L A T IO N S
(12 CFR 219)
As adopted effective October 1, 1979

Any inquiry relating to this regulation should be addressed to the Federal
Reserve Bank o f the Federal Reserve district in which the inquiry arises.

C ONTENTS
S ec.
Sec.
S ec.
S ec.
Sec.
S ec.
S ec.

2 1 9 .1 — A u th o r ity , P urpo se and S cope
2 1 9 .2 — D efinitions
2 1 9 .3 — C o st R eim bu rsem en t
2 1 9 .4 — E xceptions
2 1 9 .5 — C onditions for Pa ym en t
2 1 9 .6 — P a ym en t P rocedures
2 1 9 .7 — E ffe c t iv e D ate

ST A T U TO R Y AU TH O RITY
This regulation is issued under the authority o f section 1115 of the Right to Financial Privacy Act o f 1978
(12 U .S .C . §3415), which reads as follows:
S e c 1115. (a) Except for records obtained pursuant to section 1103(d) or 1113 (a) through (h), or as
otherwise provided by law, a Government authority shall pay to the financial institution assembling or
providing financial records pertaining to a customer and in accordance with procedures established by this
title a fee for reimbursement for such costs as are reasonably necessary and which have been directly
incurred in searching for, reproducing, or transporting books, papers, records, or other data required or
requested to be produced. The Board o f Governors o f the Federal Reserve System shall, by regulation,
establish the rates and conditions under which such payment may be made.
(b) This section shall take effect on October 1, 1979.

REGULATION S
(12 CFR 219)
As adopted effective October 1, 1979

REIM BURSEM ENT TO FINANCIAL INSTITUTIONS
FOR ASSEM BLING OR PROVIDING FINANCIAL RECORDS*
SECTION 2 1 9 .1— AU TH O RITY, PURPOSE AND
SCOPE
This Part is issued by the Board o f Governors of
the Federal Reserve System under section 1115 of
the Right to Financial Privacy Act o f 1978 (the
“ A ct” ) (12 U .S .C . § 3415). It establishes the rates
and conditions for reimbursement of reasonably
necessary costs directly incurred by financial insti­
tutions in assembling or providing customer finan­
cial records to a government authority.
SECTION 2 1 9 .2 — DEFINITIONS
For the purposes of this Part, the following def­
initions shall apply:
(a) “ Financial institution” means any office
of a bank, savings bank, card issuer as defined in
section 103 o f the Consumers Credit Protection Act
(15 U .S .C . 1602(n)), industrial loan company, trust
company, savings and loan, building and loan, or
hom estead a sso c ia tio n (in clu d in g coo p erativ e
banks), credit union, or consumer finance institu­
tion, located in any state or territory o f the United
States, the D istrict o f Colum bia, Puerto R ico ,
Guam, American Samoa, or the Virgin Islands.
(b) “ Financial record” means an original of, a
copy of, or information known to have been de­
rived from, any record held by a financial institu­
tion pertaining to a customer’s relationship with the
financial institution.
(c) “ Government authority” means any agency
or department of the United States, or any officer, em­
ployee or agent thereof.
(d) “ Person” means an individual or a part­
nership of five or fewer individuals.
*
This text corresponds to the Code of Federal Regula­
tions, Title 12, Chapter II, Part 219, cited as 12 CFR
219. The words “ this Part” , as used herein, mean Reg­
ulation S.

