According to a Federal Deposit Insurance Corporation survey of depository institutions, approximately 38 percent of institutions offer some form of remote deposit capture (RDC) service.  RDC enables a customer to deposit checks and other items electronically through the internet or the customer’s mobile phone.  The service was first authorized in 2004 when Congress passed the “Check Clearing for the 21st Century Act.”  RDC may help an institution expand its geographic reach by offering deposit services to customers who are not located nearby one of the institution’s branches or other offices.  However, the federal banking agencies are mindful of the risks involved with RDC services, including the need to protect customers’ nonpublic personal information, and have stressed sound risk management practices tailored to RDC.

The federal banking agencies recommend that institutions address RDC services in their existing risk assessments, implement physical and logical access controls over RDC data and services, impose risk-based guidelines to determine which customers should be eligible for use of the service, offer RDC training for customers, and consider applicable laws and regulations such as the Check Clearing for the 21st Century Act, Federal Reserve Regulation CC and Regulation J, applicable state laws and regulations, and other guidance.  Risk management for RDC should also address the use of third-party vendors and service providers.  According to the survey, 68 percent of institutions that offer RDC rely on either a third-party program or third-party software or hardware owned by the third-party.  For this reason, institutions should pay close attention to third-party risk in providing RDC services. 

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Photo of Mike Nonaka Mike Nonaka

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and…

Michael Nonaka is co-chair of the Financial Services Group and advises banks, financial services providers, fintech companies, and commercial companies on a broad range of compliance, enforcement, transactional, and legislative matters.

He specializes in providing advice relating to federal and state licensing and applications matters for banks and other financial institutions, the development of partnerships and platforms to provide innovative financial products and services, and a broad range of compliance areas such as anti-money laundering, financial privacy, cybersecurity, and consumer protection. He also works closely with banks and their directors and senior leadership teams on sensitive supervisory and strategic matters.

Mike plays an active role in the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as bitcoin and other cryptocurrencies, blockchain, big data, cloud computing, same day payments, and online lending. He has assisted numerous banks and fintech companies with the launch of innovative deposit and loan products, technology services, and cryptocurrency-related products and services.

Mike has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.