[Federal Register Volume 64, Number 154 (Wednesday, August 11, 1999)]
[Proposed Rules]
[Pages 43858-43877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20509]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 231
RIN 0790-AG74
Procedures Governing Banks, Credit Unions and Other Financial
Institutions on DoD Installations
AGENCY: Department of Defense.
ACTION: Proposed rule.
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SUMMARY: This proposed rule reflects the transition of operational
responsibilities for banks and credit unions from the Office of the
Under Secretary of Defense (Comptroller) to the Defense Finance and
Accounting Service; to address changes in financial-related technology
and the vehicles through which financial services are delivered (i.e.,
in-store banking, electronic banking (ATMs)); and incorporates the
procedural guidance contained in other DoD documents.
DATES: Comments must be received by October 12, 1999.
ADDRESSES: Forward comments to: OUSD(C), 1745 Jefferson Davis Highway,
Suite 201, Arlington, VA 22202.
FOR FURTHER INFORMATION CONTACT: T. Summers, 703-602-0299.
SUPPLEMENTARY INFORMATION:
Executive Order 12866, Regulatory Planning and Review
It has been determined that 32 CFR part 231 is not a significant
regulatory action. The rule does not:
(1) Have an annual effect to the economy of $100 million or more or
adversely affect in a material way the economy; a section of the
economy; productivity; competition; jobs; the environment; public
health or safety; or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another Agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs, or the rights and obligations of
recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.
Public Law 96-354, Regulatory Flexibility Act (5 U.S.C. 601)
It has been certified that this rule is not subject to the
Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if
promulgated, have a significant economic impact on a substantial number
of small entities. This rule is being promulgated to provide
administrative guidelines for the operation of banks and credit unions
on domestic and overseas installations of the Department of Defense and
address areas such as the solicitation for such services, the types of
services and the logistics support provided.
Public Law 96-511, Paperwork Reduction Act (44 U.S.C. Chapter 35)
It has been certified that this part does not impose any reporting
or recordkeeping requirements under the Paperwork Reduction Act of
1995.
List of Subjects in 32 CFR Part 231
Armed forces, Banks, banking, Credit unions, Federal buildings and
facilities.
Accordingly, 32 CFR part 231 is proposed to be revised to read as
follows:
PART 231--PROCEDURES GOVERNING BANKS, CREDIT UNIONS AND OTHER
FINANCIAL INSTITUTIONS ON DOD INSTALLATIONS
Subpart A--Guidelines
231.1 Overview.
231.2 Policy.
231.3 Responsibilities.
231.4 General policy provisions.
231.5 Procedures-domestic banks.
231.6 Procedures-overseas banks.
231.7 Procedures-domestic credit unions.
231.8 Procedures-overseas credit unions.
231.9 Definitions.
Subpart B-DoD Directive 1000.11
231.10 Financial institutions on DoD installations.
Subpart C--Guidelines for Application of the Privacy Act to Financial
Institution Operations
231.11 Guidelines
Appendix A to Part 231--Sample Operating Agreement
Appendix B to Part 231--In-Store Banking
Appendix C to Part 231--Sample Certificate of Compliance for
Credit Unions
Appendix D to Part 231--Foreign Geographic Field of Membership
(Franchise) Assignment Listing
Authority: 10 U.S.C. 136.
Subpart A--Guidelines
Sec. 231.1 Overview.
(a) Purpose. This part implements DoD Directive 1000.1,\1\
``Financial Institutions on DoD Installations,'' and prescribes
guidance and procedures governing the establishment, support,
operation, and termination of banks and credit unions operating on DoD
installations worldwide, to include military banking facilities (MBFs).
In addition, this part provides guidance intended to ensure that
arrangements for the provision of services by financial institutions
are consistent among DoD Components, and that financial institutions
operating on DoD installations provide, and are provided support
consistent with the guidance and procedures stated in this part.
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\1\ Copies may be obtained at http://web7.whs.osd.mil/
corres.htm.
