The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ftfr Sun,' ^ November 20, 1979 To the Addressee: Enclosed is a copy, in pamphlet form, of the new Regulation S, "Reimbursement to Financial Institutions for Assembling and Providing Financial Records," of the Board of Governors of the Federal Reserve System. The regulation, described in this Bank's Circular No. 8644, became effective October 1, 1979. Questions regarding the regulation may be directed to this Bank's Regulations Division (Tel. No. 212-791-5914). Circulars Division FEDERAL RESERVE BANK OF NEW YORK BO A RD O F G O V ER N O R S of the F E D E R A L R E SE R V E SY ST E M REIMBURSEMENT TO FINANCIAL INSTITUTIONS FOR ASSEMBLING OR PROVIDING FINANCIAL RECORDS R E G U LA T IO N S (1 2 C F R 2 1 9 ) A s adopted effective O c to b er 1, 1979 Any inquiry relating to this regulation should be addressed to the Federal Reserve Bank of the Federal Reserve district in which the inquiry arises. CONTENTS S ec . S ec . S ec . S ec . S ec . S ec . S ec . 219.1— Authority, Purpose and S cope 219.2— Definitions 219.3—Cost Reimbursement 219.4—E xceptions 219.5—Conditions for Payment 219.6— Payment Procedures 219.7— E ffective Date STATUTORY AUTHORITY This regulation is issued under the authority of section 1115 of the Right to Financial Privacy Act of 1978 (12 U.S.C. §3415), which reads as follows: S ec 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 of Governors of 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. 2 REGULATION S (12 C F R 2 19 ) As adopted effective O c to b e r 1, 1979 REIMBURSEMENT TO FINANCIAL INSTITUTIONS FOR ASSEMBLING OR PROVIDING FINANCIAL RECORDS* (e) “ Customer” means any person or author ized representative of that person who utilized or is utilizing any service of 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 of 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 of 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 219.1— AUTHORITY, PURPOSE AND SCOPE This Part is issued by the Board of Governors of the Federal Reserve System under section 1115 of the Right to Financial Privacy Act of 1978 (the “ Act” ) (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 219.2— 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 of the Consumers Credit Protection Act (15 U.S.C. 1602(n)), industrial loan company, trust company, savings and loan, building and loan, or homestead association (including cooperative banks), credit union, or consumer finance institu tion, located in any state or territory of the United States, the District of Columbia, Puerto Rico, 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. SECTION 219.3— COST REIMBURSEMENT 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 of reason ably necessary costs which have been directly in curred according to the following schedule: (a) Search and processing costs. (1) Reim bursement of search and processing costs shall be the total amount of 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 of $2.50 per quarter hour or fraction thereof, and is limited * 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. 3 to the total amount of 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 of material or for managerial or legal advice, expertise, research, or time spent for any of these activities. If itemized separately, search and processing costs may include the actual cost of 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 of examination. assistance to a customer in the form of 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 of its supervisory, regulatory, or monetary functions with respect to a financial insti tution. (e) Internal Revenue summons. 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 dm inistrative agency subpoenas. 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 of 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 of 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- SECTION 219.4— EXCEPTIONS 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 claims, 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) Government loan programs. 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 4 223); or section 5 of the United Nations Participa where the customer successfully challenges access by or disclosure to a government authority, the tion Act (22 U.S.C. 287(c)). financial institution shall be reimbursed for reason (j) Investigation of a financial institution or ably necessary costs directly incurred in assembling its noncustomers. Financial records sought by a financial records required or requested to be pro government authority in connection with a lawful proceeding, investigation, examination, or inspec duced prior to the time that the government author tion directed at the financial institution in posses ity notifies the institution that the legal process or request is withdrawn or defeated, or that the cus sion of such records or at a legal entity which is tomer has revoked his or her authorization. not a customer. (d) Itemized bill or invoice. No payment (k) General Accounting Office requests. shall be made unless the financial institution sub Financial records sought by the General Accounting mits an itemized bill or invoice showing specific Office pursuant to an authorized proceeding, inves tigation, examination or audit directed at a govern details concerning the search and processing, repro duction, and transportation costs. ment authority. (1) Securities and Exchange Commission requests. Until November 10, 1980, financial rec SECTION 219.6— PAYMENT PROCEDURES ords sought by the Securities and Exchange Com (a) Notice to submit invoice. Promptly fol mission. lowing a government authority’s service of legal process or request, the government authority shall SECTION 219.5— CONDITIONS FOR notify the financial institution that an itemized bill PAYMENT or invoice must be submitted for payment and shall furnish an office address for this purpose. (a) Lim itations. Payment for reasonably (b) Special Notice. If a government authority necessary, directly incurred costs to financial insti withdraws the legal process or formal written re tutions shall be limited to material required or re quest, or if the customer revokes his or her author quested. ization, or if the legal process or request has been (b) Separate consideration of component successfully challenged by the customer, the gov costs. Payment shall be made only for costs that ernment authority shall promptly notify the finan are both directly incurred and reasonably necessary. cial institution of these facts, and shall also notify In determining whether costs are reasonably neces the financial institution that the itemized bill or in sary, search and processing, reproduction, and voice must be submitted for payment of costs incur transportation costs shall be considered separately. red prior to the time that the financial institution (c) Compliance with legal process, request, receives this notice. or authorization. No payment shall be made until the financial institution satisfactorily complies with the legal process or formal written request, or cus SECTION 219.7— EFFECTIVE DATE tomer authorization, except that in the case where This regulation shall become effective October 1, the legal process or formal written request is with 1979. drawn, or the customer authorization is revoked, or 5
@FedFRASER