PART 370—ELECTRONIC TRANSACTIONS AND FUNDS TRANSFERS RELATING TO UNITED STATES SECURITIES Authority: 12 U.S.C. 391; 31 U.S.C. chapter 31. Source: 64 FR 40487, July 26, 1999, unless otherwise noted. Subpart A—General Information § 370.0 What does this part cover? (a) Scope. (b) Operating Rules of the National Automated Clearing House Association and Regulations of the Financial Management Service. (c) Regulations of the Board of Governors of the Federal Reserve. (d) Variance by agreement. § 370.1 What special terms do I need to know to understand this part? Automated Clearing House (ACH) entry Credit entry Debit entry Deposit account Digital signature (1) Whether the transformation was accomplished with the private key that corresponds to the signer's public key; and (2) Whether the electronic message has been altered since the transformation was made. Electronic message Electronic signature (1) Identifies and authenticates a particular person as the source of the electronic message; and (2) Indicates such person's approval of the information contained in the electronic message. Financial institution (1) Any insured bank as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or any bank that is eligible to make application to become an insured bank under section 5 of such Act (12 U.S.C. 1815); (2) Any mutual savings bank as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or any bank that is eligible to make application to become an insured bank under section 5 of such Act (12 U.S.C. 1815); (3) Any savings bank as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or any bank that is eligible to make application to become an insured bank under section 5 of such Act (12 U.S.C. 1815); (4) Any insured credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752) or any credit union that is eligible to make application to become an insured credit union pursuant to section 201 of such Act (12 U.S.C. 1781); (5) Any savings association as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) that is an insured depository institution as defined in that act or is eligible to apply to become an insured depository institution under that act; and (6) Any Federal branch or agency of a foreign bank as defined in section 1(b) of the International Banking Act, as amended (12 U.S.C. 3101). Investor account TreasuryDirect TreasuryDirect Message digest function (1) The same electronic message yields the same message digest every time the algorithm is executed; (2) It is computationally infeasible that an electronic message can be derived from the message digest result produced by the algorithm; and (3) it is computationally infeasible that two electronic messages can be found that produce the same message digest using the algorithm. Payment Person Public-key encryption Security Settlement date Signature We (or “us”) You Subpart B—Credit ACH Entries § 370.5 How can I appoint a financial institution to receive payments on my behalf? You must name a financial institution to receive payments through credit entries using the ACH method. You also must identify the deposit account to which payments are to be made. To do this, you must use a form approved by us. § 370.6 What requirements apply to a financial institution that handles a credit entry? A financial institution that accepts and handles a credit entry initiated by us agrees to the provisions of this subpart, and warrants that it will comply with all requirements imposed upon Receiving Depository Financial Institutions under the Operating Rules of the National Automated Clearing House Association, as modified by these regulations and other law. § 370.7 How can my financial institution change my designated deposit account? If your financial institution requests us to make a change in your deposit account number or type of your account, we will change the information without requiring any confirmation from you. The request from the financial institution must be made following the Operating Rules of the National Automated Clearing House Association. The financial institution's request will be deemed an agreement by the institution to indemnify us and you for any loss resulting from the requested change. § 370.8 Are there any requirements related to a prenotification entry? (a) Use of prenotification in our discretion. (b) Requirements placed upon financial institution that receives a prenotification. § 370.9 How can my payment instructions be changed? Your payment instructions will continue to apply until either you or your financial institution requests us to make a change. § 370.10 What can cause my payments to be suspended? (a) Change in deposit account. (b) Change in status of owner. (c) Continuation of suspension. § 370.11 What must my financial institution do when it receives a payment? An institution which receives a payment on behalf of its customer must: (a) Upon receipt, make the payment available to you on the payment date. If a scheduled payment date is not a business day for the Federal Reserve Bank of the district in which the institution is located, payment will be made on the next-succeeding business day. If the institution is unable to make a credit entry to the designated account, it must return the payment in accordance with the Operating Rules of the National Automated Clearing House Association. (b) Promptly notify us when your account has been closed, or when it is on notice of the death or legal incapacity of you or any other individual named on your account, or when it is on notice of the dissolution of a corporation in whose name the deposit account is held. The institution must return all payments received along with an explanation for the return. § 370.12 What happens if an error is made in a credit entry, or if a duplicate credit entry is made? If we make an erroneous credit entry under this part, we will make a corrected credit entry to your account. We will then take action to recover the erroneous credit entry, or any duplicate credit entry, as follows: (a) Return of amount of erroneous or duplicate credit entry by financial institution. (b) Collection of amount of unreturned erroneous or duplicate credit entry. (c) Authorization of Debit to collect unreturned dulicate or erroneous credit entry. § 370.13 Can time limits for taking an action on a credit entry be extended? If we or your financial institution are delayed beyond applicable time limits in taking any