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(b) Applicability. This part applies to the Office of the Secretary
of Defense (OSD), the Military Departments, the Chairman of the Joint
Chiefs of Staff (JCS), the Combatant Commands, the Inspector General of
the Department of Defense (IG, DoD), the Defense Agencies, the DoD
Field Activities, and all nonappropriated fund instrumentalities
including the Military Exchange Services and morale, welfare and
recreation (MWR) activities.
Sec. 231.2 Policy.
The policy pertaining to financial institutions operating on DoD
installations is contained in DoD Directive 1000.11, ``Financial
Institutions on DoD Installations'' (32 CFR part 230) and in
Sec. 231.4.
Sec. 231.3 Responsibilities.
(a) The Under Secretary of Defense (Comptroller) (USD(C)) shall
develop and monitor policies governing establishment, operation, and
termination of financial institutions on DoD installations and take
final action on requests for exceptions to DoD Directive 1000.11.
(b) The Under Secretary of Defense (Acquisition and Technology)
(USD(A&T)) shall develop and monitor policies and procedures governing
logistical support furnished to financial institutions on DoD
installations, including the use of DoD real property and equipment.
[[Page 43859]]
(c) The Under Secretary of Defense (Personnel and Readiness)
(USD(P&R)) shall advise the USD(C) on all aspects of on-base financial
institution services that affect the morale and welfare of DoD
personnel.
(d) The Director, Defense Finance and Accounting Service (DFAS)
shall:
(1) Develop procedures governing banks and credit unions on DoD
installations for promulgation in this part.
(2) For domestic DoD installations, coordinate with the Secretaries
of the Military Departments (or designees) on requests from subordinate
installation commanders to establish or terminate banking offices or
on-base credit unions. For overseas DoD installations, coordinate with
the Secretary of the Military Department concerned (or designee) on
requests from subordinate installation commanders to establish or
discontinue the provision of financial services from the on-base
financial institution under contract with the Department of Defense or
to establish or terminate banking offices or credit unions located on
DoD installations.
(3) In coordination with affected DoD Components, authorize the
specific types of banking services that will be provided by overseas
military banking facilities (MBFs) and specify the charges or fees, or
the basis for these, to be levied on users of these services.
(4) Coordinate with the Fiscal Assistant Secretary of the Treasury
on the designation of domestic and overseas MBFs as depositaries and
financial agents of the U.S. Government.
(5) Designate a technical representative to provide policy
direction for the procuring and administrative contracting officer(s)
responsible under the Federal Acquisition Regulation (FAR) for
acquiring banking services required at overseas DoD installations.
(6) Serve as principal liaison with banking institutions having
offices on overseas DoD installations. In this capacity, monitor MBF
managerial and operational policies, procedures, and operating results
and take action as appropriate.
(7) As necessary, assist in the formation of government-to-
government agreements for the provision of banking services on overseas
DoD installations, in accordance with DoD Directive 5530.3. \2\
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\2\ See footnote 1 to Sec. 231.1(a).
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(8) Provide procedural guidance to DoD Components, as required.
(9) Maintain liaison with financial institution trade associations,
leagues, and councils in order to interpret DoD policies toward
respective memberships and aid in resolving mutual concerns affecting
the provision of financial services.
(10) Coordinate with the USD(P&R), through the USD(C), on all
aspects of morale and welfare and with the USD(A&T), through the
USD(C), on all aspects of logistic support for on-base financial
institutions.
(11) Monitor industry trends, conduct studies and surveys, and
facilitate appropriate dialogues on banking and credit union
arrangements and cost-benefit relationships, coordinate as necessary
with DoD Components, financial institutions, and trade associations as
appropriate.
(12) Maintain liaison, as appropriate, with financial institution
regulatory agencies at federal and state levels.
(13) Ensure that recommendations of the Combatant Commands are
considered before processing requests for overseas banking and credit
union service or related actions.
(e) Secretaries of the Military Departments (or designees) shall:
(1) For domestic DoD installations, take action on requests from
subordinate installation commanders to establish or terminate financial
institution operations. For overseas DoD installations, take action in
accordance with guidance contained herein on requests from subordinate
installation commanders to establish or discontinue the provision of
financial services from the DoD contracted bank, or to establish or
terminate other financial institutions located on DoD installations.
(2) Provide for liaison to those financial institutions that
operate banking offices on respective domestic DoD installations.
