[Federal Register Volume 62, Number 90 (Friday, May 9, 1997)]
[Proposed Rules]
[Pages 25572-25576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11928]
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DEPARTMENT OF THE TREASURY
Fiscal Service
31 CFR Part 207
RIN 1510-AA59
Electronic Benefits Transfer; Selection and Designation of
Financial Institutions as Financial Agents
AGENCY: Financial Management Service, Fiscal Service, Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of the Treasury, Financial Management Service
(Service), proposes to adopt a new regulation dealing with the Direct
Federal electronic benefits transfer (EBT) program. The Direct Federal
EBT program provides access to Federal program benefit payments through
electronic funds transfer (EFT) to individuals who do not have an
account at a financial institution. The proposed Part 207 describes how
the Service will implement EBT through the selection and designation of
financial institutions as Financial Agents of the Treasury, and
specifies the duties of such Financial Agents.
DATES: Comments must be received no later than July 8, 1997.
ADDRESSES: Comments may be mailed to the Director, Card Technology
Division, Financial Management Service, U.S. Department of the
Treasury, Room 526, Liberty Center, 401 14th Street, S.W., Washington,
D.C. 20227. A copy of the proposed rule is available at the Service's
home page at: http://www.fms.treas.gov. Comments on the proposed rule
will be available for inspection in a reading room in the Department of
the Treasury.
FOR FURTHER INFORMATION CONTACT: John P. Galligan, Director, Card
Technology Division, (202) 874-6550, or Anne Wallace, Senior Attorney
(202) 874-6681.
SUPPLEMENTARY INFORMATION:
Background
The Department of the Treasury's Financial Management Service
(Service) is the Federal Government's financial manager. Its mission
includes providing leadership and assistance to Federal agencies in
cash management, payment policy and financial systems, and collecting
and disbursing public money. The Service issues over 850 million
payments each year, totaling in excess of $1 trillion.
The Service disburses payments under a variety of Federal programs,
including Social Security Old Age, Survivors, and Disability Insurance,
Supplemental Security Income, Black Lung, Railroad Retirement Board
Retirement and Annuity, Department of Veterans Affairs Compensation and
Pension, Civil Service Retirement and Disability, and Office of
Personnel Management wage and salary payments. These payments are
referred to as Direct Federal payments.
The Service disburses public monies in one of two ways: Treasury
check and EFT. Slightly more than half of the 850 million payments made
annually, representing payments to more than 30 million individuals,
are made by Direct Deposit. Direct Deposit is a safe, reliable, and
economical EFT payment mechanism in which funds are sent through the
automated clearing house (ACH) into an account established by the
recipient at a financial institution.
To utilize Direct Deposit under Treasury's regulations, a Direct
Federal payment recipient must have an account with a financial
institution and must designate that account as the location to which
payments are to be sent by means of Direct Deposit. 31 CFR 210.4(a).
However, an estimated 20-30 million Americans, including 10 million
recipients of the Direct Federal payments mentioned above, do not have
a bank account. These individuals are referred to as ``unbanked
recipients'' in this proposal. Without an account at a financial
institution, these recipients cannot receive their Direct Federal
benefits via Direct Deposit. In order to afford unbanked recipients
with a safe, reliable, and economical means of accessing their
benefits, Treasury, together with other agencies in the Executive
Branch, has been developing EBT for Direct Federal payments.
EBT is any delivery system which disburses government benefits
through EFT and replaces paper benefit distribution with EFT and
electronic access in the form of a plastic card. EBT may utilize a
debit card or a stored value card, usable at point of sale (POS)
[[Page 25573]]
terminals and automated teller machines (ATMs). A debit card is a
plastic card with a magnetic stripe that permits access to an account
at a financial institution. A stored value card is a plastic card in
which a computer chip is embedded. The computer chip retains a record
of the card's value.
A majority of the States have implemented or are developing EBT
systems. The benefits distributed in State EBT programs include those
which are partly or fully funded by the Federal Government and
administered by the State, such as Aid to Families with Dependent
Children (AFDC), Food Stamps, and Women, Infants, and Children, and
those that are fully funded and administered by the State, such as
general assistance and unemployment compensation. For example, a number
of States have replaced paper Food Stamp coupons with plastic cards
that Food Stamp recipients use when purchasing food at participating
certified grocery stores.
