Safe Deposit 60 Steps to Properly Handle Delinquent or Abandoned Boxes (How to Minimize Your UNLIMITED Liability)
Independent Community Bankers of America September 12, 2018 10:00 AM – 12:00 PM (Central)
Presented by: Dave McGuinn President Safe Deposit Specialists Houston, Texas www.sdspec.com
www.sdspec.com 1 Introduction Speaker David P. McGuinn, president of Safe Deposit Specialists, speaks nationwide for numerous financial associations. He is a former Senior Vice President and Cashier with over 45 years of financial experience and is often referred to nationwide as the safe deposit GURU. As a consultant he has trained over 350,000 safe deposit personnel since 1969 in programs offered in all 50 states. Dave is past president of the American Institute of Banking and the American, Texas and Houston Safe Deposit Associations. He has written numerous financial articles and has been interviewed by The New York Times, Wall Street Journal, Money Magazine, New York Magazine, Fortune Magazine, Washington Post, Associated Press, AARP, Bottom Line Financial, National Public Radio (NPR), British Broadcasting Corp. (BBC), Inside Edition, Crime Watch, Court TV, CUNA, FDIC, CNN, Fox, CBS, ABC, NBC Nightly News and many other financial publications regarding current safe deposit issues. He was also a featured speaker for the American Bankers Association, Independent Community Bankers of America and National Association of Federal Credit Unions and over 100 other nationwide financial associations. McGuinn has created numerous training videos, DVDs, policy and procedure manuals and many other unique safe deposit compliance products. His safe deposit resources are often considered the accepted standard for the financial industry.
www.sdspec.com 2 Overview 1. Drilled and Abandoned Box ______2. State & Federal Regulatory Requirements 3. 22 Box ______Procedures 4. 18 Abandoned Property Questions 5. 21 ______Item Descriptions 6. Box Drilling Procedures Test 7. Unusual Items ______in Drilled Boxes 8. Question and Answer Session(s)
www.sdspec.com 3 Past Due Box Claims
Poor Procedures Create Significant Lawsuits Nationwide Very Poor Safekeeping
Lawsuit History: Texas bank Lawsuit filed: Several years ago Jury trial (found guilty): $187,000.00 Incorrect Procedures: 1. Box rent past due and ______mailed. 2. Box drilled and contents inventoried. 3. Contents secured in a ______envelope. 4. Envelope put into a file cabinet located in the lobby. 5. 18 ______later renter comes in and pays charges. 6. Employee goes to file cabinet and removes envelope. 7. Renter opens ______and screams: “These are not my box contents. I had a valuable coin collection in my box and someone has switched my coins and replaced them with junk!” 8. Lawsuit filed and jury awards $107,000 in damages. 9. Bank paid additional ______fees totaling $80,000.00.
www.sdspec.com 5 More Poor Safekeeping
Lawsuit History: Mississippi Credit Union Lawsuit filed: Several years ago Jury trial: Lawsuit Status Unknown Incorrect Procedures: 1. Box rent ______due and notices mailed. 2. Box drilled and contents inventoried. 3. Contents put into a file cabinet in the ______. 4. Hurricane floods credit union. 5. File cabinet ______out of credit union and is lost. 6. Box contents and original inventory forms are gone. 7. Renter comes back and wants her box ______. 8. She claims jewelry and coin collection are missing. 9. Litigation or settlement offer is ______.
www.sdspec.com 6 Lawsuit History: Lawsuit filed: Several years ago Box Settled out of court: (Undisclosed amount) Incorrect Procedures: Drilling 1. Numerous branches were ______. 2. Hundreds of boxes relocated. Lawsuit 3. All boxes merged into one ______location. 4. Poor recordkeeping and documentation. 5. Contracts and ______records misplaced. 6. Computer billing and history records lost. $5,500,000.00 7. Many box ______were changed. 8. Safe deposit box audit performed. Bethesda, 9. 400 mystery boxes identified and ______. 10. Poor drilling and dual control procedures. Maryland 11. Very sloppy box content ______. 12. Inventories identified box content owners . 13. Property owners were ______notified. 14. Incorrect safekeeping of property. 15. Very poor employee ______.
www.sdspec.com 7 Box Relocation Procedures Manual
This valuable publication contains sample box renter notification letters with recommended mailing time schedules, security requirements, bid forms for box relocation vendors, insurance recommendations, chain of custody requirements and forms, sample box relocation horror stories and much more. These recommended procedures are now the accepted standard for the financial industry.
www.sdspec.com 8 BOX RELOCATIONS RECOMMENDED PROCEDURE:
1. Place a hard ______egg inside a vacant box in each relocated section.
2. Carefully document all box numbers where these ______are located.
3. After the move, remove the eggs under ______control and document that they were examined and not cracked.
4. If a box renter claims that his property was ______during the relocation this procedure will provide a valuable defense for your institution.