(3) Oversee the use of banking offices and credit unions on
respective DoD installations within the guidance contained herein and
in DoD Directive 1000.11.
(4) Evaluate the services provided by respective on-base banking
offices and credit unions to ensure that they fulfill the requirements
upon which the establishment and retention of those services were
justified.
(5) Monitor practices and procedures of respective banking offices
and credit unions to ensure that the welfare and interests of DoD
personnel as consumers are protected.
(6) Assist on-base banking offices and credit unions to develop and
expand necessary services for DoD personnel consistent with this part.
(7) Encourage the conversion of existing domestic MBFs on
respective installations to independent or branch bank status where
feasible.
(8) Provide logistical support to overseas MBFs under terms and
conditions identified in this part as well as with the applicable terms
of DoD contracts with financial institutions responsible for the
operations of overseas MBFs.
(9). Refer matters requiring policy decisions or proposed changes
to this part or DoD Directive 100011 to the USD(C) through the
Director, DFAS.
(10) Supervise and encourage the use of financial institutions on
DoD installations to:
(i) Facilitate convenient, effective management of the
appropriated, nonappropriated, and private funds of on-base activities.
(ii) Assist DoD personnel in managing their personal finances
through participation in programs such as direct deposit and regular
savings plans. The use of on-base financial institutions shall be on a
voluntary basis and should not be urged in preference to, or to the
exclusion of, other financial institutions.
(11) Encourage and assist duly chartered financial institutions on
domestic DoD installations to provide complete financial services to
include financial counseling at no charge.
(12) Establish liaison, as appropriate, with federal and state
regulatory agencies and financial institution trade associations,
leagues, and councils.
(13) Provide debt processing assistance to on-base financial
institutions in accordance with the Privacy Act guidelines in subpart B
of this part.
(14) Recognize the right of DoD personnel to organize and join duly
chartered credit unions.
(15) Permit DoD personnel to serve on credit union boards and
committees on a voluntary basis, without compensation, when neither a
conflict of duty nor a conflict of interest is involved, as stated in
DoD Directive 5500.7.\3\
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\3\ See Footnote 1 to Sec. 231.1(a).
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(16) Allow personnel to attend credit union conferences and
meetings in accordance with DoD Directive 1327.5 \4\, Subchapter 630 of
the ``DoD Civilian Personnel Manual,'' DoD 1400.25-M \5\, and
Comptroller General Decision B-212457.
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\4\ See Footnote 1 to Sec. 231.1(a).
\5\ See Footnote 1 to Sec. 231.1(a).
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(f) The Commanders of the Combatant Commands (or designees) shall:
(1) Ensure the appropriate coordination of requests to:
(i) Establish financial institutions in countries not presently
served. Such requests will include a statement that
[[Page 43860]]
the requirement has been coordinated with the U.S. Chief of Diplomatic
Mission or U.S. Embassy and that the host country will permit the
operation.
(ii) Eliminate any or all financial institutions on DoD
installations within a foreign country. Such requests will include a
statement that the U.S. Chief of Diplomatic Mission has been informed
and appropriate arrangements to coordinate local termination
announcements and procedures have been made with the U.S. Embassy.
(2) Monitor and coordinate military banking operations within the
command area. Personnel assigned to security assistance positions will
not perform this function without the prior approval of the Director,
Defense Security Cooperation Agency (DSCA).
(g) The Commanders of Major Commands and subordinate installation
commanders shall:
(1) Monitor the banking and credit union program within their
commands.
(2) Coordinate requests to establish or construct bank and credit
union offices or terminate logistical support to banks and credit
unions within their commands. Personnel assigned to overseas security
assistance positions will not monitor, coordinate, or assist in
military banking operations without the prior approval of the DSCA.
(3) Assign, as appropriate, responsibility for paragraphs (g)(1)
and (g)(2) of this section, to Comptroller or resource management
personnel.
(4) Cooperate with financial institution associations, leagues, and
councils.
(5) Recognize the right of all DoD personnel to organize and join
credit unions and promote the credit union movement in DoD worldwide.
(6) Permit DoD personnel to serve on credit union boards and
committees on a voluntary basis, without compensation, when neither
conflict of duty nor conflict of interest is involved, as stated in DoD
Directive 5500.7.