Treasury also has tested EBT in the delivery of Direct Federal
payments. In 1989, Treasury designated the First National Bank of
Maryland as its Financial Agent in the SecureCard pilot in Baltimore,
Maryland. This one-year pilot was conducted with approximately 300
Supplemental Security Income recipients. In 1992, Treasury designated
Citibank, N.A. as its Financial Agent in the Direct Payment Card pilot
in Texas. The Direct Payment Card is an EBT program which provides
unbanked recipients with access to Direct Federal payments. At the
present time, there are approximately 21,000 active users of the Direct
Payment Card throughout the State of Texas. In January, 1996, Treasury
designated Citibank F.S.B. as its Financial Agent for EBT in the
Southern Alliance of States (SAS). The SAS includes the states of
Alabama, Arkansas, Florida, Georgia, Kentucky, Missouri, North Carolina
and Tennessee.
In his National Performance Review Report, ``On An Implementation
Plan For Nationwide EBT,'' Vice President Gore encouraged Federal
agencies, in partnership with State and local governments, to develop a
nationwide integrated EBT system utilizing the commercial
infrastructure and combined access to Direct Federal payments and
State-administered benefits for an individual recipient on a single
card.
Recent legislation has provided additional urgency to the
development of an electronic delivery system for the unbanked. Chapter
10 of Pub. L. 104-134, which was signed by the President on April 25,
1996, is the Debt Collection Improvement Act (DCIA). Section 31001(x)
of the DCIA amends 31 U.S.C. 3332 to require Federal agencies to
convert Federal payments, other than payments under the Internal
Revenue Code, from checks to EFT in two phases. Phase one affects
newly-eligible recipients of Federal payments. During phase one, which
began on July 26, 1996, a recipient of a Federal payment who becomes
eligible to receive the payment on or after July 26, 1996, must receive
it by EFT unless the recipient certifies in writing that the recipient
does not have an account at a financial institution or authorized
payment agent. Phase two involves the conversion from checks to EFT of
all Federal payments, except payments under the Internal Revenue Code.
The DCIA provides that, subject to the Secretary's authority to grant
waivers, after January 1, 1999, all Federal payments must be made by
EFT.
Section 3332(i) authorizes Treasury to issue regulations to
implement the mandatory EFT requirements. On July 26, 1996, the Service
issued an interim rule to implement the provisions of the DCIA that
took effect on that date and to seek public comment on issues relating
to implementation of the requirements that take effect in January 1999.
61 FR 39254. The Service also described the steps it intends to take to
implement the DCIA. The Service noted that it plans to engage in
extensive educational and marketing efforts to promote Direct Deposit
and Direct Deposit Too. Direct Deposit Too is a collaborative marketing
initiative between the Federal Government and the financial services
industry under which the Federal Government will encourage the
financial industry to offer simple, low-cost, electronically-accessible
accounts and will help market such accounts. 61 FR 39254-5.
Treasury hopes that many unbanked recipients of Direct Federal
payments will become ``banked'' as a result of public and private
sector educational and marketing efforts. However, it is likely that a
certain percentage of Direct Federal recipients will remain unbanked by
the January 1999 deadline. Therefore, by that time, Treasury must have
in place payment systems, such as EBT, which will permit the electronic
delivery of funds to the unbanked. Treasury believes that, by
establishing a legal framework, the adoption of Part 207 will
facilitate implementation of the Direct Federal EBT program.
Part 207
The Service has adopted regulations dealing with Direct Deposit
which are codified at 31 CFR Part 210. Although Direct Deposit and EBT
are similar in that both involve the movement of funds by EFT through
the ACH, there are significant distinctions between them. For this
reason, the Service believes it is desirable to adopt a regulation that
deals specifically with EBT.
There are three principal distinctions between Direct Deposit and
EBT. First, Direct Deposit is an EFT system for recipients who already
have an account at a financial institution; EBT is an EFT system for
unbanked recipients of Direct Federal benefit payments. In the Direct
Federal EBT program, a financial institution designated by Treasury as
its Financial Agent for EBT establishes an account in the name of the
recipient for the purpose of receiving and providing adequate access to
Direct Federal payments by EFT. The establishment of this account can
be viewed as changing the recipient's status from ``unbanked'' to
``banked.'' However, it is important to note that, in EBT, all of the
attributes of the account are determined by Treasury, none by the
recipient, and the recipient has no ability to change the attributes of
the account.
