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DFS-03-14-00007-E Mandatory Reporting of ATM Safety Act Compliance by Banking Institutions
1/22/14 N.Y. St. Reg. DFS-03-14-00007-E
NEW YORK STATE REGISTER
VOLUME XXXVI, ISSUE 3
January 22, 2014
RULE MAKING ACTIVITIES
DEPARTMENT OF FINANCIAL SERVICES
EMERGENCY RULE MAKING
I.D No. DFS-03-14-00007-E
Filing No. 1
Filing Date. Jan. 02, 2014
Effective Date. Jan. 02, 2014
Mandatory Reporting of ATM Safety Act Compliance by Banking Institutions
PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of section 301.6 of Title 3 NYCRR.
Statutory authority:
Banking Law, Article II-AA (ATM Safety Act)
Finding of necessity for emergency rule:
Preservation of public safety and general welfare.
Specific reasons underlying the finding of necessity:
Changes reporting requirements in section 301.6 of the Superintendent’s Regulations to be consistent with changes in the ATM Safety Act (Article II-AA of the Banking Law) made by Chapter 227 of the Laws of 2013. Emergency adoption is necessary in order to implement the changed reporting requirements prior to the first report under the amended statute, which is due January, 2014.
Subject:
Mandatory reporting of ATM Safety Act Compliance by banking institutions.
Purpose:
To be consistent with changes in the ATM Safety Act (Article II-A of the Banking Law) made by chapter 227 of the Laws of 2013.
Text of emergency rule:
TITLE 3. BANKING
CHAPTER III. SUPERINTENDENT'S REGULATIONS SUBCHAPTER A. BANKING ORGANIZATIONS PART 301. SECURITY AT AUTOMATED TELLER FACILITIES
Section 301.6. Report of compliance.
(a) (1) The semi-annual report of compliance required to be filed pursuant to the provisions of section 75-g of the Banking Law shall be filed [within 75 days after the close of each calendar year covering the preceding calendar year] with the Department of Financial Services no later than the fifteenth day of January and July of each year or the following business day if that day is not a business day. This report shall be certified, under the penalties of perjury, and shall contain language substantially similar to the following:
I, ________, (person at the institution charged with enforcing compliance with article II-AA of the Banking Law) hereby certify, under the penalties of perjury, that all answers contained herein are true, accurate and complete.
[(2)] (i) All of the automated teller machine facilities operated by ________ (name of institution) which are subject to the provisions of article II-AA of the Banking Law (choose one or more of the following, as applicable):
[(i)] (a)________ are in full compliance with the provisions of that article; and/or
[(ii)] (b) ________ are in full compliance with the variance or exemption (as the case may be) granted by the superintendent for the automated teller machine facility (or facilities) located at ________ (specific address); and/or
[(iii)] (c)________ are not in compliance with the provisions of article II-AA.
[(3)] (ii) ________ (name of institution) uses and maintains only T-120 (commercial/industrial) grade video tapes, or better, in accordance with the provisions of section 301.5 of this Part.
[(i)] (2) In cases in which some or all of a banking institution's automated teller machine facilities are not in compliance with the provisions of article II-AA, the semi-annual report shall indicate the following additional information:
[(a)] (i) the specific address of each such facility;
[(b)] (ii) the manner in which each such facility fails to meet the requirements of that article and the reasons for such non-compliance; and
[(c)] (iii) a plan to remedy such non-compliance at each such facility, including the expected correction date.
(b) [Upon notification] After notice of any violation of the provisions of section 75-c of the Banking Law is provided to the Department in any semi-annual report or such banking institution is notified of any violation of section 75-c of the Banking Law, such banking institution shall file a report of corrective action [required] pursuant to section 75-[j]g(2) of the Banking Law [shall be filed within] no later than 10 business days [from] following the filing of the semi-annual report or receipt of such notification of violation. That report shall be certified, under the penalties of perjury, and shall contain language substantially similar to the following:
I, ________, (person at the institution charged with enforcing compliance with article II-AA of the Banking Law) hereby certify, under the penalties of perjury, that all answers contained herein are true, accurate and complete. The automated teller machine facility operated by ________ (name of institution) located at ________ (specific address) which is the subject of one or more violations of the provisions of section 75-c of the Banking Law, is (chose one of the following):
(1) ________ in full compliance with the provisions of section 75-c as of ________ (date); or
(2) ________ not presently in compliance with the provisions of section 75-c and the annexed remedial plan has been implemented and shall be completed by ________ [(date no later than 30 days after initial notification of violation from the Department of Financial Services)]; upon the date of completion of the remedial plan, ________ (name of institution) shall file a certified report of compliance with the Department of Financial Services stating that the location meets the requirements of section 75-c. Annexed hereto is a description of the remedial plan.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire April 2, 2014.