(e) “ Customer” means any person or author­
ized representative o f that person who utilized or is
utilizing any service o f a financial institution, or for
whom a financial institution is acting or has acted
as a fiduciary, in relation to an account maintained
in the person’s name. “ Customer” does not include
corporations or partnerships comprised o f more than
five persons.
(f) “ Directly incurred costs” means costs in­
curred solely and necessarily as a consequence of
searching for, reproducing or transporting books,
papers, records, or other data, in order to comply
with legal process or a formal written request or a
customer’s authorization to produce a customer’s
financial records. The term does not include any
allocation o f fixed costs (overhead, equipment, de­
preciation, etc.). If a financial institution has finan­
cial records that are stored at an independent stor­
age facility that charges a fee to search for, repro­
duce, or transport particular records requested,
these costs are considered to be directly incurred by
the financial institution.
SECTION 2 1 9 .3 — C O ST R E IM BU R SEM EN T
Except as hereinafter provided, a government au­
thority requiring or requesting access to financial
records pertaining to a customer shall pay to the
financial institution that assembles or provides the
financial records a fee for reimbursement o f reason­
ably necessary costs which have been directly in­
curred according to the following schedule:
(a)
Search and processing costs. (1) Reim­
bursement o f search and processing costs shall be
the total amount o f personnel direct time incurred
in locating and retrieving, reproducing, packaging
and preparing financial records for shipment. (2)
The rate for search and processing costs is $10 per
hour per person, computed on the basis o f $ 2 .5 0
per quarter hour or fraction thereof, and is limited

to the total amount o f personnel time spent in locat­
ing and retrieving documents or information or re­
producing or packaging and preparing documents
for shipment where required or requested by a gov­
ernment authority. Specific salaries of such persons
shall not be included in search costs. In addition,
search and processing costs do not include salaries,
fees, or similar costs for analysis o f material or for
managerial or legal advice, expertise, research, or
time spent for any o f these activities. If itemized
separately, search and processing costs may include
the actual cost o f extracting information stored by
computer in the format in which it is normally pro­
duced, based on computer time and necessary sup­
plies; however, personnel time for computer search
may be paid for only at the rate specified in this
paragraph.
(b) Reproduction costs. (1) Reimbursement
for reproduction costs shall be for costs incurred in
making copies of documents required or requested.
(2) The rate for reproduction costs for making
copies of required or requested documents is 15
cents for each page, including copies produced by
reader/printer reproduction processes. Photographs,
films, and other materials are reimbursed at actual
cost.
(c) Transportation costs. Reimbursement for
transportation costs shall be for (1) necessary costs,
directly incurred, to transport personnel to locate
and retrieve the information required or requested;
and (2) necessary costs, directly incurred solely by
the need to convey the required or requested mate­
rial to the place o f examination.
SECTION 2 1 9 .4 — EXCEPTIO N S
A financial institution is not entitled to reim­
bursement under the Act for costs incurred in
assembling or providing the following financial rec­
ords or information:
(a) Security interests, bankruptcy claim s,
debt collection. Any financial records provided as
an incident to perfecting a security interest, proving
a claim in bankruptcy, or otherwise collecting on a
debt owing either to the financial institution itself
or in its role as a fiduciary.
(b) G overnm ent loan program s. Financial
records provided in connection with a government
authority’s consideration or administration of assist­
ance to a customer in the form of a government
loan, loan guaranty, or loan insurance program; or
as an incident to processing an application for

