Category Archives:Application Verification

Name Check Process for Applications

On June 25, 2015, a supervisory letter was provided dictating some important changes to the “name check” process for banking applications. Under the previous process, name checks generally were conducted on all proposed officers and directors and/or new principal shareholders of a supervised financial institution involved in an application under consideration by the Federal Reserve.  Exceptions were made for individuals considered “known to banking” and proposed outside directors with limited or no ownership interests (that is, less than five percent) in the supervised financial institution. Generally, a banker was considered “known to banking” if they had five years of relevent banking or thrift experience.  Where the specific facts and circumstances warrant, name checks were conducted on an entire board or ownership group.  For example, in proposals which involved numerous organizers (each with limited or no ownership in the relevant supervised financial institution) and no clear top policymakers, name checks generally were conducted for the entire group of organizers.

New Name Check Process

The Federal Reserve is now implementing several changes to the name check process.  The Federal Reserve generally will conduct name checks only on an individual that, upon consummation of an application, will become a principal shareholder or one of the top two policymakers of the supervised financial institution.  In addition, the Federal Reserve will no longer take into consideration whether an individual is “known to banking” when determining whether a name check must be conducted.  Rather, unless the facts and circumstances suggest otherwise, a completed name check will remain current for a period of five years, and individuals and companies with current name checks will generally not be rechecked, unless circumstances indicate to the Reserve Bank or Board staff that a name check is appropriate. In addition to the above changes, the Federal Reserve will obtain credit bureau reports in certain limited situations to supplement and corroborate financial information provided in application filings or from other sources.  The use of such “credit checks” will align their practice with that of other federal banking agencies.  These credit checks will be conducted on an ad hoc basis when the facts and circumstance indicate that the information provided in the credit report could be helpful to the Federal Reserve in its comprehensive assessment of individuals under review.