(7) Allow personnel to attend credit union conferences and meetings
in accordance with DoD Directive 1327.5, Subchapter 630 of the DoD
Civilian Personnel Manual (DoD 1400.25-M), and Comptroller General
Decision B-212457.
(8) Seek the provision of financial services only from existing on-
base financial institutions, proposing alternatives only where on-base
financial institutions fail to respond favorably to legitimate
requirements.
(9) Coordinate appropriate actions with the cognizant Combatant
Command.
Sec. 231.4 General policy provisions.
(a) Security. The installation commander (or designee) and the on
base financial institutions shall work with the installation security
police to establish an understanding as to each entity's
responsibilities. A written agreement shall be established outlining
the security procedures that the financial institution will follow and
the role that the security police will play with regard to alarms,
movement of cash, and procedures to be followed should a robbery occur.
The on-base financial institutions are encouraged to establish an
ongoing relationship with the security police on all matters of asset
protection.
(1) Cash and other assets in on-base banking offices and credit
unions are the property of the financial institutions. Maintenance of
alarms, escorting of cash or use of armored cars, and the guarding of
cash is the sole responsibility of the on-base financial institution.
(2) Military guards, civilian guards (for use within the
installation), military police or other protective service will be
provided without charge in the following cases:
(i) For needed periods for paydays to guard shipments of money that
primarily are for disbursing officer use.
(ii) At times of unusual risk to the financial institution, such as
cash needed to stock remote automated teller machines.
(iii) To avoid undue insurance costs.
(b) Central locator services. Military locator services shall be
provided per the guidelines in subpart B to this part.
(1) When appropriate, installations will process financial
institution requests for central locator service to obtain military
addresses of active duty personnel. This service will be used to locate
persons for settling accounts, and recovering funds on checks that did
not clear or loans that are delinquent or in default (see DoD Directive
1344.9 \6\). If delinquent loans or dishonored checks are not recouped
within 48 hours, financial institutions operating on DoD installations
may bring this information to the attention of the local commander,
bank liaison officer, or other designee for assistance in effecting
restitution of the amount due, if not otherwise prohibited by law.
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\6\ See footnote 1 to Sec. 231.1(a).
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(2) The Department will assist financial institutions to locate DoD
personnel whose whereabouts cannot be locally determined. The request
should be on the financial institution's letterhead, include the
Service member's name and social security number (SSN), and cite the
cognizant Military Department regulation that authorizes the use of
locator services. If a financial institution needs immediate service,
the institution should contact the bank or credit union liaison
officer.
(i) For addresses of Department of the Army active, retired,
separated and civilian personnel, financial institutions may telephone
(703) 325-3732 or write to: Department of the Army WW Locator, U.S.
Army Enlisted Record and Evaluation Center, 8899 E. 56th Street,
Indianapolis, IN 46249-5301.
(ii) For addresses of Department of the Navy active, retired,
separated and civilian personnel, financial institutions may telephone
(901) 874-3388 or write to: Department of the Navy, Navy Personnel
Command, PERS-312F, 5720 Integrity Drive, Millington, TN 38055.
(iii) For addresses of Department of the Air Force active, retired,
separated and civilian personnel, financial institutions may telephone
(210) 565-2660 or write to: Department of the Air Force Personnel
Command, MSIMDL Suite 50, 550 C Street West, Randolph AFB, TX 78150.
(iv) For addresses of United States Marine Corps active, retired,
separated and civilian personnel, financial institutions may telephone
(703) 784-3942 or write to:
Active:
U.S. Marine Corps-CMC, HQ MC MMS B 10, 2008 Elliot Road, Room 201,
Quantico, VA 22134-5030
Retired-Separated:
Q U.S. MMRS-6, 280 Russell Road, Quantico, VA 22134-5105
Civilian:
Commanding General, 15303 Andrew Road, Kansas City, MO, 64147-1207
(c) Advertising. (1) On-base financial institutions may use the
unofficial section of that installation's daily bulletin, provided
space is available, to inform DoD personnel of financial services and
announce seminars, consumer information programs, and other matters of
broad general interest. Announcements of free financial counseling
services are encouraged. Such media may not be used for competitive or
comparative advertising of, for example, specific interest rates on
savings or loans.