The second distinction relates to the nature of the disbursement
process and the relationship between Treasury and the financial
institution that receives the funds. Both Direct Deposit and EBT
involve the disbursement of public funds. In Direct Deposit, Treasury
disburses public funds by originating an ACH credit to the financial
institution that holds the recipient's account. By definition, however,
EBT is a payment system for the unbanked. Therefore, the mere
origination of an ACH credit will not accomplish the program objective
of placing funds representing the benefit payment into the hands of the
recipient. Thus, in EBT, disbursement is a multi-step process that
includes, in addition to the origination of an ACH credit, the
establishment of an account for the unbanked recipient by Treasury's
Financial Agent and the provision of access to that account by the
Financial Agent.
As discussed below, under Federal law, the authority to disburse
public money is limited to specific persons and entities. Financial
institutions that have been designated by the Secretary as financial
agents of the Government are among the entities authorized by Federal
law to carry out the disbursement function. The designation of a
financial institution as a financial agent creates a principal-agent
relationship between Treasury and the financial agent. As in any agency
relationship, as agents of the United States, financial agents act upon
the instructions of the principal, the
[[Page 25574]]
Treasury, and answer only to the principal. Under proposed Part 207,
the Financial Agent acts as agent of the United States, not as agent of
the unbanked recipient, in establishing the account and providing
services. For example, under proposed Sec. 207.3(a)(1), the Financial
Agent opens an account for the unbanked recipient at Treasury's
direction and may close the account only at Treasury's direction. The
Financial Agent for EBT is accountable only to Treasury, and Treasury
will hold the Financial Agent responsible for the performance of these
duties.
In contrast, under Treasury's Direct Deposit regulations, a
financial institution does not become a financial agent by virtue of
its receipt of a payment by Direct Deposit. 31 CFR 210.7(g). This is
because, in Direct Deposit, the financial institution is selected by
and acts as agent of its depositor, the recipient, and not as an agent
of the Government. The depositor has complete freedom to choose the
financial institution at which the account will be maintained and to
change institutions at will.
The third distinction between Direct Deposit and EBT relates to the
discretion possessed by the financial institution in providing access
to the recipient's funds. In Direct Deposit, the recipient's financial
institution provides access to funds in the recipient's account in
accordance with the deposit contract between the financial institution
and its depositor. Treasury is not a party to the deposit contract.
Thus, the financial institution provides its depositor with whatever
means of access, including checks, as agreed to by the parties. And, of
course, Treasury has no responsibility for the nature or quality of
services provided.
In the Direct Federal EBT program, the Financial Agent provides
unbanked recipients with access to their benefit payments in the manner
and on the terms specified in Part 207 and the agreement between
Treasury and the Financial Agent. Specifically, under proposed
Sec. 207.3(a)(4), the Financial Agent is required to issue to each
unbanked recipient a debit card bearing the Treasury's registered
service mark for EBT, the Benefit Security Card. The
service mark identifies the debit card, and the cardholder-recipient,
with the Direct Federal EBT program. The recipient is able to use this
card at ATMs and POS terminals on terms and conditions specified by
Treasury. No checks are issued to the recipient.
The statutory basis for the designation of financial institutions
as financial agents and the relationship between Treasury, the
Financial Agent for EBT, and the unbanked recipient are discussed in
more detail below.
Section-by-Section Analysis
Section 207.1--Scope
Proposed Sec. 207.1 provides that Part 207 governs Direct Federal
EBT. The Direct Federal EBT program differs in several important
respects from Direct Deposit, which is subject to regulations found at
31 CFR Part 210. The Service believes it is desirable to adopt a
regulation that reflects the unique character of Direct Federal EBT.
Section 207.2--Definitions
The Service is the registered owner of the Benefit Security
Card mark; the Patent and Trademark Office issued
Registration number 1,946,344 to the Service on January 9, 1996.
Treasury intends to use the Benefit Security Card mark to
identify the Direct Federal EBT program. Proposed Sec. 207.3(a)(4)
directs the Financial Agent for EBT to use this service mark on all EBT
cards.
The Service proposes to define the term ``Direct Federal electronic
benefits transfer (EBT)'' as a program for providing the unbanked with
electronic access to their Direct Federal benefit payments through the
disbursement by a financial institution acting as Financial Agent of
the United States. The proposed definition makes it clear that EBT is
for the unbanked, unlike Direct Deposit where a recipient must have a
preexisting account relationship with a financial institution. The
proposed definition also makes clear that EBT involves the disbursement
of public funds. See the discussion below of the proposed definition of
``disburse.''
The Service proposes to define the term ``Direct Federal payment''
as including payments under any Federally funded entitlement, pension,
annuity, wage or salary program not administered by a State government.