action with respect to a credit entry because of circumstances beyond our control, then the time for taking that action will be extended as necessary until the cause of the delay ends. § 370.14 Can substitute payment procedures be used? We may use substitute payment procedures, instead of ACH, if we consider it to be necessary. Any such action is final. § 370.15 What limitations exist on liability? (a) We may rely on the information provided by you or anyone else authorized to provide information concerning your financial institution or deposit account to which payments are to be made. We do not need to verify this information. We are not liable for any action we may take in reliance on the information furnished. (b) Our liability does not extend beyond the amount of the payment due. (c) When you name a financial institution to receive payments on your behalf, you are appointing that institution as your agent for the receipt of payments. When a credit entry is made to your financial institution for deposit to your account following your instructions, we no longer have any further responsibility for that payment. Where your financial institution has arranged with the Federal Reserve Bank to have payments made through another financial institution, the crediting of your payment to that institution relieves us of any further responsibility for that payment. Subpart C—Debit Entries § 370.20 What requirements apply if I want to authorize a debit entry to my deposit account? (a) General. (b) Single-entry and recurring debit entries. TreasuryDirect. (c) Credit entries to be made to same deposit account. (d) Signature. § 370.21 Are there any requirements related to a prenotification entry? (a) Use of prenotification in our discretion. (b) Requirements placed upon financial institution that receives a prenotification. § 370.22 What requirements apply to a financial institution that debits a deposit account? A financial institution that debits a deposit account upon receiving a debit initiated by us agrees to the provisions of this subpart. A financial institution that does so also warrants that it has the authority to receive debit entries. § 370.23 What other requirements apply to a financial institution? The financial institution warrants that it will comply with all requirements imposed upon Receiving Depository Financial Institutions under the Operating Rules of the National Automated Clearing House Association, as modified by these regulations and other law. § 370.24 What right does the Bureau of the Fiscal Service have to terminate or suspend debit entries? We may terminate or suspend the availability of one or more debit entries in any case or class of cases, and may do so without notice at any time. A decision to terminate or suspend the availability of debit entries is in our sole discretion and is final. § 370.25 What rights do I have to terminate or suspend debit entries? (a) General. (b) Exception. § 370.26 What limitations exist on liability? If we sustain a loss because a financial institution fails to handle an entry in accordance with this part, the financial institution is liable to us for the loss, but not beyond the amount of the debit entry. In no instance does our liability extend beyond the amount of the debit entry. Subpart D—Electronic Submission of Transaction Requests Through the Bureau of the Fiscal Service § 370.35 Does the Bureau of the Fiscal Service accept all electronically signed transaction requests? An electronic signature will not be accepted if it has not been accomplished through a method that has been approved for specific purposes by us. § 370.36 When does a transaction request become effective? Except for auction bids of U.S. securities or unless otherwise agreed, a transaction request becomes effective at the moment we send a confirmation message. In no instance does a transaction request become effective before we actually receive the request. § 370.37 Where is the point of transaction for an electronically submitted transaction request? For jurisdiction and venue purposes, the point of transaction for a transaction request handled pursuant to this subpart is Parkersburg, West Virginia, regardless of from where the transaction request is transmitted or where the transaction request is actually processed. § 370.38 What is the legal effect of an electronic signature? An electronic signature and any electronic message to which it is affixed or attached may not be denied legal effect, including legal effect as a signature, a writing, or an original, solely because the signature or record is in electronic form. § 370.39 To what extent is a digital signature admissible in any civil litigation or dispute? In asserting a digital signature against you in any civil litigation or dispute, extrinsic evidence of authenticity as a condition precedent of admissibility (such as testimony about the scientific validity of digital signatures) is not necessary to establish: (a) That a digital signature corresponds to a specific public key pair, and; (b) That an electronic message to which the digital signature is affixed has not been altered from its original form. § 370.40 Can I be held accountable if my negligence contributes to a forged signature? (a) General. (b) Exception. § 370.41 What limitations exist on liability? In no instance does our liability extend beyond the amount of the transaction. Subpart E—Additional Provisions § 370.45 What is the status of a security if the remittance cannot be collected? If we cannot promptly collect all of the remittance for a security, we may in our discretion cancel the security unless it has been legally transferred for value to a third person who had no knowledge of the improper debit entry at the time of the transfer. § 370.46 Are there any situations in which the Bureau of the Fiscal Service may waive these regulations? We reserve the right, in our discretion, to waive any provision of these regulations in any case or class of cases. We may do so if such action is not inconsistent with law and will not subject the United States to substantial expense or liability. § 370.47 To what extent may the Bureau of the Fiscal Service change these regulations? Any aspect of this part may be changed at any time and without notice. You assume the risk that a change may terminate a provision that was to your advantage. Nothing in this part creates vested rights in your favor.