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Banking Interpretations

NYSBL 105(1)

September 5, 2007

[---]
 
Re: [---] Third-Party Cash Vault Facility
 
Dear Mr. [---]:
 
Your letter dated July 2, 2007, to the attention of Manual Kursky, Deputy Superintendent, has been referred to me for reply. In the letter, you requested the opinion, of the New York State Banking Department (the "Department") as to whether [---] (“[---]NA”) is required to submit a domestic branch application in order to perform certain proposed cash pickup and vault services for existing customers in states outside of [---]NA's licensed branch network. In our opinion, based on the information you provided and subject to the conditions noted below, the answer is "no," a domestic branch application is not required.

In your letter you indicated that [---]NA wishes to provide the banking services through third-party cash vault facilities for [---]NA’s Existing Money Service Business ("MSB") customers in states outside of [---]NA's licensed branch network where the MSB customers operate check cashing facilities.
 
In order to provide the MSB's with banking services, you indicated that [---]NA would contract with third party independent contractors (such as Brink’s or Metavante) and use their cash vault facilities in states outside of the [---]NA  branch region. [---]NA will not maintain a physical “brick and mortar” presence in any state where cash vault facility is located and no employees of [---]NA will be on site at any cash vault facility.
 
Essentially, the third-party cash vault facility would provide two main services to MSB customers: (1) receipt of daily bank deposits and (2) supply of coin and currency. The MSB would contract with an armored car carrier, which would transport the MSB's bank deposits and pick up its supply of coin and currency to and from the cash vault facility. Additionally, the MSB would be required to sign all [---]NA  bank forms to open a deposit account, including a contract with [---]NA to use the assigned third party cash vault facility.

Under [---]NA's contract with cash vault facility, it would accept the daily bank deposits and forward them to [---]NA, which would verify and process the deposit using the MSB's established bank account and processed following normal [---]NA bank procedures.

Additionally, [---]NA will not store or maintain any coin or currency at the cash vault facility, which will provide the MSB (through the MSB's armored carrier) with specified amounts of coin and currency for the MSB's daily check cashing business. The daily supply of coin and currency will be processed by the cash vault facility as a withdrawal of funds and charged as a debit to the MSB's bank account at [---]NA.

Consistent with prior interpretations of New York Banking Law ("NYBL") Section 105(1)(a) allowing a New York State chartered bank to use an unaffiliated armored car service to pick up customer deposits without establishing a branch, it is the opinion of the Department that the establishment of branch or a limited branch at the cash vault facility here is not required under the circumstances described above, provided that the cash and check pickup activities conform to the following conditions:
  1. the bank's customer and the courier service enter into an agreement under which the courier acts as the customer's agent in picking up the deposit;
  2. the courier or the customer, but not the bank, is responsible at all times for the funds while the funds are in transit; and
  3. the deposits collected are not considered to have been received by the bank until delivered by an independent courier service to an independent service bureau, correspondent bank, or other permissible facility, such as a back office facility.

Regarding the coin or currency activities, it is the opinion of the Department that these activities, under the circumstances described above, should be permitted without a branch license for the cash vault facility. This opinion is consistent with the position of the Office of the Comptroller of the Currency ("OCC") and the Department has previously adopted this view, which puts New York State chartered banks on equal footing with national banks in regard to such activities. (See, for example, OCC Interpretive Letter No. 796 - August 18, 1997.)

The opinion rendered herein is based on the facts set forth in your letter, may not be applicable to any other situation and is limited to the laws of the State of New York. You may wish to independently determine what issues, if any, may be present with respect to the laws of the state(s) in which the cash pickup and vault services are to be provided.

I trust that this letter is responsive to your inquiry.

Very truly yours,

Alan Weinberg
Assistant Counsel

cc: R. Mengani

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