This category includes Social Security Old Age, Survivors, and
Disability Insurance, Supplemental Security Income, Black Lung,
Railroad Retirement Board Retirement and Annuity, Department of
Veterans Affairs Compensation and Pension, Civil Service Retirement and
Disability, and Office of Personnel Management wage and salary
payments.
Proposed Sec. 207.2 defines the term ``disburse'' in the context of
EBT as the performance of a series of functions by a financial
institution that has been designated as a Financial Agent of the United
States. These functions are: The establishment of an account in the
name of an unbanked recipient; the maintenance of the account; the
crediting of Direct Federal payments to the account; and the provision
of access to the account on terms specified by the Service.
Two elements of this definition are significant: the multiple
functions which, taken together, comprise the act of disbursement; and
the identity of the party performing disbursement. First, it should be
noted that the broad definition of ``disburse'' in proposed Sec. 207.2
reflects the Service's determination that all these functions must be
performed in order to accomplish Treasury's goal of providing unbanked
recipients with electronic access to their benefit payments. By
contrast, the term ``disburse'' is used in a narrower sense in 31 CFR
Part 206, where the Service's regulation deals with the management of
Federal agency receipts and collections. There, ``disburse'' is defined
in 31 CFR 206.2 as the initiation of an electronic funds transfer
because, in the context of agency cash management where all the parties
have accounts at financial institutions, the only function that needs
to be performed in order to deliver public money by EFT to the intended
recipient is the initiation of an electronic funds transfer.
Federal law authorizes the Secretary of the Treasury to disburse
public money for the executive branch and specifies the individuals and
entities to whom the Secretary can delegate the performance of this
task. Section 3321 of Title 31 provides, in relevant part:
(a) Except as provided in this section or another law, only
officers and employees of the Department of the Treasury designated
by the Secretary of the Treasury as disbursing officials may
disburse public money available for expenditure by an executive
agency.
(b) For economy and efficiency, the Secretary may delegate the
authority to disburse public money to officers and employees of
other executive agencies.
Thus, the authority to disburse public funds is limited to
designated officers and employees of Treasury, designated officers and
employees of another executive agency under a delegation of authority
from Treasury, or other entities to the extent they are authorized
under some other specific statutory provision. One such provision is 31
U.S.C. 3327, which provides, in pertinent part:
When the Secretary decides it is convenient to a public creditor
and in the public interest, the Secretary may designate a depositary
to issue a check or other draft on public money held by the
depositary to pay an obligation of the Government.
[[Page 25575]]
Other Federal laws specifically authorize ``depositaries'' of
public money, that is, banks or other financial institutions, to
disburse public money as ``financial agents'' of the Government. For
example, 12 U.S.C. 90 authorizes the Secretary of the Treasury to
designate national banks as financial agents. That section provides, in
relevant part:
All national banking associations, designated for that purpose
by the Secretary * * * shall be depositaries of public money, under
such regulations as may be prescribed by the Secretary; and they may
also be employed as financial agents of the Government; and they
shall perform all such reasonable duties, as depositaries of public
money and financial agents * * * as may be required from time to
time.
Federal law also authorizes the Secretary to designate other types
of financial institutions as financial agents. See, 12 U.S.C. 265, 266,
391, 1452(d), 1767, 1789a, 2013, 2122, and 31 U.S.C. 3122 and 3303.
Recent legislation clarified the Secretary's authority to use
financial institutions designated as financial agents for EBT. Section
665, Omnibus Consolidated Appropriations Act, 1997, Pub. L. 104-208,
amends 12 U.S.C. 90 by adding the following sentence to the end of that
provision:
Notwithstanding the Federal Property and Administrative Services
Act of 1949, as amended, the Secretary may select [national banking]
associations as financial agents in accordance with any process the
Secretary deems appropriate and their reasonable duties may include
the provision of [EBT] services (including State-administered
benefits with the consent of the States), as defined by the
Secretary.
Corresponding amendments were made to the ten other provisions of
Federal law that authorize the designation of financial institutions as
financial agents.
Relying upon this authority, the Service proposes to use financial
institutions designated as financial agents of the Government to
perform the disbursement of public funds that is central to the Direct
Federal EBT program. The Service wishes to emphasize that proposed
definition would not preclude a financial agent from working with one
or more non-financial institutions in providing Direct Federal EBT
services.
The proposed definition of ``eligible financial institution'' lists
the eleven provisions in Federal law discussed above that authorize the
designation of financial institutions as financial agents of the
Government.
