Banking Interpretations

November 1, 2001 

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Re: Deposit Related Activities

Dear [          ]:

Your letter of October 17, 2001 addressed to Deputy Superintendent and Counsel [     ] seeking clarification of Section 105 of the New York Banking Law has been referred to me for reply.  Section 105 provides, in brief, that "[n]o bank or trust company or officer, director, agent or employee thereof, shall transact any part of its usual business of banking at any place other than its principal office…[o]r branch office at any location in the state…" In your letter you query whether under Section 105 a deposit could be considered "received" by a New York State-chartered bank when said deposit is delivered by an independent courier to a third party service bureau, correspondent bank or other permissible facility such as a back office facility.

As you are aware, the Banking Department currently interprets Section 105 to permit a State-chartered bank to collect deposits at the premises of a customer through a third-party courier providing the following conditions are met: (1) the bank's customer and courier enter into a written agreement whereby the courier must be the agent of the bank's customer; (2) the courier or the customer, but not the bank, must be responsible at all times for the funds while the funds are in transit; and (3) the deposits collected are not considered as having been received by the bank until they are actually delivered to the teller (or the wire transfer received) at the bank's premises.

The Department's position, until recently, was parallel to that of the Office of the Comptroller of the Currency ("OCC") in regard to national banks.  The OCC, however, through a series of recent Interpretive Opinions and a revised Interpretive Ruling, has revised its policy and now permits national banks to engage in the activity you seek for State-chartered banks.

Under Interpretive Letter No. 639, January 14, 1994,[1] the OCC opined that it was legally permissible for a national bank to receive or process check deposits at a service bureau which received such deposits from the bank's escrow company customers and which were delivered by a messenger service.  The items were not treated as "deposited" when they were picked up by the messenger service, but were credited to the customer's account when they were received by the service bureau.

The OCC, in revised Interpretive Ruling 12 C.F.R. § 7.1012[2], ruled that pursuant to 12 U.S.C. §24(Seventh) a national bank and its customers may use a third-party messenger service to pick up from, and deliver to, customers items that relate to branching functions within the meaning of 12 U.S.C. §36(j) without regard to the branching limitations set forth in 12 U.S.C. §36 provided the messenger service acts as the agent for the customer when the items are in transit and the bank does not deem items intended for deposit to be deposited until credited to the customer's account at an established bank office or other permissible nonbranch facility (emphasis added).  In addition, the OCC opined that the bank deemed items representing withdrawals to be paid when the items are given to the messenger service.

In Interpretive Letter No. 796, August 18, 1997, the OCC opined that a national bank could establish a correspondent account at an unaffiliated bank in a different state and arrange for that institution to provide cash vault services for the bank's customers through the correspondent bank and the use of a third-party messenger service. The OCC determined that the locations to which the items for deposits would be delivered would not be branches "established" by the bank, but would rather be locations belonging to independent third parties or correspondent banks on the basis that, rather than branching, the arrangement between the bank and the correspondent bank was properly characterized as a correspondent service, which the OCC had long recognized as including deposit-related services. 

The Banking Department finds that the principles stated in the foregoing OCC Interpretations persuasive.  Thus, the Department finds that the proposed deposit related activities would not result in unauthorized banking by New York State-chartered banks, but rather, that the proposed activities would be a logical extension of those currently sanctioned between State-chartered banks and independent courier services.  Accordingly, the Department concludes that a State-chartered bank may consider customer deposits as "received" by the bank when said deposits are delivered by an independent courier service to an independent service bureau, correspondent bank, or other permissible facility such as a back office facility.

I trust the following is responsive to your query.  Should you have any additional questions please feel free to contact me at [                           ].     

Sincerely yours,

Jay Kane
Assistant Counsel