SDBA eNews

June 10, 2021

Quad States Convention Starts on Monday

2021 Quad States ConventionThe SDBA will host the 2021 Quad States Convention on Monday and Tuesday, June 14-15, in Rapid City at The Monument. This year's convention will celebrate all that we have accomplished this past year as we reimagine, reinvent and revolutionize in a new direction. The event includes bankers from South Dakota, North Dakota, Montana and Wyoming and their business partners. 

Due to hosting the convention, the SDBA Office will be closed Monday through Wednesday, June 14-16, and will reopen on Thursday, June 17. 

Trade Groups Caution Lawmakers on Enhanced Reporting Requirements for Banks

Ahead of a House Ways and Means subcommittee hearing today on shrinking the tax gap, ABA and 10 other financial trade associations cautioned lawmakers about creating new reporting requirements for banks that would “impose cost and complexity that are not justified by the potential, and highly uncertain, benefits.” Such a proposal was included in President Biden’s American Families Plan, which called for financial institutions to report information on account flows, including earnings from investments and business activity.

The groups noted that while only limited details were provided in the recently released “Green Book,” which contains information on the tax changes that the Biden administration is proposing to help fund the budget for the coming fiscal year, “the limited additional information . . . suggests that this new regime could be exceptionally expansive and comprehensive, covering the accounts of most Americans, rather than only the ‘wealthiest,’ as described in the American Families Plan.”

The groups emphasized that financial institutions already have robust reporting responsibilities and that creating a new reporting structure would be a complex undertaking. They also raised concerns about whether the benefits of the new reporting framework would outweigh the significant compliance burdens and about privacy and data protection challenges that could arise.

They added that “strengthening IRS funding to facilitate targeted auditing of questionable tax returns is a much more efficient and effective approach” to closing the tax gap. “We support efforts to increase compliance so that all taxpayers meet their responsibilities,” the groups concluded. “But putting financial institutions in the position of reporting more information on their account holders is not the answer.” Read the letter. For more information, contact ABA’s John Kinsella.

IRS: Families Eligible for Expanded Child Tax Credit Should File Returns Soon

The Internal Revenue Service on Monday urged all individuals and families who have not yet filed their 2019 or 2020 tax returns to do so as soon as possible so that those who are eligible may begin receiving the expanded Child Tax Credit payments, which were authorized by the American Rescue Plan and which will begin to be distributed on July 15. The IRS is in the process of sending letters to more than 36 million American families who may be eligible, based on tax information on record.

Eligible families will begin receiving advance payments either by direct deposit or check. Under the expanded tax credit, payments may be up to $300 per month for each qualifying child under age six and up to $250 per month for each qualifying child between the ages of six and 17. The IRS noted that “most families do not need to take any action to get their payment,” and that payments will be calculated based on the 2020 tax return, if available. If the 2020 return is not available, the IRS will determine the payment amount using the 2019 return.

The IRS has created a dedicated webpage with more information and resources on the expanded tax credit, including an interactive eligibility tool and a portal through which taxpayers eligible for the credit may opt-out of the advance payment program. Read moreVisit the webpage.

ABA to Lawmakers: CBDCs Could 'Reshape' Banking System

As central banks around the globe explore whether to issue central bank digital currencies (CBDCs), there is a growing recognition that CBDCs involve very significant real-world trade-offs. While recognizing that CBDC proposals are often driven by laudable goals, ABA cautioned that the introduction of a CBDC could “fundamentally change the role of the central bank in the United States and reshape the banking system.”

In a statement for the record of a Senate Banking subcommittee hearing, ABA noted that choosing between the various CBDC designs requires “serious and complex policy tradeoffs” and that too often CBDC proponents take a “highlight reel” approach to describing CBDC, “cherry picking all the perceived benefits, while downplaying the serious risks to consumers and our financial system.”

ABA pointed out that the U.S. already has a robust and well-functioning financial system, with banks already providing lending, deposit-taking and payments services to consumers. After carefully reviewing the benefits and risks of various proposals to implement a CBDC, ABA concluded that “it does not appear that a CBDC is well-positioned to enhance underlying financial capabilities or extend the reach of financial services in well-developed markets.” Should policymakers decide to move ahead with its development of a CBDC, the association urged them to do so with caution and carefully consider the risks and benefits of various CBDC designs.

“Given the additional complexity, delay and transition costs involved in creating a new form of money, there are strong efficiency interests that suggest CBDC should only be pursued as a final option to meet clearly-defined public policy goals that cannot be achieved through payments innovations that leverage existing digital dollars. As of today, those use cases have not emerged,” ABA said. “If a viable use case for CBDC in the United States does emerge in the future, design choices must be carefully considered to ensure that the benefits as well as the risks of introducing a CBDC are fully appreciated.” Read the statement. For more information, contact ABA’s Rob Morgan or Matt Daigler.