Text of rule and any required statements and analyses may be obtained from:
Sam L. Abram, Assistant Counsel, New York State Department of Financial Services, One State Street, New York, NY 10004-1417, (212) 709-1658, email: sam.abram@dfs.ny.gov
Regulatory Impact Statement
1. Statutory authority.
Chapter 227 of the laws of 2013 became effective on July 31, 2013. It made amendments to Banking Law Sections 75-g and 75-j. The changes to Subsection 301(6) of Part 301 made herein are intended to make the regulation consistent with the changes made to Section 75-g.
The ATM Safety Act (the “Act”), Article II-A of the Banking Law, is intended to protect members of the public by imposing lighting, security camera and other requirements on bank controlled ATM facilities operating in New York State. Section 75-n of the Banking Law grants the Superintendent with authority to adopt implementing regulations. Part 301 of the Superintendent’s Regulations implements the Act.
Subsection 301(6) of Part 301 relates to periodic reporting obligations by banking institutions with respect to the compliance of their ATM facilities with the requirements of the Act. The changes made herein are intended to make the reporting process for banking institutions more efficient and less expensive. Changes are also made to make the regulation consistent with the newly amended law.
Chapter 227 made amendments to Subdivision 1 of Section 75-g of the Banking Law. It also added a new Subdivision 2 to the statute. The amendments to Subdivision 1 make clear that the reporting is to be on a semi-annual basis. It also made clear that all such reporting is to be done on an electronic basis. New Section 75-g(2) provides that any institution filing a semi-annual compliance report that shows noncompliance shall thereafter submit an additional report to the Department indicating whether the failure has been corrected, the reason for any failure that has not been corrected and the expected date of correction. Finally, for any violation not corrected within ten business days after the filing of the applicable compliance report, the institution also must report the date of completion of the corrective action.
2. Legislative objectives.
As noted, the Act is intended to protect members of the public by imposing lighting, security camera and other requirements on bank controlled ATM facilities operating in New York State. The recent amendments are intended to automate the reporting of violations, thus enhancing the efficiency of the reporting process.
Part 301 implements the Act. The following is a summary of the major changes to Section 301(6) to implement Chapter 227:
1. The numbering of the section is changed to make the regulation consistent with the intent of the statute. Individuals who originate loans on manufactured homes will be subject to the regulation for the first time.
2. Paragraph (a) has been changed to make clear that compliance reporting is to be done on a semi-annual basis.
3. Clause (C) of subparagraph (2) of paragraph (a) has been changed to add a requirement that the banking institution indicate the expected date of completion of the corrective action.
4. Paragraph (b) has been modified to clarify that any banking institution that submitted a notice of violation in any semi-annual report or has otherwise been notified of any violation must file a report of corrective action no later than 10 business days following the filing of the semi-annual report or receipt of notice of a violation. This report must state whether the violation has been corrected or, if not, the expected date of completion. When the corrective action has been completed, Paragraph (b) also requires the banking institution to report the date of completion.
5. All reports must be certified.
3. Needs and benefits.
Prior to the amendments described above, the Act required banking institutions to make annual reports to the Department regarding their ATM compliance with the Act. This reporting was supported by on-site examinations by employees of the Department. This reporting obligation has been changed to a semi-annual reporting process. The statute also was amended to allow the reporting to be done electronically. In effect, while the Department retains its examination authority, the compliance emphasis has been changed from a primarily examination-based system handled by the Department to a more comprehensive self-reporting system. Since banking institutions will have primary responsibility for monitoring and reporting, it is anticipated that the costs of compliance for both banks with ATMs and for the Department will be reduced.