IMPORTANT: REMOVE ALL EGGS. IF YOU DON’T, THE ______WILL BE VERY ANNOYING A FEW MONTHS LATER.
www.sdspec.com 9 Lawsuit History: Box Lawsuit filed: Several years ago Drilling Trial date: (Pending) Lawsuit Incorrect Procedures: 1. Box was ______by mistake in July. 2. Renter was never provided drill notification. 3. Property inventory identified box ______. $4,500,000.00 4. Renter was not notified immediately. 5. Renter finally ______in November. Las Vegas, 6. Unknown locksmith’s name on inventory. 7. No bank employee signed inventory ______. Nevada 8. Very poor dual control procedures. 9. Box ______inventory was very sloppy. 10. Incorrect safekeeping of property. 11. Bank told renter she must ______to recover.
www.sdspec.com 10 Recent CBS Ann Werner Investigates, San Francisco, CA. Lawsuits filed: (Status unknown) TV Special Disappearance Claim #1: (Two disappearance claims) 1. Bank located in El Cerrito, California 2. Customer has rented box for over _____years. All Drilled Box 3. Box renter requested access to her box. 4. Box had been ______and all contents gone. Contents Missing 5. Valuable family jewelry missing. (over 8 carats) and 6. Bank’s response: “Sorry. . . your ______is gone”. Disappearance Claim #2: 27 Carat 1. Bank located in San Francisco, California 2. 27 ______sapphire pendant disappeared. Sapphire Stone 3. Sapphire brought to U.S. from Cambodia. Disappeared 4. Sapphire pendant worth over $______,000.00. 5. Bank’s response – “Not responsible for loss”. (Both California Mega Banks)
www.sdspec.com 11 Other Recent Losses
Missouri, California, Florida & Oklahoma “Recent" Disappearance Claims
1. St Louis, MO. - Box opened and all contents and the ______were missing. Over $50,000 in jewelry and cash were stolen. Bank told renter that they take no responsibility for this loss. CBS featured loss on TV.
2. Palo Alto, CA. - Apple Computer former ______box drilled. Contents and records disappear. CBS featured claim as a safe deposit TV special.
3. Miami FL. – Renter opens box and discovers all contents missing. A broken safe deposit box ______was found in the box. This also happened to another renter at a different branch of this same bank.
4. Purcell, OK. - Past due box drilled. $1,500,000.00 coins, jewelry and family heirloom documents given to unauthorized person. Bank ______with box renter for an undisclosed amount.
www.sdspec.com 13 Wrong Past Due Box Drilled
Now, What Do You Do?
Please write your solution below: ______
www.sdspec.com 14 State Regulations
Most States Have Past Due and Unclaimed Property Regulations Every State is Different
www.sdspec.com 16 Regulatory/Compliance Manual
Safe Deposit Manuals Contain: ➢ ______State” Specific Regulations. ➢ Federal Safe Deposit Regulations: (Updated ______) ❑ Bank Secrecy Act ❑ USA Patriot Act ❑ Suspicious Activity Reports ❑ Bank Protection Act ❑ Americans With Disabilities Act ❑ SCRA Past Due Box Regulation ➢ Examination Requirements: ❑ Federal Deposit Insurance Corp. ❑ Comptroller of the Currency ❑ National Credit Union Admin. ➢ Recommended ______Procedures.
www.sdspec.com 17 Federal Regulation
Servicemembers Civil Relief Act (SCRA) Servicemembers Civil Relief Act
1. The American Bankers Association and examiners and are now requiring past due safe deposit box ______compliance. 2. Service member’s past due box ______be drilled without a court order. 3. Past due final drill letters should ask any service member or dependent (spouse or child) to contact your institution. 4. Must verify if renter is on active duty service on SCRA ______. https://scra.dmdc.osd.mil/ 5. Financial institutions are now postponing the past due box drilling if they are aware of a renter’s active duty.
www.sdspec.com 19 2016 SCRA COURT RULING Loss History: 1. Wells Fargo Bank was fined $___ million for SCRA violations.
2. 413 service member ______were seized from 2008 to 2015.
