Full text of Federal Reserve Bank of New York Circulars : 10450. Revision of Regulation P

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FEDERAL RESERVE BANK
OF NEW YORK

[

C ircu lar N o.

10450 1

A p ril 1 8 , 1991

REVISION OF REGULATION P
Minimum Security Devices and Procedures For
Federal Reserve Banks and State Member Banks

To All Depository Institutions in the Second Federal
Reserve District, and Others Concerned:

The following statement has been issued by the Board of Governors of the Federal Reserve
System:
The Federal Reserve Board has announced revisions to Regulation P (Minimum Security Devices
and Procedures for Federal Reserve Banks and State Member Banks).
The revisions become effective May 1, 1991.
The revisions update provisions adopted in 1969, simplify and clarify existing areas of flexibility,
eliminate many obsolete or technical requirements particularly those in Appendix A, and delete refer­
ences to required reports following elimination of reporting requirements in this area by the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
The revisions do not otherwise substantively change the regulation, which is already relatively brief
and flexible, and add no new regulatory burden.

Enclosed — for depository institutions and others maintaining sets of Board regulations — is
the text of the revised Regulation, which has been reprinted from the Federal Register of March 29;
additional, single copies may be obtained at the Bank (33 Liberty Street) from the Issues Division
on the first floor, or by calling the Circulars Division (Tel. No. 212-720-5215 or 5216).
Questions on this matter may be directed to our Specialized Examinations Department
(Tel. No. 212-720-7946).




E. G erald C o rr ig a n ,
President.

Friday
March 29, 1991
Vol. 56, No. 61
Pp. 13069-13071

Regulation P; Docket No.R-0688

[E n c . Cir. N o. 1 0 4 5 0 ]




FEDERAL RESERVE SYSTEM
12 CFR Part 216
[Regulation P; Docket No. R-0688]

Security Devices and Procedures
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
SUMMARY: The Board of Governors of

the Federal Reserve System (‘‘Board"),
in coordination with the other federal
bank supervisory agencies, has
reviewed Regulation P—Security
Devices and Procedures—and
determined that it is appropriate to
revise the regulation to reflect changes
in the technology of security devices,
and to implement changes made by the
Financial Institutions Reform, Recovery
and Enforcement Act of 1989
(“FIRREA"). The proposed revision was
published for comment by the Board in
April 1990. (55 FR 12850, April 6,1990).
The revision incorporates amendments
made to the Bank Protection Act of 1968
by FIRREA and provides banks with the
flexibility to avoid the technical
obsolescence that occurred with the
existing regulation.
DATES: This regulation is effective May
1,1991; however, renewal of the
recordkeeping requirement FR 4004 and
discontinuance of the FR 4003 and FR
4005 reports, is effective March 31,1991.
FOR FURTHER INFORMATION CONTACT:

Elaine M. Boutilier, Senior Attorney
(202/452-2418). Legal Division, or
Thomas A. Durkin, Regulatory Planning
and Review Director (202/452-2326),
Office of the Secretary, Board of
Governors of the Federal Reserve
System, Washington, DC 20551. For the
hearing impaired only,
Telecommunication Devic° for the Deaf
(“TDD”), Dorothea Thompson (202/4523544).
SUPPLEMENTARY INFORMATION: The
Bank Protection Act of 1968 requires the
Federal financial institution supervisory
agencies to establish minimum
standards for bank security devices and
procedures to discourage bank crime
and to assist in the identification of
persons who commit such crimes. 12
U.S.C. 1882. To implement this statute a
uniform regulation was adopted in 1969
by each of the supervisory agencies—
Comptroller of the Currency, Federal
Deposit Insurance Corporation, Federal
Home Loan Bank Board (now known as
the Office of Thrift Supervision), and the
Board. With the exception of minor
changes in 1973 and 1981, this regulation