The changes described herein are expected to simplify reporting and the cost of reporting for banking institutions. In addition, it is expected that the changes to the regulation will facilitate reporting by making the process somewhat more straight forward. They will also conform the regulation to the statute.
4. Costs.
As under the existing Part 301, banking institutions remain primarily responsible for ensuring that their ATMs are in compliance with the Act. Nevertheless, the cost of demonstrating their compliance with Act in writing will be significantly simplified as all such reporting will now be done electronically. The Department is developing an online system to provide for such reporting. This system is expected to be in place for the first scheduled semi-annual reporting now set for January of 2014.
5. Local government mandates.
None.
6. Paperwork.
Going forward, reporting will be done electronically.
7. Duplication.
The revised regulation does not duplicate, overlap or conflict with any other regulations.
8. Alternatives.
The purpose of the regulation is to conform the regulation to changes in the statute and to carry out the statutory mandate to regulate bank controlled ATM facilities pursuant to the Act. Failure to act would result in regulations that are inconsistent with the statute.
9. Federal standards.
None applicable.
10. Compliance schedule.
Chapter 227 became effective on July 31, 2013. The first semi-annual report is due in January. The proposed emergency regulation would be effective immediately.
Regulatory Flexibility Analysis
1. Effect of the Rule:
The revised regulation will not have any impact on local governments. However, a number of the banking institutions that maintain automatic teller facilities (“ATMs”) and will be affected by revised regulation are considered small businesses. Overall, there are in excess of 5000ATMs regulated by the Department of Financial Services (the “Department”) (formerly, the Banking Department).
2. Compliance Requirements:
As noted, the Department regulates over 5000ATMs in the state. Chapter 227 of the laws of 2013 became effective on July 31, 2013. It made amendments to Section 75-g and 75-j of the Banking Law. The changes to Subsection 301(6) of Part 301 made herein are intended to make the regulation more consistent with the statute and also make compliance easier.
The ATM Safety Act (the “Act”) is intended to protect members of the public by imposing lighting, security camera and other requirements on bank controlled ATMs operating in New York State. Subsection 301(6) of Part 301 relates to periodic reporting obligations by banking institutions with respect to the compliance of their ATMs with the requirements of the Act. The changes made herein are intended to make the filing process for banking institutions more efficient and less expensive. Changes are also made to make the regulation more consistent with law and easier to follow.
3. Professional Services:
None.
4. Compliance Costs:
As under the existing Part 301, banking institutions remain primarily responsible for ensuring that their ATMs are in compliance with the Act. Nevertheless, the cost of demonstrating their compliance with Act will be significantly simplified as all such reporting will now be done electronically. The Department is developing an online system to provide for such reporting. This system is expected to be in place for the first scheduled semi-annual reporting now required for January of 2014.
5. Economic and Technological Feasibility:
The rule-making should impose no adverse economic or technological burden on small businesses. Indeed, banking institutions should benefit from new electronic systems for reporting.
6. Minimizing Adverse Impacts:
It is expected that electronic reporting will significantly reduce overall compliance costs for industry. Also, the cost to the Department of its supervision of compliance with the Act should similarly be reduced. Since the Department assesses industry for these costs, the changes contemplated by these regulations should assist in further reducing industry costs.
7. Small Business and Local Government Participation:
The Department is in regular contact with banking institutions, including those that are small businesses, and industry associations regarding compliance with the Act. Banking institutions are interested in both improving their compliance and reducing the costs of compliance. The proposed adoption should facilitate banking institutions in attaining both goals. This regulation does not impact local governments.
Rural Area Flexibility Analysis
Types and Estimated Numbers: The New York State Department of Financial Services (the “Department”) (formerly the Banking Department) regulates over xyzmn automatic teller machines (“ATMs”) in the state, including numerous ATMs in rural area. The changes to Subsection 301(6) of Part 301 made herein are intended to make the regulation consistent with the changes made to Section 75-g.
The ATM Safety Act (the “Act”), Article II-A of the Banking Law, is intended to protect members of the public by imposing lighting, security camera and other requirements on ATMs operating in New York State. Section 75-n of the Banking Law grants the Superintendent with authority to adopt implementing regulations. Part 301 of the Superintendent’s Regulations implements the Act.
