Financial institutions face some of the most stringent rules and regulations regarding retaining and shredding records and documents. Banks and other financial businesses are governed by laws like the Gramm-Leach-Bailey Act (GLBA) and the Fair and Accurate Credit Transaction Act (FACTA) to ensure the safety of customer information. The consequences for violating these rules are considerable.
Financial Record Retention Policies
Unfortunately, record retention policies for financial institutions are scattered across many statues and regulations, making it all too easy to overlook something. We have compiled several common banking laws that have specific document retention requirements that all financial institutions should take note of; however, it is important to conduct your own research as these laws may change over time.
- Equal Credit Opportunity Act: This act requires loan application documents to be stored for 25 months after the bank notifies the applicant of the action taking.
- Truth in Lending Act & Truth in Savings Act: Both acts require banks to retain evidence of compliance for 2 years after date disclosures are given, or action is taken.
- Electronic Funds Transfer Act: Financial institutions must retain evidence of compliance for two years after date disclosures are required to be given or action is required to be taken.
- Bank Secrecy Act: Documents must be retained for 5 years under the BSA/AML requirements. Each type of document has specific instructions with this act:
- All CTRs and SARs must be retained 5 years after filing
- Records of every cashier and other official check of $3,000 or more must be stored for 5 years after issuance
- CIP information needs to be stored for 5 years after any account closed or loan paid
- Specific information as to any extension of credit in excess of $10,000 (not secured by real estate) must be retained for 5 years after loan paid
- Records of every request to transfer currency or monetary instruments in excess of $10,000 to or from any person, account or place outside of U.S. should be retained for 5 years
- Specific information as to wire transfers in excess of $3,000 must be stored for 5 years after origination
- Signature cards and verifying information should be stored for 5 years after account closed
- Record of each account statement for every deposit account must be stored for 5 years
- Copy of each check drawn on or issued by the bank in excess of $100 must be stored for 5 years
- Copy of each deposit slip or equivalent record showing deposit in excess of $100 should be retained for 5 years
- Records needed to reconstruct transaction to trace any check in excess of $100 deposited at bank should be retained for 5 years
In addition to the banking law requirements, your bank must retain documents that will be needed for your business operations. This can include documents such as:
- Vendor contracts
- Employment applications and files
- Accounts payable records
- Tax records
- And more
It is important to note that these policies apply to both electronic and paper documents. Also, not all laws expressly state a specific document retention period for these type of documents. If no retention period is specifically designated by federal or state law for a particular type of document, we recommend the bank use its state’s general statute of limitations period. For New York, the general statute of limitations is 6 years.
The Importance of Secure Record Storage
As you just read, there is a long list of documents that need to be stored for several years. However, a banks responsibility doesn’t end at simply storing these files. While these documents are under your care, you are still liable for any data breaches that may occur. For this reason, it is important to ensure all records are kept in a secure area and access to these files is limited and monitored.
For many financial businesses, there simply isn’t enough real estate to securely store all the necessary records. If you find yourself in this situation, enlisting the help of a secure record storage service company is a great cost-effective option.
Financial Record Shredding Policies
Various regulations stipulate that financial records must be:
- Shredded such that paper cannot be pieced together
- Electronic information must be erased and shredded
It is important to shred records as soon as the retention period expires. Keeping confidential information past this period can be just as damaging as not keeping them long enough. Similarly, not disposing of the information properly can leave your business at risk. This is why it is important to partner with a trustworthy document destruction company to ensure that the documents are not only destroyed on time, but in a manner that is compliant with any relevant regulations.
Affordable & Secure Financial Record Storage & Shredding Services
If you are looking for help managing your record retention and shredding policies, ConfiData is here to help! We offer financial record storage, off-site shredding, mobile shredding, and hard drive destruction services all under one roof, making it easier than ever for your business to stay compliant! We serve all of central and upstate New York including, Utica, Syracuse, Binghamton, Albany, Watertown, and more. Give us a call at 1-800-627-4733 or fill out our contact form to request a free initial consult.