INDEPENDENT COMMUNITY BANKERS OF AMERICA
July
23, 2004
Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Office of the Comptroller of the Currency
250 E Street, S.W.
Public Reference Room, Mail Stop 1—5
Washington, DC 20219
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G Street, N.W.
Washington, DC 20552
Attention No. 2004-26
To Whom It May Concern:
The Independent Community Bankers of America (ICBA)1 appreciates
the opportunity to comment on the proposed regulations for disposal
of consumer information under Section 216 of the Fair and Accurate
Credit Transactions Act of 2003.
Background
As required by the Fair and Accurate Credit Transactions Act (FACTA), the federal
bank regulators propose to amend current guidelines for safeguarding customer
information. Currently, rules under the Gramm-Leach-Bliley Act require banks
to maintain written policies and procedures to ensure the security and confidentiality
of customer information, including proper disposal. FACTA, designed to protect
consumers from identity theft and other fraud, requires the agencies to issue
a rule on proper disposal of consumer records as well.
First, the proposal defines consumer information as any record about
an individual, whether in paper, electronic or other form, that is
a consumer report or derived from a consumer report and that is maintained
or otherwise possessed by or on behalf of the financial institution
for a business purpose. The proposed definition would also include
a compilation of such records. It would not include information that
cannot be directly tied to a specific consumer, such as compiled
statistical analysis.
Second, the proposed regulation
would add a new objective for the “proper
disposal” of consumer information, requiring banks to dispose
consumer information in a manner consistent with the disposal of
customer information and to contractually require its service providers
to develop appropriate measures for the proper disposal of this information.
The Agencies propose banks would be given one year after the rule
is finalized to comply with this part of the rule.
Customer versus Consumer Information
As surmised by the banking agencies, most community banks dispose
of customer and consumer information in the same manner and do
not distinguish between the two. Furthermore, as required by existing
regulatory guidelines, community banks have established procedures
to dispose of paper and electronic files. Often, community banks
employ the services of a third party vendor to ensure proper disposal
of obsolete records. However, since community banks already dispose
of consumer information in the same way they dispose of customer
information, the new regulation as a practical matter, will impose
little additional burden.
Proper Disposal
The proposal states that banks should design a security program that “ensures
the proper disposal of consumer information in a manner consistent
with the disposal of customer information.” The ICBA encourages
the agencies to further clarify the term “proper disposal.” Disposal
of paper documents and records is relatively easy to define. Disposal
could consist of shredding, burning or any other method of destruction
of paper records. However, what constitutes the proper disposal of
electronic records is much more difficult to define. The FFIEC Handbook
has some information on disposal of electronic documentation, which
would be helpful to cross reference in this rule. It is important
that it be not left to individual examiners to assess what meets
the standard and whether or not disposal has been carried out to
meet the regulatory requirements.
Additionally, ICBA believes community banks can modify existing
agreements with document disposal providers within the proposed one-year
time frame.
Thank you for the opportunity to comment. If you need additional
information or have any questions, please contact me.
Sincerely,
Katherine Bragan
Associate Director of Accounting and Lending Policy
__________________________________________
1 ICBA represents the largest constituency of community
banks in the nation and is dedicated exclusively to protecting the
interests of the community banking industry. We aggregate the power
of our members to provide a voice for community banking interests in
Washington, resources to enhance community bank education and marketability,
and profitability options to help community banks compete in an ever-changing
marketplace.
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