The Service proposes to define the term ``Financial Agent'' as a
financial institution that has been designated as a Financial Agent of
the United States for EBT.
Proposed Sec. 207.2 defines ``recipient'' as a natural person
entitled to receive a Direct Federal payment.
The proposed definition of the ``Service'' provides that the
Financial Management Service is a bureau of the Department of the
Treasury. The Service is responsible for implementation of the Direct
Federal EBT program.
The Service proposes to define ``State EBT program'' as a program
established under State or local law or administered by a State or
local agency to provide electronic access to benefits. A number of
States distribute cash benefits, such as AFDC and unemployment
compensation, through the ACH. Proposed Sec. 207.3(a)(3) authorizes the
Financial Agent for EBT to credit such payments to the account
established pursuant to Sec. 207.3(a)(1). Obviously, non-cash benefits,
such as Food Stamps, could not be added to the deposit account
established by the Financial Agent.
The Service's proposed definition of ``State EBT program'' is based
on language used by the Board of Governors of the Federal Reserve
System in a recently proposed amendment to Regulation E, 12 CFR Part
205. 62 FR 3242.
The Board's proposed amendment implements legislation which
exempted from the Electronic Funds Transfer Act ``needs-tested'' EBT
programs, such as AFDC, established or administered under State or
local law. However, the Service's proposed definition is not limited to
needs-tested programs. Therefore, under this proposal, the Financial
Agent could credit to the account established under Sec. 207.3(a)(1)
needs-tested cash payments, such as AFDC, or cash payments which are
not needs-tested, such as unemployment compensation.
The proposed definition of ``unbanked recipient'' describes the
class of persons eligible to participate in the Direct Federal EBT
program as comprising those recipients who do not have an account at a
financial institution. This definition reflects the distinction between
Direct Deposit and the Direct Federal EBT program. The Service's Direct
Deposit regulation provides that, in order to receive a benefit payment
by Direct Deposit, the recipient ``shall designate the desired
financial institution and account identification at that financial
institution.'' 31 CFR 210.4(a). Obviously, a recipient who does not
have an account at a financial institution cannot satisfy this
requirement. The Direct Federal EBT program is designed to meet the
needs of such recipients.
Section 207.3--Duties of the Financial Agent
Proposed Sec. 207.3(a) describes the duties of a Financial Agent
for EBT. The proposal contemplates the performance by the Financial
Agent of a broad range of duties; as noted above, non-financial
institutions can partner with the Financial Agent. In addition, it
should be noted that Treasury possesses the inherent authority to
perform, as principal, many of the duties described in this section.
The regulation should not be interpreted as precluding Treasury from
performing certain functions directly, should it determine that doing
so is in the best interests of the Government.
Proposed Sec. 207.3(a)(1) requires the Financial Agent to establish
an account in the name of each unbanked recipient. The operational or
accounting convention used by the Financial Agent is irrelevant; the
account may be a master or subaccount, provided the deposit account
records of the Financial Agent make clear the unbanked recipient's
ownership rights in the account. In addition, the proposal provides
that, since the Financial Agent acts as agent of Treasury in
establishing the account, the account may be closed only at the
direction of the Service.
Proposed Sec. 207.3(a)(2) provides that the Financial Agent must
comply with Regulation E, 12 CFR Part 205. The Financial Agent would be
required to comply with Regulation E regardless of the requirement
imposed by Sec. 207.3(a)(2); the Service includes this requirement in
Part 207 merely to emphasize that unbanked recipients participating in
the Direct Federal EBT program will receive full Regulation E
protection.
Proposed Sec. 207.3(a)(3) requires the Financial Agent to credit to
the account established pursuant to Sec. 207.3(a)(1) Direct Federal
payments received through the ACH. In addition, as discussed above, the
Service is proposing to permit the Financial Agent to credit cash
payments made to the recipient under a State EBT program to such
account. No other deposits, whether over the counter or by EFT, may be
made to the account.
Proposed Sec. 207.3(a)(4) would require the Financial Agent to
issue to each unbanked recipient a debit card bearing the Service's
registered service mark, Benefit Security Card. The
recipient may use this card to access his or her account at ATMs and
POS terminals.
[[Page 25576]]
Under proposed Sec. 207.3(a)(5), the Financial Agent is required to
provide service to cardholders on such terms and conditions as the
Service specifies. The customer service duties of the Financial Agent
will be described in detail in the Invitation for Expression of
Interest (IEI) or in the Financial Agency Agreement between the Service
and the Financial Agent.