3. Cars were repossessed without a court order.
4. Bank must pay $__,000 per car, car equity, accrued interest and costs for consumer’s credit repair.
www.sdspec.com 20 Delinquent Boxes
Recommended Procedures For Drilling Past Due Boxes Drilling Delinquent Boxes
➢Restrict future box ______until rent is paid.
Cautions Tabs Key Hole Signals
www.sdspec.com 22 Drilling Boxes (Continued)
➢Mail at least _____delinquent box rent notices.
1. Reminder Notice (One ______after due date).
2. Past Due Notice (One ______after due date).
www.sdspec.com 23 Drilling Boxes (Continued)
➢Have you ever ______a past due payment to a renter’s deposit account? r Yes r No
➢Do you have a “Right of ______” clause in your safe deposit contract? r Yes r No
www.sdspec.com 24 Drilling Boxes (Continued)
➢Wait ______months before taking legal action.
➢Give renter ______days notice.
www.sdspec.com 25 Drilling Boxes (Continued)
➢Use carefully worded language in ______legal notice.
➢Mail final legal notice to renter’s ______known address.
www.sdspec.com 26 Drilling Boxes (Continued)
➢Mail notice ______, return receipt requested.
➢Officer should be ______during drilling.
www.sdspec.com 27 Drilling Boxes (Continued)
➢Another employee or officer should ______the box drilling.
➢Inventory drilled box ______carefully.
www.sdspec.com 28 Drilling Boxes (Continued) ➢ What action should be taken if dangerous or ______box contents are found? ❑ Firearms ❑ Drugs ❑ Explosives ❑ Pornography (See following pages)
www.sdspec.com 29 FIREARMS FOUND IN A BOX
What should you do now?
1. Handle gun with ______. 2. Contact your Security Officer. 3. Examine gun with ______gloves. 4. Carefully preserve fingerprints. 5. Determine if gun is ______. 6. Place gun in a clear plastic bag. 7. Contact local ______department. 8. Follow your State’s Unclaimed Property regulation.
www.sdspec.com 30 DRUGS FOUND IN A BOX What should you do now?
1. Handle ______with care. 2. Contact your Security Officer. 3. Examine drugs with rubber ______. 4. Be careful handling hypodermic needles. 5. Carefully preserve ______. 6. Determine if drugs could be illegal. 7. Place drugs in a clear ______bag. 8. Contact local police department. 9. Follow your State’s ______Property regulation.
www.sdspec.com 31 EXPOSIVES FOUND IN A BOX What should you do now?
1. Contact your ______Officer.
2. Don’t touch or remove explosives.
3. Evacuate your ______immediately.
4. Contact local bomb squad.
5. Wait outside facility until the ______squad arrives.
6. Describe the bomb and provide directions to your vault location.
www.sdspec.com 32 PORNOGRAPHY FOUND IN A BOX
What should you do now?
1. Examine all pictures for possible ______pornography.
2. Look at all written documents for possible terrorist activity.
3. Read all notations and ______on VHS tapes for suspicious content.
4. Examine all DVDs for notations of illegal or criminal activity.
www.sdspec.com 33 Drilling Boxes (Continued)
➢ Should we _____and record the box inventory process? ______
www.sdspec.com 34 Drilling Boxes (Continued) ➢Notarize your ______Affidavit.
www.sdspec.com 35 Drilling Boxes (Continued) ➢Secure in ______resistant envelope.
www.sdspec.com 36 Drilling Boxes (Continued)
➢Place drilled box content in safekeeping under ______control.
➢Hold drilled box contents until all ______are collected.
www.sdspec.com 37 Drilling Boxes (Continued)
➢What ______should you collect? ❑______due rent ❑Postage ❑______fees ❑Tamper resistant envelope ❑______fee ❑Storage/safekeeping ❑______
www.sdspec.com 38 Drilling Boxes (Continued)
➢Report box renter to a ______reporting agency.