has not been modified since it was first
features of security devices as
adopted. The Board, along with the
mandatory. Nevertheless, security
other federal financial institution
officers would be expected to identify
supervisory agencies, requested
the level of risk to their institution and
comments on a proposed revision of this adopt an appropriate security program,
regulation last year. (55 FR 12850, April
taking into consideration applicable
6. 1990).
ANSI and UL standards.
Appendix B concerned proper
The Board received a total of 43
employee conduct after a robbery.
comments on the proposed changes to
Although this appendix has been
Regulation P. Twenty-nine of these
eliminated, the Board believes that
comments were received from banks:
training of employees should be
five were received from manufacturers
of security equipment: six were received included in a bank’s security program
from associations connected with banks and notes that several organizations
(e.o.. trade associations): and three were offer training programs for bank
employees and security officers.
received from Reserve Banks. The
Some letters that were generally
overall response to the changes was
supportive of the revision commented
supportive: 32 of the comments
that the regulation was too narrow and
expressed support for the revisions,
while only 11 comments were not
should cover “white-collar crime” as
well. Regulation P is promulgated in
supportive. Four of the five equipment
manufacturers opposed the changes, but response to the Bank Protection Act,
which is specifically intended to
twenty-five of the twenty-nine
“discourage robberies, burglaries, and
commenting banks were generally
larcenies.” While the Board agrees that
supportive. The primary objection of
those opposing the changes was that the white-collar crimes such as fraud and
embezzlement are problems, these
revised standards were too vague; in
crimes are covered by other laws
particular, some commenters opposed
deletion of appendix A and appendix B. outside the scope of Regulation P.
One of the trade associations opposed
The revised regulation establishes a
the deletion of these appendices
minimum standard by requiring four
because, in its view, small institutions
specified security devices: A secure
have security officers that depend on
space for cash; a lighting system for
these appendices for guidance.
illuminating the vault; an alarm system;
Appendix A set forth specifications
and tamper resistant locks on exterior
for security devices to be used in banks. doors and windows. In addition, the
The Board is deleting this appendix
proposed regulation establishes the
because it is too specific and has
contents of a security program, e.q.,
become obsolete. The Board believes
procedures for opening and closing for
that any standards that continue to
business, for safekeeping of valuables,
reference specific security devices are
and for identifying persons committing
also likely to become obsolete because
crimes. These are the minimum
technology is continuing to advance at a procedures that should comprise a
rapid pace. To avoid the necessity of
bank’s security program. To assist banks
constantly updating required security
in establishing their program, the
devices, the revised regulation requires
regulation suggests certain factors to be
each bank to designate a security officer considered when selecting additional
to administer a written security
security devices. In making these
program, which would require, at a
suggestions, the Board notes that in the
minimum, that four specific security
22 years since passage of the Bank
devices be installed, but leaves it to the
Protection Act, trade associations and
discretion of the security officer to
other vendors have produced security
determine which additional security
manuals and information designed for
devices will best meet the needs of the
banks of various sizes.
program. In this way the security officer
To ensure that a bank’s security
can choose the most up-to-date
program is reviewed on a regular basis
equipment that meets the requirements
for effectiveness, the regulation requires
of his particular bank. Some
a report to be made by the security
commenters recommended referring to
officer to the bank’s board of directors
Underwriters Laboratory (“UL”)
at least annually. This changes the
previous requirement, which was
approval or ANSI specifications as a
eliminated by FIRREA, that reports must
substitute for appendix A. Because the
be filed periodically with a bank’s
level of risk varies from institution to
institution, the Board does not believe it primary supervisory agency.
is appropriate to specify particular
Nevertheless, the annual reports to the

2

board of directors should still contain
information such as the status of
employee training, the number of
offenses against the bank, and the
success of prosecution for such offenses.
When requesting Comments on the
proposed amendments to Regulation P,
the Board also proposed elimination of
three reports relating to recordkeeping
and reporting requirements of the
regulation: FR 4003 (Statement
Regarding Security Devices That Do Not
Meet the Minimum Requirements of
Regulation P), FR 4004 (Written Security
Program for State Member Banks as
Required by Regulation P), and FR 4005
(Annual Statement of Compliance with
the Bank Protection Act of 1968). Only
two comments were received on this
issue, and both supported the
elimination of the reports. Because the
revised regulation still requires a written
security program, however, the Board
has decided to discontinue only two of
these reports—the FR 4003 and FR 4005
reports—effective on March 31,1991.
The FR 4004 report, a recordkeeping
requirement, has not been discontinued,
because banks are still required to
maintain a written security program. 1 In
accordance with section 3507 of the
Paperwork Reduction Act of 1980, (44
U.S.C. 3507, and 5 CFR 1320.13), the
discontinuance of the FR 4003 and FR
4005 reports has been reviewed and
approved by the Board under Office of
Management and Budget delegated
authority after consideration of the
comments received during the public
comment period.
Renewal of FR 4004 is approved by
the Board under delegated authority (5
CFR 1320.9) to be effective on March 31,
1991, which is less than 30 days from
publication of this ruling. The Board
finds good cause for an effective date
less than 30 days from publication
because the authority for the
recordkeeping requirement expires on
March 31,1991, and a period of time
without it would be disruptive to the
institutions required to maintain such
records. Furthermore, this is a
continuation of an existing
recordkeeping requirement, so an
1 For purposes ofthe Paperwork Reduction Act,
the recordkeeping requirement of this regulation for
establishment of written security programs is
described as follows: (1) Report title: Written
Security Program for State Mepiber Banks; (2)
Agency report number FR 4004; (3) OMB Docket
num ber 7100-0112; (4) Frequency: recordkeeping;
(5) Reporters: State member banks; (6) Annual
reporting hours: 513; (7) Estimated average hours
per response: 0.5 per year; (8) Number of
respondents: 1025.H ie information collection is
mandatory (12 U.S.C. 1882(bj).