ABA Ads Spotlight Financial Inclusion, Vaccination Efforts

ABA is running digital ads this week in the widely read Axios AM newsletter that will amplify how banks are working to promote financial inclusion and support their communities during the pandemic. The ads will feature insights from ABA’s recently released Bank Access Report and highlight bank participation in the Bank On movement to offer low-cost bank accounts to consumers.

The ads will also spotlight how Montana’s Bank of the Rockies transformed its branches into vaccination centers to help fight the pandemic and ABA’s Innovation Pays campaign, which promotes the role banks play in delivering fast, secure payments.

Biden Administration Calls for Private Sector Action to Combat Ransomware Attacks

With ransomware attacks on the rise, the Biden administration last week called on corporations to take several “highly impactful steps” to help address these “serious” and “increasing” threats. Those steps include implementing the five best practices from President Biden’s recent executive order on improving the nation’s cybersecurity: multifactor authentication, endpoint detection and response, encryption, and a “skilled, empowered security team” that can rapidly patch, share and act on threat information.

In addition to these best practices, the White House said, corporations should also back up their data, system images and configuration, regularly test them, and keep the backups offline; update and patch systems promptly; test their incident response plan; use a third-party to test the firm’s security systems; and segmenting the firm’s networks to ensure business continuity in the event of a cyber attack.

“The private sector . . . has a critical responsibility to protect against these threats,” said the letter to business leaders. “All organizations must recognize that no company is safe from being targeted by ransomware, regardless of size or location. . . . [W]e urge you to take ransomware crime seriously and ensure your corporate cyber defenses match the threat.” Read the letter.

CFPB Issues FAQs on Electronic Fund Transfer Act, Reg E

The Consumer Financial Protection Bureau released a set of frequently asked questions that address the unauthorized transfer and error resolution provisions under the Electronic Fund Transfer Act and Regulation E. The FAQs also address situations when a consumer is fraudulently induced by a third party to provide their account information or private network rules conflict with the regulation. Read the FAQs.

Registration Now Open, Speakers Announced for In-Person ABA Annual Convention

Registrations are now being accepted for the in-person 2021 ABA Annual Convention to be held Oct. 17-19 in Tampa, Fla. A discounted matchmaking registration rate is available for attendees that agree to meet with sponsors. Those taking advantage of the discounted rate will take part in scheduled small-group discussions with other bankers and led by sponsors with expertise in the topic.

Attendees can also take advantage of the Live Plus Five rate, allowing one person to attend in person and five of their bank colleagues to access live streamed and on-demand virtual content.

Undersea explorer Robert Ballard will be a keynote speaker at the convention. Best known for his 1985 discovery of the Titanic, Ballard also succeeded in tracking down other significant shipwrecks including the German battleship Bismarck, the lost fleet of Guadalcanal and John F. Kennedy's boat, PT-109. Also joining the convention speaker lineup is Johnny Taylor Jr., president and CEO for the Society for Human Resource Management. Register now.


Question of the Week

Question: If we send out an email to customers who use interactive teller machines (ITMs), letting them know the ITMs will be discontinued, would that message be considered mixed or transactional?

Answer: The CAN-SPAM Act governs email communications. For the purposes of the Act, conservatively, we would agree that your email would be considered a mixed message. The language informing the discontinuance of the product could be construed as a transaction itself, but the email also contains content promoting existing services such as online banking and the mobile application. That can be considered commercial content as it is promoting a product or service. The Federal Trade Commission (FTC) provides the following guidance in making the primary purpose determination under the Act.

A. What matters is the “primary purpose” of the message. To determine the primary purpose, remember that an email can contain three different types of information:

  • Commercial content – which advertises or promotes a commercial product or service, including content on a website operated for a commercial purpose;
  • Transactional or relationship content – which facilitates an already agreed-upon transaction or updates a customer about an ongoing transaction; and
  • Other content – which is neither commercial nor transactional or relationship.

A. What if the message combines commercial content and transactional or relationship content?

It’s common for email sent by businesses to mix commercial content and transactional or relationship content. When an email contains both kinds of content, the primary purpose of the message is the deciding factor. Here’s how to make that determination: If a recipient reasonably interpreting the subject line would likely conclude that the message contains an advertisement or promotion for a commercial product or service or if the message’s transactional or relationship content does not appear mainly at the beginning of the message, the primary purpose of the message is commercial. So, when a message contains both kinds of content – commercial and transactional or relationship – if the subject line would lead the recipient to think it’s a commercial message, it’s a commercial message for CAN-SPAM purposes. Similarly, if the bulk of the transactional or relationship part of the message doesn’t appear at the beginning, it’s a commercial message under the CAN-SPAM Act.

Not a member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email and ask for our Membership Team.

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.