(This option is available in ______major cities)
www.sdspec.com 39 Drilling Boxes (Continued)
➢Are drilled box contents _____ after ____ year(s)? r Yes r No
➢Report abandoned property after ____ years.
www.sdspec.com 40 Question Break
Any questions, comments or feedback?
www.sdspec.com 41 Abandoned Property
Most Frequently Asked Abandoned Property Questions Most Frequently Asked Questions
1. If a renter has not ➢ ______entered his box in over ______year is this box ______considered abandoned? ______
2. Can we ______these ➢ ______past due boxes to the ______state before they are ______drilled? ______
www.sdspec.com 43 Frequently Asked Questions (Continued)
3. When are drilled box ➢ ______contents ______to the Abandoned ______Property Department? ______
4. When are abandoned ➢ ______contents ______to ______the Abandoned ______Property Department? ______
www.sdspec.com 44 Frequently Asked Questions (Continued) 5. If we find currency or ➢ ______coins in boxes can we ______use it to ______our collection expenses? ______
www.sdspec.com 45 Frequently Asked Questions (Continued) 6. Can abandoned property ➢ ______be ______to recover our ______past due fees and ______collection expenses? ______
www.sdspec.com 46 Frequently Asked Questions (Continued) 7. Can inventoried box ➢ ______property with “No ______Monetary Value” be ______? ______
www.sdspec.com 47 Frequently Asked Questions (Continued) 8. If not destroyed, how ➢ ______long must “No Monetary ______Value” property be ______? ______
www.sdspec.com 48 Frequently Asked Questions (Continued) 9. Are financial institutions ➢ ______required to sell box ______contents and ______the ______proceeds to the state? ______
www.sdspec.com 49 Frequently Asked Questions (Continued) 10. If your state does not ➢ ______accept these abandoned ______items can they be ______to a ______charitable organization?
www.sdspec.com 50 Frequently Asked Questions (Continued) 11. What is the best and ➢ ______safest way to ______abandoned box ______contents to the state? ______
www.sdspec.com 51 Frequently Asked Questions (Continued) 12. What does the ______➢ ______do with these ______abandoned contents ______that they receive? ______
www.sdspec.com 52 Frequently Asked Questions (Continued) 13. If box contents are ➢ ______sold at an ______what does the state do ______with the proceeds? ______
www.sdspec.com 53 Frequently Asked Questions (Continued) 14. How does a box renter ➢ ______his abandoned ______contents from the ______state? ______
www.sdspec.com 54 Frequently Asked Questions (Continued) 15. How long must records ➢ ______be ______if a ______renter’s contents are ______remitted to the state? ______
www.sdspec.com 55 Frequently Asked Questions (Continued)
16. Are there any fines or ➢ ______if our ______state’s unclaimed ______property laws are not ______followed?
www.sdspec.com 56 Frequently Asked Questions (Continued)
17. If property is ______in ➢ ______a viewing room, the ______vault or in our facility ______should it be treated as ______abandoned property?
www.sdspec.com 57 Frequently Asked Questions (Continued) 18. Do state unclaimed ➢ ______property regulations ______specify how to ______box contents on an ______inventory form?
(See Next Section)
www.sdspec.com 58 Abandoned Property
How to Inventory Drilled Box Contents How to Inventory Box Contents
How should the following items be listed? (SAMPLE DESCRIPTIONS)
1. U. S. Currency ➢ List denominations: 13 - $5.00, 5 - $20.00, 18 - $50.00 and 30 - $100.00 bills. (Various issue ______from 1967-1998).
➢ 10 - 4”x 6” ______colored bars and 20 2. Gold/Silver small white colored coins. (Various issue dates from 1956-1999).
➢ 1 white metal ring with six blue stones, 3 3. Jewelry yellow metal necklaces and 1 yellow metal watch with the word ______on the face.
4. Gem Stones ➢ 3 white round stones, 4 red round stones and 7 ______rectangular stones.
www.sdspec.com 60 Inventory Box Contents (continued)
(SAMPLE DESCRIPTIONS)
5. Stocks & Securities ➢ Owner’s name, company name, issue date, certificate ______and number of shares.
➢ List U.S. Series E Bonds: 10 - $100.00, 25 6. Savings Bonds - $75.00 and 32 – $100.00 bonds. (List various bond ______dates).
7. Stamp Collection ➢ 3 blue stamp collection books containing U.S. stamps with various issue dates and ______amounts.
8. Baseball Cards ➢ 20 baseball cards wrapped in protective cellophane with pictures of various ______and issue dates.
www.sdspec.com 61 Inventory Box Contents (continued)
(SAMPLE DESCRIPTIONS)
➢ 1 coin collection book containing 50 9. Coin Collections Liberty ______with dates ranging from 1946-1975 and 150 rolled $1.00 coins. (Various dates ranging from 1948 – 1967).
10. Foreign Coins & ➢ List coin and currency by country of ______, monetary amounts and issue Currency dates.
➢ Owner’s names, ______representative 11. Will & Living Trust and issue date.