(2) On-base financial institutions may use installation bulletin
boards, newsletters or web pages to post general information that
complements the installation's financial counseling programs and
promotes financial responsibility and thrift. Message center services
may distribute a reasonable number of announcements to units for use on
bulletin boards so long as this
[[Page 43861]]
does not impose an unreasonable workload.
(3) On-base financial institutions may include a one page insert
into the newcomer's package. This insert would benefit the
installation's newcomers by letting them know what financial services
are available on the installation.
(4) DoD Directive 5120.20 \7\ prevents use of the Armed Forces
Radio and Television Service to promote a specific financial
institution.
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\7\ See footnote 1 to Sec. 231.1(a).
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(5) Off-base financial institutions will not be permitted to
distribute competitive literature or forms on the installation.
However, they may use commercial advertising, mailings or
telecommunications to reach their customers.
(6) Advertising in government-funded (official) installation papers
is not permitted with the exception of insert advertising in the Stars
and Stripes overseas. Installation newspapers funded by local
advertisers are not official publications and, thus, may include paid
bank advertising.
(7) Installation activities, including Military Exchange and
concessionaire outlets, shall not permit the distribution of literature
from off-base financial institutions if there is an on-base financial
institution. This does not prevent Military Exchange Services from
distributing literature on affinity credit cards centrally acquired
through competitive solicitation.
(d) On-base financial institutions are encouraged to install ATMs
at those installation(s) on which they are located.
(1) Financial institutions that propose to install an ATM on DoD
installations shall bear the cost of ATM installation, maintenance, and
operation.
(2) ATM approval authority is as shown.
(i) The installation commander has approval authority when an on-
base financial institution wishes to place an ATM on the installation.
This approval should be reflected as an amendment to the operating
agreement.
(ii) Where there is no on-base financial institution, follow the
solicitation procedures to obtain financial services set forth in
Secs. 231.5(b) and 231.7(b).
(3) The availability of ATM service will not preclude the later
establishment of a banking office should conditions change on an
installation.
(4) Proposals by the installation commander to install ATMs from
other than on-base financial institutions on domestic installations
shall be considered only when ATM service is unavailable or existing
service is inadequate and the on-base financial institution(s) either
declines to provide the service, fails to improve existing service so
that it is adequate, or does not formally respond to the request for
such service within 30 days of the date of the request. Additional ATM
service from other than on-base financial institutions is considered an
exception to policy and, therefore, must be submitted by the
installation commander for approval to the USD(C) through the Secretary
of the Military Department concerned (or designee) and the DFAS. The
procedures to establish an on-base financial institution set forth in
Secs. 231.5(b) and 231.7(b) shall be followed when soliciting for the
additional services. Proposals offering shared-access ATMs shall
receive preference.
(5) ATM service from foreign banking institutions may be authorized
on overseas installations with or without MBFs operated under contract
where the installation or community commander determines that a
bonafide need exists to support local national hires. In such
instances, ATM connectivity shall be limited to host country networks
and the ATMs shall dispense only local currency (no U.S. dollars). The
operating agreement covering ATM service shall be negotiated by the
installation or community commander and coordinated with the Secretary
of the Military Department concerned (or designee) and the appropriate
Combatant Command (or designee) prior to its execution. A copy of the
operating agreement will be forwarded through DoD Component channels to
the DFAS.
(6) Domestic and International Treasury General Accounts. In cases
where authorization will be required for the banking office or on-base
credit union to act as a Treasury General Account (TGA) domestic
depositary (on overseas installations--International Treasury General
Account (ITGA) overseas depository), the financial institution must
satisfy the risk management standard established by the Department of
the Treasury. Local operating funds may be used if the on-base
financial institution requests reimbursement for costs incurred. On-
base financial institutions shall accept deposits for credit to the TGA
(or ITGA) when so authorized.
(7) Staffing. (i) On-base financial institutions are expected to be
staffed adequately commensurate with industry standards for similar
numbers of accountholders and financial services rendered. Staffing at
overseas MBFs operated under contract shall be maintained within
negotiated ceilings.
