Compliance Bulletin

Final Federal Garnishment Rule Could Cause Conflicts with Law Enforcement Agencies
July 1, 2013

The supplemental information accompanying the final rule on handling federal agency garnishments includes a clarification that the rule covers, among other things, law enforcement seizure orders. This potentially sets up conflicts between banks and law enforcement agencies seeking to seize assets held at banks under criminal seizure orders. On the one hand, enforcement agencies expect to freeze and/or seize assets immediately upon presentation of an order without notifying the account holder.

On the other hand, when presented with such an order, banks are expected to review the account to match the account holder, determine the presence of benefit funds and, if such funds exist, to give a detailed notice to the account holder, including that the assets are subject to an order. They have two days to do this. Furthermore, the bank is required to protect specific amounts from the order. Because it is unlikely that most law enforcement agencies are aware of the banks’ obligations, banks are encouraged to reach out to their local law enforcement agencies about the rule. CBA is working with statewide law enforcement umbrella organizations to do the same. See CBA’s Regulatory Compliance Bulletin and supplemental rule form letter for more information.  CBA wishes to thank Ted Kitada, senior company counsel with Wells Fargo Bank, for his guidance on this matter and for producing the supplemental memo.