Industry Letters

The Record Retention Requirements of the Federal Electronic Signatures in Global and National Commerce Act

April 30, 2001

TO THE CHIEF EXECUTIVE OFFICER OF THE INSTITUTION ADDRESSED

The purpose of this guidance letter is to clarify the New York State Banking Department's ("Department") position on the record retention requirements of the federal Electronic Signatures in Global and National Commerce Act ("E-Sign" or "the act").

E-Sign was enacted on June 30, 2000. The act is intended to eliminate legal barriers to the use of electronic commerce by giving documents stored or signed electronically the same force and effect as more traditional paper documents. The act is broken down into two basic parts: 1) electronic signatures, and 2) electronic record retention. As was previously stated, this letter will deal only with the record retention provisions of the E-Sign law.

Under the record retention provisions of E-Sign, regulatory agencies are required to remove all impediments to the use of electronic records in interstate or foreign commercial transactions for their regulated entities or licensees. The act provides a framework for the use and retention of electronic records in three basic steps. First, it generally recognizes that electronic records are as legally effective, valid and enforceable as paper writings, with certain exceptions. Second, it recognizes that laws should be neutral as to the specific technologies and means used to create such records and signatures. And third, it requires that the legal effect, validity or enforceability of a document may be denied if it is not retained in a manner that accurately reproduces the document and is accessible to the parties of interest.

On February 28, 2001 the Department published a public notice in the State Register announcing its consideration of rules relative to the retention of electronic records. Subsequently, the Department performed a review of its rules, regulations and guidelines, and determined that there are no impediments to Department regulated entities retaining their records in an electronic format, and therefore no rulemaking is necessary. Moreover, in keeping with the spirit of Governor Pataki's "Government Without Walls" initiative, the Department encourages the use of electronic record keeping.

Your institution's record retention systems, controls and practices will be reviewed by New York State Banking Department examiners as part of their overall supervisory examination. Consistent with the best practices for internal controls, the Department expects that all supervised institutions ensure the integrity, authenticity and accessibility of the records that they are required to retain. Should you have any questions regarding this topic, please contact Liam McLaughlin, Esq., Assistant Director of Banking Research and Statistics, at (212) 618-6986 or by e-mail at [email protected].

Very truly yours,

Elizabeth McCaul
Superintendent of Banks