Subsection 301(6) of Part 301 relates to periodic reporting obligations by banking institutions with respect to the compliance of their ATMs with the requirements of the Act. The changes made herein are intended to make the filing process for banking institutions more efficient and less expensive. Changes are also made to make the regulation more consistent with law and easier to follow.
Chapter 227 made amendments to Subdivision 1 of Section 75-g of the Banking law. It also added a new Subdivision 2 to the statute. The amendments to Subdivision 1 make clear that the reporting was to be on a semi-annual basis. It also made clear that all such reporting was to be done on an electronic basis. New Section 75-g(2) provides that any institution filing a semi-annual compliance report that shows noncompliance shall thereafter submit an additional report to the Department indicating whether the failure has been corrected, the reason for any failure that has not been corrected and the expected date of correction. Finally, for any violation not corrected within ten business days after the filing of the applicable compliance report, the institution also must report the date of completion of the corrective action.
Compliance Requirements: Prior to the amendments described above, the Act required banking institutions to make annual reports to the Department regarding their ATM compliance with the Act. This reporting was supported by on-site examinations by employees of the Department. In effect, while the Department retains its examination authority, the compliance emphasis is has been changed from a primarily examination-based system handled by the Department to a more comprehensive self-reporting system. This reporting obligation has been changed to a semi-annual reporting process. The statute also was amended to allow the reporting to be done electronically. Since banking institutions will have primary responsibility for monitoring and reporting, it is anticipated that the costs of compliance for both banks with ATMs and for the Department will be reduced.
Costs: Banking institutions in rural areas should experience a more efficient compliance reporting system going forward. Indeed, expenses for compliance will remain the same as banking institutions will continue to have the primary responsibility for ensuring that there ATMs comply with law. However, ongoing reporting costs should be reduced as banks will have both a more streamlined reporting system and the ability to report electronically.
Minimizing Adverse Impacts: It is expected that electronic reporting will significantly reduce overall compliance costs for industry. Also, the cost to the Department of its supervision of compliance with the Act should similarly be reduced. Since the Department assesses industry for these costs, the changes contemplated by these regulations should assist in further reducing industry costs.
Rural Area Participation: The Department is in regular contact with banking institutions, including those that are small businesses, and industry associations regarding compliance with the Act. Banking institutions are interested in both improving their compliance and reducing the costs of compliance. The proposed adoption should facilitate banking institutions in attaining both goals. This regulation does not impact local governments.
Job Impact Statement
The requirement to comply with this regulation is not expected to have a significant adverse effect on jobs or employment. Chapter 227 of the laws of 2013 became effective on July 31, 2013. It made amendments to Banking Law Sections 75-g and 75-j. The changes to Subsection 301(6) of Part 301 made herein are intended to make the regulation consistent with the changes made to Section 75-g.
The ATM Safety Act (the “Act”), Article II-A of the Banking Law, is intended to protect members of the public by imposing lighting, security camera and other requirements on ATMs operating in New York State. Section 75-n of the Banking Law grants the Superintendent with authority to adopt implementing regulations. Part 301 of the Superintendent’s Regulations implements the Act.
Subsection 301(6) of Part 301 relates to periodic reporting obligations by banking institutions with respect to the compliance of their ATMs with the requirements of the Act. The changes made herein are intended to make the filing process for banking institutions more efficient and less expensive. Changes are also made to make the regulation more consistent with law and easier to follow.
Chapter 227 made amendments to Subdivision 1 of Section 75-g of the Banking law. It also added a new Subdivision 2 to the statute. The amendments to Subdivision 1 make clear that the reporting was to be on a semi-annual basis. It also made clear that all such reporting was to be done on an electronic basis. New Section 75-g(2) provides that any institution filing a semi-annual compliance report that shows noncompliance shall thereafter submit an additional report to the Department indicating whether the failure has been corrected, the reason for any failure that has not been corrected and the expected date of correction. Finally, for any violation not corrected within ten business days after the filing of the applicable compliance report, the institution also must report the date of completion of the corrective action.
Banking institutions have and will continue to have primary responsibility for ensuring compliance with the Act. Indeed, the associated costs of reporting should be reduced as all reporting going forward is to be completed electronically. This compliance with the amended regulation is not expected to have an adverse effect on employment.