effective date with less than 30 days
prior notice has no harmful effect on the
institutions involved.
Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the
Regulatory Flexibility Act (Pub. L. No.
96-354, 5 U.S.C. 601 et seg.), the Board
certifies that this final rule will not have
a significant economic impact on a
substantial number of small entities.
Small entities already were complying
with the security standards established
in the prior regulation, and this revision
provides for more flexibility in devising
security programs, which should help
minimize the existing costs to the
institutions. The amendment also
deletes two of the three reports required
by the government, which should ease
the regulatory burden on small
institutions.
List of Subjects in 12 CFR Part 216
Banks, Banking, Federal Reserve
System, Reporting and recordkeeping
requirements, Security measures, State
member banks.
For the reasons set out in the
preamble, title 12, part 216 of the Code
of Federal Regulations is revised as
follows:

security officer who shall have the
authority, subject to the approval of the
board of directors to develop, within a
reasonable time, but no later than 180
days, and to administer a written
security program for each banking
office.
§ 216.3 Security program.

(a) Contents of security program. The
security program shall:
(1) Establish procedures for opening
and closing for business and for the
safekeeping of all currency, negotiable
securities, and similar valuables at all
times:
(2) Establish procedures that will
assist in identifying persons committing
crimes against the institution and that
will preserve evidence that may aid in
their identification and prosecution.
Such procedures may include, but are
not limited to:
(i) Maintaining a camera that records
activity in the banking office:
(ii) Using identification devices, such
as prerecorded serial-numbered bills, or
chemical and electronic devices: and
(iii) Retaining a record of any robbery,
burglary, or larceny committeed against
the bank:
(3) Provide for initial and periodic
training of officers and employees in
PART 216—SECURITY PROCEDURES
their responsibilities under the security
program and in proper employee
Sec.
conduct during and after a burglary,
216.1 Authority, purpose, and scope.
robbery, or larceny; and
216.2 Designation of security officer.
(4) Provide for selecting, testing,
216.3 Security program.
operating, and maintaining appropriate
216.4 Report.
216.5 Federal Reserve Banks.
security devices, as specified in
paragraph (b) of this section.
A u t h o r it y : 12 U.S.C. 1881-1884.
(b) Security devices. Each member
§ 2 16 .1
A u th o rity , p u rp o s e , a n d s c o p e .
bank shall have, at a minimum, the
(a) This regulation is issued by the
following security devices:
Board of Governors of the Federal
(1) A means of protecting cash and
Reserve System (the "Board”) pursuant other liquid assets, such as a vault, safe,
to section 3 of the Bank Protection Act
or other secure space:
of 1968 (12 U.S.C. 1882). It applies to
(2) A lighting system for illuminating,
Federal Reserve Banks and state banks during the hours of darkness, the area
that are members of the Federal Reserve around the vault, if the vault is visible
System. It requires each bank to adopt
from outside the banking office:
appropriate security procedures to
(3) Tamper-resistent locks on exterior
discourage robberies, burglaries, and
doors and exterior windows that may be
larcenies, and to assist in the
opened:
identification and prosecution of
(4) An alarm system or other
persons who commit such acts.
appropriate device for promptly
(b) It is the responsibility of the
notifying the nearest responsible law
member bank’s board of directors to
enforcement officers of an attempted or
comply with this regulation and ensure perpetrated robbery or burglary: and
that a written security program for the
(5) Such other devices as the security
bank’s main office and branches is
officer determines to be appropriate,
developed and implemented.
taking into consideration:
(i) The incidence of crimes against
i) 2 1 6 .2 D e s ig n a tio n o f s e c u rity o f f ic e r .
financial institutions in the area;
Upon becoming a member of the
(ii) The amount of currency and other
Federal Reserve System, a state bank’s valuables exposed to robbery, burglary,
board of directors shall designate a
or larcency;

3

(iii) The distance of the banking office
from the nearest responsible law
enforcement officers;’
(iv) The cost of the security devices;
(v) Other security measures in effect
at the banking office; and
(vi) The physical characteristics of the
structure of the banking office and its
surroundings.




maintain a written security program for
its main office and branches subject to
The security officer for each member
bank shall report at least annually to the review and approval of the Board.
bank’s board of directors on the
B y o r d e r o f th e B o a rd o f G o v e r n o r s o f th e
F e d e ra l R e s e rv e S y s te m , M a r c h 2 2 ,1 9 9 1 .
implementation, administration, and
effectiveness of the security program.
J e n n ife r J. J o h n s o n ,
§ 216.4 Report.

A s s o c ia te S e c re ta r y o f th e Board.

§ 216.5 Federal Reserve Banks.

Each Reserve Bank shall develop and

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BILLING CODE 6210-01-M