assistance to a customer in the form o f a govern­
ment loan, loan guaranty, or loan insurance agree­
ment; or as an incident to processing a default on,
or administering, a government-guaranteed or in­
sured loan, as necessary to permit a responsible
government authority to carry out its responsibilities
under the loan, loan guaranty, or loan insurance
agreement.
(c) Nonidentifiable information. Financial re­
cords that are not identified with or identifiable as
being derived from the financial records of a partic­
ular customer.
(d) Financial supervisory agencies. Financial
records disclosed to a financial supervisory agency
in the exercise o f its supervisory, regulatory, or
monetary functions with respect to a financial insti­
tution.
(e) Internal R evenue sum m ons. Financial
records disclosed in accordance with procedures au­
thorized by the Internal Revenue Code.
(f) Federally required reports. Financial re­
cords required to be reported in accordance with
any federal statute or rule promulgated thereunder
(such as the Bank Secrecy Act).
(g) Government civil or criminal litigation.
Financial records sought by a government authority
under the Federal Rules of Civil or Criminal Proce­
dure or comparable rules of other courts in connec­
tion with litigation to which the government author­
ity and the customer are parties.
(h) A d m in istr a tiv e a g en cy s u b p o e n a s.
Financial records sought by a government authority
pursuant to an administrative subpoena issued by an
administrative law judge in an adjudicatory pro­
ceeding subject to section 554 o f Title 5 , United
States Code, and to which the government authority
and the customer are parties.
(i) Identity of accounts in limited circum ­
stances. Financial information sought by a govern­
ment authority, in accordance with the Right to
Financial Privacy Act procedures and for a legiti­
mate law enforcement inquiry, and limited only to
the name, address, account number, and type of
account o f any customer or ascertainable group of
customers associated (1) with a financial transaction
or class of financial transactions, or (2) with a for­
eign country or subdivision thereof in the case of a
government authority exercising financial controls
over foreign accounts in the United States under
section 5(b) of the Trading With the Enemy Act
(50 U .S.C . App. 5(b)); the International Emergency
Economic Powers Act (Title II, Public Law 95-

223); or section 5 of the United Nations Participa­
tion Act (22 U .S .C . 287(c)).

(j) Investigation o f a financial institution or
its noncustomers. Financial records sought by a
government authority in connection with a lawful
proceeding, investigation, examination, or inspec­
tion directed at the financial institution in posses­
sion o f such records or at a legal entity which is
not a customer.
(k) G eneral A ccou n tin g O ffice requ ests.
Financial records sought by the General Accounting
Office pursuant to an authorized proceeding, inves­
tigation, examination or audit directed at a govern­
ment authority.

where the customer successfully challenges access
by or disclosure to a government authority, the
financial institution shall be reimbursed for reason­
ably necessary costs directly incurred in assembling
financial records required or requested to be pro­
duced prior to the time that the government author­
ity notifies the institution that the legal process or
request is withdrawn or defeated, or that the cus­
tomer has revoked his or her authorization.
(d)
Item ized bill or in voice. No payment
shall be made unless the financial institution sub­
mits an itemized bill or invoice showing specific
details concerning the search and processing, repro­
duction, and transportation costs.

(1)
Securities and Exchange Commission
requests. Until November 10, 1980, financial rec­
SECTION 2 1 9 .6 — PAYM EN T PROCED U RES
ords sought by the Securities and Exchange Com­
mission.
SECTION 2 1 9 .5 — CONDITIONS FOR
PAYM EN T
(a) L im ita tio n s. Paym ent fo r reasonably
necessary, directly incurred costs to financial insti­
tutions shall be limited to material required or re­
quested.
(b) Sep arate con sid eration o f com ponent
costs. Payment shall be made only for costs that
are both directly incurred and reasonably necessary.
In determining whether costs are reasonably neces­
sary, search and processing, reproduction, and
transportation costs shall be considered separately.
(c) Compliance with legal process, request,
or authorization. No payment shall be made until
the financial institution satisfactorily complies with
the legal process or formal written request, or cus­
tomer authorization, except that in the case where
the legal process or formal written request is with­
drawn, or the customer authorization is revoked, or

(a) Notice to subm it invoice. Promptly fol­
lowing a government authority’s service o f legal
process or request, the government authority shall
notify the financial institution that an itemized bill
or invoice must be submitted for payment and shall
furnish an office address for this purpose.
(b) Special Notice. If a government authority
withdraws the legal process or formal written re­
quest, or if the customer revokes his or her author­
ization, or if the legal process or request has been
successfully challenged by the customer, the gov­
ernment authority shall promptly notify the finan­
cial institution o f these facts, and shall also notify
the financial institution that the itemized bill or in­
voice must be submitted for payment o f costs incur­
red prior to the time that the financial institution
receives this notice.
SECTION 2 1 9 .7 — E FFE C T IV E DATE
This regulation shall become effective October 1,
1979.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102