Proposed Sec. 207.3(a)(6) is a catch-all provision that would
require the Financial Agent to perform any duties not specifically
enumerated in this Part which the Service determines are necessary or
appropriate in connection with the Direct Federal EBT program.
Proposed Sec. 207.3(b) provides that, in carrying out its duties,
the Financial Agent acts as agent of the United States and not as agent
of the unbanked recipient.
Rulemaking Analysis
Treasury has determined that this proposed regulation is not a
significant regulatory action as defined in Executive Order 12866. It
is hereby certified that this rule will not have a significant economic
impact on a substantial number of small business entities. The proposed
rule does not require any actions on the part of small entities.
Accordingly, a Regulatory Flexibility Act analysis is not required.
List of Subjects in 31 CFR Part 207
Automated clearing house, Banks, Banking, Electronic funds
transfer, Federal Reserve System, Financial institutions, Government
payments.
For the reasons set out in the preamble, the Service proposes to
add Part 207 to title 31, chap. II, as follows:
PART 207--ELECTRONIC BENEFITS TRANSFER; DESIGNATION OF FINANCIAL
INSTITUTIONS AS FINANCIAL AGENTS
Sec.
207.1 Scope.
207.2 Definitions.
207.3 Duties of the financial agent.
Authority: 12 U.S.C. 90, 265, 266, 391, 1452(d), 1767, 1789a,
2013, 2122; 31 U.S.C. 321, 3122, 3303, 3321, 3327, 3332, 3335 and
3336.
Sec. 207.1 Scope.
This part governs Direct Federal electronic benefits transfer
(EBT), which involves the disbursement by electronic funds transfer of
Direct Federal payments to unbanked recipients through the selection
and designation of financial institutions as Financial Agents of the
United States, and describes the duties of such Financial Agents.
Sec. 207.2 Definitions.
For purposes of this part:
Benefit Security Card means the Service's registered
service mark for Direct Federal EBT.
Direct Federal electronic benefits transfer (EBT) means a program
for providing electronic access to Direct Federal payments to unbanked
recipients through disbursement by a financial institution acting as
Financial Agent of the United States.
Direct Federal payment means a payment under any entitlement,
pension, annuity, or wage or salary program.
Disburse means, in the context of Direct Federal EBT, the
performance of the following duties by a Financial Agent acting as
agent of the United States: the establishment at a financial
institution of an account in the name of an unbanked recipient; the
maintenance of such account; the receiving of Direct Federal payments
through the ACH and crediting of Direct Federal payments to the
account; and the provision of access to such account on the terms
specified by the Service and in accordance with this part.
Eligible financial institution means an institution eligible for
designation as a Depositary and Financial Agent under any one of the
following provisions of Federal law: 12 U.S.C. 90, 265, 266, 391,
1452(d), 1767, 1789a, 2013, 2122; and 31 U.S.C. 3122 and 3303.
Financial agent means an eligible financial institution that has
been designated as a Depository and Financial Agent of the United
States for EBT pursuant to this part.
Recipient means a natural person entitled to receive a Direct
Federal payment.
Service means the Financial Management Service, a bureau of the
United States Treasury.
State EBT program means a program established under State or local
law or administered by a State or local agency for providing electronic
access to needs-tested or other benefits.
Unbanked recipient means a recipient who does not have an account
at a financial institution.
Sec. 207.3 Duties of the financial agent.
(a) The financial agent shall:
(1) Establish an account in the name of each unbanked recipient.
Such account must be eligible for Federal deposit insurance and may be
closed only at the direction of the Service.
(2) Comply with Regulation E, 12 CFR part 205.
(3) Credit to such account Direct Federal payments received through
the automated clearing house. The Financial Agent also may credit to
the account payments under a State EBT program.
(4) Issue to each unbanked recipient a debit card bearing the
Benefit Security Card service mark which will permit the
recipient to access the account established pursuant to paragraph
(a)(1) of this section at automated teller machines and point of sale
terminals.
(5) Provide service to Benefit Security Card holders on
such terms as the Service specifies; and,
(6) Perform such other duties as the Service may specify.
(b) In performing the duties described in subsection (a), the
financial agent shall act solely as the agent of the United States, not
as agent of the unbanked recipient, and shall be accountable only to
the Treasury.
Russell D. Morris,
Commissioner.
[FR Doc. 97-11928 Filed 5-8-97; 8:45 am]
BILLING CODE 4810-35-P