(ii) All staffing will comply fully with the spirit and intent of
the DoD equal employment opportunity policies and programs in
accordance with DoD Directive 1440.1. \8\
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\8\ See footnote 1 to Sec. 231.1(a).
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(iii) DoD personnel may not serve as directors of domestic or
foreign banking institutions operating banking offices on those DoD
installations where they are currently assigned. However, a member of a
Reserve Component who has been serving as a director of a domestic or
foreign banking institution operating a banking office on a DoD
installation need not resign his or her directorship when called to
active duty.
(iv) DoD personnel may not be detailed to duty with an on-base
financial institution located on a DoD installation. However, off-duty
personnel may be employed by an on-base financial institution subject
to installation commander approval. Such employment must not interfere
with the performance of the individual's official duties and
responsibilities.
(e) Departure clearance. The installation commander establishes the
clearance policy for all DoD personnel leaving the installation. The
on-base financial institutions shall be included as places requiring
clearance. The purpose of a clearance is to report change of address,
reaffirm allotments or outstanding debts, and receive financial
counseling, if desired or appropriate. Clearance may not be denied in
order to collect debts or resolve disputes with financial institution
management.
(f) Financial education. (1) Officials of on-base financial
institutions shall be invited to take part in seminars to educate
personnel on personal financial management and services of financial
institutions. Financial institutions will be encouraged to provide
financial education and counseling services as an integral part of
their financial program. Officials of on-base financial institutions
shall submit advance-briefing texts for approval by the installation
commander to ensure that the program is not used to promote services of
a specific financial institution.
(2) DoD personnel who tender uncollectable checks, overdraw their
accounts or fail to meet their financial obligations in a proper and
timely manner damage their credit reputation and adversely affect the
public image of all government personnel. For uniformed personnel,
military financial counselors and legal advisors shall
[[Page 43862]]
recommend workable repayment plans that avoid further endangering
credit rating and counsel affected personnel to protect their credit
standing and career. Counselors shall ensure that such personnel are
aware of the stigma associated with bankruptcy and shall recommend its
use only when no other alternative will alleviate the situation.
(g) Operating agreements. Before operations of an on base banking
office or credit union begin, a written operating agreement (Appendix A
to this part) shall be negotiated directly between the installation
commander and officials of the designated financial institution. The
operating agreement shall define the basic relationship between the on-
base financial institution and the installation commander and identify
mutual support activities such as hours of operation, service fees and
security provided. The agreement shall not prescribe internal
operations of the financial institution. One copy of the agreement
shall be sent through command channels to the Secretary of the Military
Department concerned (or designee). A copy of the agreement shall be
maintained by the installation commander and the banking office or on-
base credit union. At a minimum, the agreement shall include the
following provisions:
(1) Identification of services to be rendered and the conditions
for service. Full financial services shall be provided where feasible.
Agreements, however, may not restrict either entity's right to
renegotiate services and fees.
(2) Agreement that retail fees and services for products (to
include related minimum balance requirements for noninterest checking,
NOW and savings accounts) offered by financial institutions operating
on domestic installations and domestic credit unions operating on DoD
installations overseas shall not exceed 110 percent of the industry-
wide averages for banks as identified in the ``Annual Report to
Congress on Retail Fees and Services of Depository Institutions,''
published by the Board of Governors of the Federal Reserve System. This
report is submitted to the Congress pursuant to section 1002 of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as
amended by section 108 of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 and is accessible through the Internet
at http://www.bog.frb.fed.us/boarddocs/RptCongress.
(3) Agreement that, notwithstanding the provisions contained in
paragraph (g)(2) of this section, on-base ATM service offered by
financial institutions operating on domestic installations and domestic
credit unions operating on DoD installations overseas shall be provided
without surcharge.
(4) Agreement by both parties that they will comply with this part.
(5) Agreement by the on base financial institution that it will
furnish copies of its monthly financial reports and other local
publications to the installation commander (or designee).
(6) Agreement that the on-base financial institution will indemnify
and hold harmless the U.S. Government from (and against) any loss,
expense, claim, or demand to which the U.S. Government may be subjected
as a result of death, loss, destruction, or damage in conjunction with
the use and occupancy of the premises caused in whole or in part by
agents or employees of the on-base financial institution.
