Download presentation
Presentation is loading. Please wait.
Published byAllen Potter Modified over 9 years ago
1
Webcast Series 2009 featuring... Operational Considerations on Regulatory Issues December 8, 2009
2
Welcome Introduction Craig Hollis Vice President and AML Officer
3
Meeting Logistics Keep Webcast to 60 minutes Ask a question Click on the Q&A window in the lower right hand portion of the screen Type your question into the dialog box Click the Send button Following today’s Webcast Redirected to a brief survey Link via email to access a recording of today’s Webcast If you experience any technical difficulties during the presentation Submit a question through the Q&A Contact WebEx Technical Support at 1 (866) 229-3239
4
Agenda Privacy Massachusetts Data Protection Law FTC Identify Theft Prevention (Red Flags Rule) Data Masking Summary Prospectus International ACH Transactions (“IAT”) New California Law: State Backup Withholding Joan Dowd Chief Compliance Officer Boston Financial Data Services Jeff Cook Director of Regulatory Compliance DST Systems
5
Massachusetts Data Protection Law Massachusetts Office of Consumer Affairs and Business Regulation Adopt Standards – September 2008 Original Law Exceeded Authority – Rigid Standards Multiple Public and Private Hearings Two Significant Revisions – August 2009 Final Regulation Issued – October 30, 2009 Background Compliance Date Extended to March 1, 2010
6
Massachusetts Data Protection Law Have a written information security program adhering to promulgated standards Comply with specified system security requirements Take “reasonable steps” to ensure third party service provider compliance For those maintaining or storing “personal information” of Massachusetts Residents: Requirements Compliance Date Extended to March 1, 2010
7
Massachusetts Data Protection Law Listened and responded to industry concerns Built more flexibility into the rules Still requires each business to have a comprehensive information security program but can now be tailored to the following: Size, scope, and type of business Available resources Amount of stored data Need for security and confidentiality of consumers and employee information Must take reasonable steps to ensure their third party providers protect shareholder information, but written certification is no longer required Revisions to the Law …
8
Massachusetts Data Protection Law Compared the revised MA law with our Security Program Periodically review our program to ensure compliance with regulations Annual training and awareness regarding information security Enhanced due diligence of third party providers/vendors Daily monitoring Use multi-factor authentication to provide information for phone inquiries Encrypt e-mail and secure FTP for file transmission Provide clients an overview of internal security policies Our Support Structure
9
FTC Red Flags Rule Develop and implement a written Identity Theft Prevention Program Designed to detect, prevent, and mitigate identity theft One definition of financial institution is one that has “transaction accounts” An account from which the account owner can direct payments to third parties Check-writing; debit cards; wires to third parties Written or telephone instructions directing money to third parties (or to bank accounts not on file) Requirements Enforcement Date Extended to June 1, 2010
10
Initial program provided in 2008; subsequent updates added Placed program on Boston Financial Compliance Corner or issued directly to clients Provide certification as part of our quarterly 38a-1 statement A file that contains SSN/TIN discrepancies from the CIP verification process to run against the IRS TIN Match Program A new report that contains only address discrepancies is being created with a procedural workflow to review and analyze for fraud, identity theft is in development FTC Red Flags Rule Our Support Structure Two Future Program Enhancements
11
Data Masking DST TA2000 3270, Desktop, SmartDesk, Vision, and FANWeb screens have been identified and provided to RCAG Steering Committee for review Reports – FANWeb, Vision, Voice, and DST reports have been identified and masking is ongoing DST Online Masking Projects Our Support Structure SSNs have been removed from transcripts, confirmation statements, and new account welcome kits Fund, Account and SSN have been removed from correspondence Encourage not returning original documents to shareholders as these may contain personal information Validate reports and screens during testing phase
12
Tax Form Masking Creates a pilot program allowing the masking of SSNs For tax years 2009 and 2010 on paper payee statements only IRS approval is not needed The notice is effective immediately; masking is voluntary Applies to paper payee statements (not electronic statements) Only applies to Form 1098 series, Form 1099 series, and Form 5498 series. Form W-2 is not included Does not apply to any information return filed with the IRS Applies to tax forms to individuals only (SSN format only) Does not apply to accounts registered as entities (those with EIN format of 99- 9999999) - paper payee statements for these accounts must include full TIN IRS Notice 2009-93 Requirements
13