➢ Owner’s name, name of the appointed 12. Power of Attorney power of ______and issue date.
www.sdspec.com 62 Inventory Box Contents (continued)
(SAMPLE DESCRIPTIONS)
13. Funeral Contracts ➢ Owner’s name, name of ______home or mortuary and date of purchase.
➢ Owner’s name, cemetery name and 14. Cemetery Deed address, ______number and purchase date.
15. Birth Certificates ➢ Name on certificate and date of ______.
16. Death Certificates ➢ Name on certificate and date of ______.
www.sdspec.com 63 Inventory Box Contents (continued) (SAMPLE DESCRIPTIONS) 17. Marriage Certificates ➢ Both ______on certificate and issue date.
➢ Name of insured, insurance amount , 18. Life Insurance Policy ______number and name of beneficiary.
➢ Owner’s name, ______description 19. Real Estate Deeds and issue date.
➢ Manufacture’s name, model, caliber, type 20. Weapons and ______number. Also indicate if the gun is loaded or unloaded.
➢ Various miscellaneous documents with 21. Photos, papers, etc. no apparent ______value.
www.sdspec.com 64 Safe Deposit Liability Test
Evaluate Your Current Forms and Procedures Test Your Procedures 1. Do you have a written procedure that 6. Are your box drilling and unclaimed restricts access to all delinquent box property procedures in compliance with renters? your state and federal regulations?
2. Does your current procedures 7. Are all drilled box contents properly manual contain delinquent box and stored in tamper resistant envelopes in a unclaimed property regulations? secure dual controlled area?
3. Does your contract have a clear 8. Do you have written procedures for statement covering past due rent and reporting abandoned property? the recovery of collection expenses? 9. Do you perform all past due box 4. Are your safe deposit employees and inventories on a proper “Box Inventory supervisors properly trained to Affidavit”? perform past due box drillings? 10. Do you prohibit service technicians from 5. Are your box drilling and safekeeping staying in your vault alone when they procedures audited annually? drill past due boxes? Number of “Yes” Answers: _____ Grade: _____
www.sdspec.com 66 Safe Deposit Report Card
Page #1
View larger copy at www.sdspec.com Click on “News Article” link
www.sdspec.com 67 Safe Deposit Report Card
Page #2
View larger copy at www.sdspec.com Click on “News Article” link
www.sdspec.com 68 Audit/Compliance Manual
www.sdspec.com 69 Question Break
Any questions, comments or feedback?
www.sdspec.com 70 Most Unusual Box Contents
Reprinted from: London Daily Telegraph
Bank safe deposit box raises a STINK
Staffers report finding MUMMIFIED pygmy; Owner says NO!
www.sdspec.com 71 Safe Deposit Products and Services (Visit our web site at www.sdspec.com for information on the following items)
Safe Deposit Manuals Safe Deposit Training DVDs (on CD) O Regulatory/Compliance (Updated 2018) O Liability and Legal Issues O Policy &Procedures Handbook (on CD) (Updated 2012) O USA PATRIOT Act & SAR Compliance O Procedures – 10 Keys to Improvement O Audit Compliance (on CD) O Safe Deposit Fundamentals O Box Relocation O DVD Discount Packages – (Save 10% to 50%) O Disaster Recovery (Flood Damage - on CD) O Disaster Recovery (Fire Damage - on CD) Other Products and Services O Self Service Boxes (Pros and Cons) O In-house Audit & Contract Review Safe Deposit Brochures & Forms O Safe Deposit “Question and Answer” HOTLINE O Question and Answer Brochure O In-house Training Programs (live, web or audio) O Box Content Inventory Form O Community Meeting Presentations O Forced Box Entry Authorization O Expert Witness Litigation Services O Non-Renter Vault Entry Record O Ultimate Protection (Marketing Booklet) O Opening a Private Safe Deposit Facility O No Insurance Disclosure Kit O Vault Equipment and Service O Vault “Access Ticket” System Contact Information: O New Facility “Start-up” Forms Kit David P. McGuinn, President O Tamper Resistant Envelopes O PATRIOT Act “Identification Required” Notice Safe Deposit Specialists O Business Resolution and Authorization P.O. Box 40026 O Box Inventory Affidavit Houston, TX 77240-0026 O Key (snap & locking) Wallets (713) 937-9929 O Privacy Room Signs E-mail: [email protected] Web site: www.sdspec.com
www.sdspec.com 72 Safe Deposit “Things To Do”
www.sdspec.com 73