OCC issues new guidance on telemarketing relationshipsMortgagePress.comrisk management, telemarketers, due diligence, underwriting
On April 24, the Office of
the Comptroller of the Currency (OCC) issued risk management
guidance to national banks for due diligence, underwriting and
monitoring of entities that process payments for telemarketers and
other merchant clients. Pursuant to the guidance, banks must
control risk in the accounts of payment processors through due
diligence and underwriting, as well as monitoring these high-risk
accounts for high levels of unauthorized returns and for suspicious
or unusual patterns of activity. Banks must implement a due
diligence and underwriting policy that, among other things,
requires an initial background check of the processor and its
underlying merchants to support the validity of processors' and
merchants' businesses, their creditworthiness, and business
practices. Banks must also engage in fraud monitoring. These
procedures are particularly important in cases in which
telemarketing payment processors deposit remotely created checks
(RCCs) in their accounts. To ensure effective risk management,
banks that initiate transactions for processors should require the
processor to provide information on their merchant clients, such as
the merchant's name, principal business activity and geographic
location. Banks should verify directly, or through the processor,
that the originator of the payment is operating a legitimate
business.
Finally, the guidance provides that banks are expected to comply
with Bank Secrecy Act/Anti-Money Laundering (BSA/AML) policies and
procedures to monitor and identify unusual activity. For a copy of
this guidance, please see www.occ.treas.gov/ftp/bulletin/2008-12.html.
For more information, visit www.occ.treas.gov.
