R. Kinney Williams & Associates
R. Kinney Williams
& Associates

Internet Banking News

January 27, 2002

INTERNET COMPLIANCENon-Deposit Investment Products

Financial institutions advertising or selling non-deposit investment products on-line should ensure that consumers are informed of the risks associated with non-deposit investment products as discussed in the "Interagency Statement on Retail Sales of Non Deposit Investment Products."  On-line systems should comply with this Interagency Statement, minimizing the possibility of customer confusion and preventing any inaccurate or misleading impression about the nature of the non-deposit investment product or its lack of FDIC insurance.

INTERNET SECURITY
- We continue covering some of the issues discussed in the "Risk Management Principles for Electronic Banking" published by the Basel Committee on Bank Supervision in May 2001.

Principle 9: Banks should take appropriate measures to ensure adherence to customer privacy requirements applicable to the jurisdictions to which the bank is providing e-banking products and services.

Maintaining a customers information privacy is a key responsibility for a bank. Misuse or unauthorized disclosure of confidential customer data exposes a bank to both legal and reputation risk. To meet these challenges concerning the preservation of privacy of customer information, banks should make reasonable endeavors to ensure that:

1)  The bank's customer privacy policies and standards take account of and comply with all privacy regulations and laws applicable to the jurisdictions to which it is providing e-banking products and services.

2)  Customers are made aware of the bank's privacy policies and relevant privacy issues concerning use of e-banking products and services.

3)  Customers may decline (opt out) from permitting the bank to share with a third party for cross-marketing purposes any information about the customers personal needs, interests, financial position or banking activity.

4)  Customer data are not used for purposes beyond which they are specifically allowed or for purposes beyond which customers have authorized.

5)  The banks standards for customer data use must be met when third parties have access to customer data through outsourcing relationships.

PRIVACY - We continue covering various issues in the "Privacy of Consumer Financial Information" published by the financial regulatory agencies in May 2001.

Reuse & Redisclosure of nonpublic personal information received from a nonaffiliated financial institution under Sections 14 and/or 15.

A. Through discussions with management and review of the institution's procedures, determine whether the institution has adequate practices to prevent the unlawful redisclosure and reuse of the information where the institution is the recipient of nonpublic personal information ('11(a)).

B. Select a sample of data received from nonaffiliated financial institutions, to evaluate the financial institution's compliance ` with reuse and redisclosure limitations.

1.  Verify that the institution's redisclosure of the information was only to affiliates of the financial institution from which the information was obtained or to the institution's own affiliates, except as otherwise allowed in the step b below ('11(a)(1)(i) and (ii)).

2.  Verify that the institution only uses and shares the data pursuant to an exception in Sections 14 and 15 ('11(a)(1)(iii)).

 

PLEASE NOTE:  Some of the above links may have expired, especially those from news organizations.  We may have a copy of the article, so please e-mail us at examiner@yennik.com if we can be of assistance.  

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