IRS Notice 2009-93 Substitute and composite/combined payee statements are in scope The identifying number must be truncated by replacing the first five digits of the nine-digit number with asterisks or Xs For example, a social security number 123-45-6789 would appear on the paper payee statement as ***-**-6789 or XXX-XX-6789) Entire social security number for individuals and/or tax identification number for entities are still required on files sent to IRS The Notice is available at http://www.irs.gov/pub/irs-drop/n-09-93.pdf. The IRS is accepting comments until May 1, 2010, with regard to the current notice and go forward strategy Requirements
14
IRS Notice 2009-93 We will work to have the TA2000 programming ready for systematic masking the SSNs for tax year 2010 Distinguishing and separating the masking for SSN and EIN formats is necessary Interfering with the YE platform at this late date is not recommended Working with DST Output for a 2009 masking solution that will not involve changes to the YE platform Our Support Structure
15
Summary Prospectus
16
Three or four-page, “plain English” summary Updated annually Can be sent in lieu of statutory prospectus Must be incorporated into the statutory prospectus Must have Internet availability of compliance materials Summary Prospectus, statutory prospectus, SAI, and shareholder reports Must send statutory prospectus if requested Requirements 3/31/2009: SEC Effective Date (optional) 1/01/2010: Mandatory Filing
18
International ACH Transactions (“IAT”)
19
What is IAT? A new ACH transaction type, International ACH Transaction or “IAT” This new payment code and record layout will be used to identify an ACH credit or debit that is part of a payment transaction that involves a financial agency's office that is not located within the territorial jurisdiction of the US It allows for the identification and facilitation of IAT transactions It enables financial institutions to comply with OFAC obligations regarding international transactions The territorial jurisdiction of United States includes all 50 states, U.S. territories, U.S. Military bases and U.S. embassies in foreign countries Effective Date: September 18, 2009 Background
20
Incoming IATs - project complete Worked with Banks that have an interface with DST DST receives ACH file from bank that contains the new code and new record layout DST created a report that is executed daily that contains ACH transactions with IAT code and transaction information Operations receives the report and scans information against the OFAC database If there is not an OFAC hit, transaction is processed same day If there is an OFAC match the transaction is not processed and operations contact the originating bank Worked with banks who do not have an interface with DST Reviewed the bank reports to identify any IAT transactions Process follows that noted above International ACH Transactions (“IAT”) Our Support Structure
21
International ACH Transactions (“IAT”) Outgoing IATs - project underway All outgoing ACH transactions are run against the OFAC database A report that identifies outgoing systematic ACH transactions for accounts with foreign addresses is printed daily Currently DST is developing a systematic solution to include the IAT code and transaction information Boston Financial/DST are retaining reports until the process is automated If destination bank contacts Boston Financial/DST, transaction information will be provided Our Support Structure
22
International ACH Transactions (“IAT”) Systematic Solution for Outgoing IAT Flag outbound ACHs as IAT for all accounts with a foreign address based on country code Update the ACH layout with the new IAT layout Provide a front-end method for users to flag the account as IAT when setting up a new ACH Project was rated as highest priority by RCAG Steering Committee
23
New California Law State Backup Withholding
24
New California Law: State Backup Withholding There is a 7% state backup withholding for California residents on transactions that are subject to federal backup withholding (28%) Exclusions include: Those accounts or transactions not subject to federal backup withholding Money Market Funds – (not subject to withholding) Interest and dividend payments or release of loans Accounts with uncertified or missing TINs, and B-Notices, California backup withholding will apply to redemption and long-term capital gains only Accounts with C-Notices, California backup withholding applies only to long- term capital gains Signed into law on July 28, 2009 Effective Date: January 1, 2010 Requirements
25
New California Law State Backup Withholding We will continue the analysis of the Bill and work to begin identifying potential impacts to determine necessary long-term system changes Analyzing possible solutions Efforts involved in taking the withholding automatically on applicable payments, remitting withholding, and reporting to California residents Due to the short time-frame, a full systematic process will not be available on January 1, 2010 DST programming is developing a short-term solution that will involve minimal manual effort until the long-term systematic solution is available Our Support Structure
26
Craig Hollis Vice President, AML Officer, Boston Financial Questions
27
Thank You
Similar presentations
© 2024 SlidePlayer.com Inc.
All rights reserved.