Maryland Legal Alert for Financial Services
Maryland Legal Alert October 2013
- REMITTANCE TRANSFER RULE – EFFECTIVE OCTOBER 28, 2013
- MARYLAND LAW ON REPORTING FINANCIAL ABUSE OF OLDER ADULTS
- APPELLATE COURT ANALYZES MARYLAND’S DEPOSIT ACCOUNT GARNISHMENT LAW
REMITTANCE TRANSFER RULE – EFFECTIVE OCTOBER 28, 2013
The new CFPB Remittance Rule requires financial institutions that provide remittance transfers in the normal course of business to give new disclosures, follow new error resolution procedures, and assume new liabilities. A remittance transfer is an electronic money transfer made by a natural person (not a corporation, etc.) primarily for personal, family, or household purposes to be received in a foreign country. Remittance transfers include consumer wire transfers, international ACH transactions, and online bill payments. If an internet banking program permits remittance transfers to be made, those transfers are subject to the Rule and appropriate disclosures must be made, unless remittance transfers are not made in the normal course of business (100 or fewer remittance transfers in the prior calendar year and 100 or fewer remittance transfers in the current calendar year, with a transition period).
The Rule provides helpful model disclosures, but financial institutions should be sure to include an optional disclosure, not provided by the models, so that the financial institution may escape liability for failure to make funds available to a recipient by the disclosed availability date. A financial institution escapes liability if the sender provides an incorrect account number or recipient institution identifier, but only if the financial institution meets certain conditions. Those conditions include giving the sender notice, generally written, before the sender pays for the remittance transfer that the sender could lose the transfer amount if the sender provides an incorrect account number or identifier. A good place to provide this disclosure is in connection with the prepayment disclosures. If you have questions about remittance transfers or would like assistance with your disclosures, please contact Carla Witzel or Margie Corwin.
MARYLAND LAW ON REPORTING FINANCIAL ABUSE OF OLDER ADULTS
On September 24, 2013, various federal regulators issued an Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Adults. It clarifies that reporting suspected financial abuse of older adults to appropriate agencies does not, in general, violate the privacy provisions of the federal Gramm-Leach-Bliley Act. This Interagency Guidance does not change any obligation or authorization existing under Maryland’s Confidential Financial Records Act that requires or permits depository institutions to report financial exploitation of any customer or financial abuse of elder adults. Click here to review Maryland’s law. While this Guidance confirms that the GLBA privacy provisions do not impede MCFRA obligations or authorizations to share financial records when a depository institution suspects financial exploitation or abuse, it is important to remember that Maryland law limits the agencies to which information may or must be provided. When reporting under Maryland law is required (because of known or suspected financial abuse of elder adults), mandatory reporting must only be made to: adult protective services; long-term care ombudsman; law enforcement; or the Attorney General or a State’s Attorney. When reporting under Maryland law is voluntary (because of believed financial exploitation of a customer), reporting must only be made to adult protective services. Please let Margie Corwin or Carla Witzel know if you have any questions.
APPELLATE COURT ANALYZES MARYLAND’S DEPOSIT ACCOUNT GARNISHMENT LAW
The Court of Special Appeals of Maryland recently analyzed Maryland’s law that addresses garnishment of jointly held property. In a decision issued September 9, 2013, the Court reviewed the legislative history of this Maryland law, currently codified at Courts and Judicial Proceedings Article Section 11-603. Factually, this saga started with a writ of garnishment issued to a bank regarding a single judgment debtor. This individual was a joint owner (with her husband) on deposit accounts at the bank and also was an authorized signer (along with her husband) on an account that included her mother-in-law. The bank held the accounts and answered the writ of garnishment indicating that the accounts were in the name of two or more persons, one or more of whom but fewer than all of whom were judgment debtors. Since 1991, depository institutions have relied on Section 11-603(c) to hold funds and answer writs of garnishment in this manner, and Section 11-603(c) gives the depository institution protection if it complies with the statute’s mandates. Of particular significance, the Court of Special Appeals upheld the trial court’s determination, based on a number of different challenges, that Section 11-603(c) is not unconstitutional. The decision is a bit difficult to follow and, as of the date we are publishing this Legal Alert, the opportunity to appeal to the Court of Appeals is still available. Even so, at this time, we view this decision as favorable for depository institutions in Maryland. Please contact Margie Corwin if you would like to discuss this legal development in greater detail.