(7) Agreement that neither the Department of Defense nor its
representatives shall be responsible or liable for the financial
operation of the on-base financial institution or for any loss
(including criminal losses), expense, or claim for damages arising from
operations.
(8) Agreement by the on-base financial institution (or any
successor) that it will provide no less than 180 days advance written
notice before ceasing operations.
(9) Specification of the security services to be provided for
guarding cash shipments for paydays, at times of unusual risk to the
financial institution, and to avoid excessive insurance costs charged
to that institution.
(10) Statement that the physical security for cash and negotiable
items will be in a manner consistent with the requirements of the on-
base financial institution's insurer. A copy of those requirements will
be provided to the installation commander on request.
(11) Statement that the financial institution, whenever possible,
will accommodate local command requests for lectures and printed
materials for consumer credit education programs. Officials invited to
participate in such programs shall not use the occasion to promote the
exclusive services of a particular financial institution.
(12) Agreement of the installation commander to provide support as
identified in this part.
(13) Statement that on-base financial institution operations shall
be terminated in accordance with the provisions outlined in this part.
(h) Installation financial services. (1) Financial services
provided on DoD installations will be as uniform as possible for all
personnel.
(2) As separately negotiated, or based on a fee schedule,
custodians of nonappropriated funds shall compensate on-base financial
institutions for services received. Compensation may be made with
compensating balances or paying fees based on the services provided or
a combination of these payment mechanisms. Fees shall not exceed the
charge customary for the financial institution less an offsetting
credit on balances maintained. Banking offices shall classify
nonappropriated fund accounts as commercial accounts.
(3) At a minimum, banking offices shall provide the same services
to individuals and nonappropriated fund instrumentalities as are
available locally.
(4) On-base financial institutions may conduct operations during
normal duty hours provided they do not disrupt the performance of
official duties. Operating hours shall be set, in consultation with the
bank/credit union liaison officer, to meet the needs of all concerned.
ATMs may be used to expand financial services and operating hours.
(5) DoD personnel may use their allotment of pay privileges to
establish sound credit and savings practices through on-base financial
institutions.
(i) On-base financial institution shall credit customer accounts
not later than the value date of the allotment check or electronic
funds transfer.
(ii) The initiation of an allotment is voluntary (see Volume 7A,
section 4202, of DoD 7000.14-R). Thus, generally, a Service member
cannot be required to initiate an allotment for the repayment of a
loan. Allotments voluntarily established by a Service member for the
purpose of repaying a loan or otherwise providing funds to an on-base
financial institution shall continue in effect at the option of the
allotter.
(6) In accordance with sound lending practice, policies on loans to
individuals are expected to be as liberal as feasible while remaining
consistent with the overall interests of the on-base financial
institution. On-base financial institutions shall conform to the
Standards of Fairness principles before executing loan or credit
agreements. (See DoD Directive 1344.9).
(7) On-base financial institutions shall make financial education
and counseling services available without charge to individuals seeking
financial counseling. Such services shall include helping customers to
budget and solve financial problems. Personnel in junior enlisted
grades, or newly married couples who apply for loans, shall be given
special attention and counseling.
[[Page 43863]]
(8) On-base financial institutions must strive to provide the best
service to all customers. On-base financial institutions that evidence
a policy of discrimination in their services are in violation of this
part. In resolving complaints of discrimination, use the procedures
specified in Sec. 231.5(g)(7).
(9) All correspondence regarding on-base financial institutions,
and questions concerning their operation that cannot be resolved
locally shall be referred through command channels to the Secretary of
the Military Department concerned (or designee) for consideration.
Sec. 231.5 Procedures--domestic banks.
(a) Establishment. (1) The following information shall be included
in the installation commander's request to the Secretary of the
Military Department concerned (or designee) for establishment of
banking offices:
(i) The approximate number of DoD personnel at the installation,
and other persons who may be authorized to use the banking office.
(ii) The distance between the installation and the financial
institutions in the vicinity, and the names and addresses of those
institutions.
(iii) Available transportation between the installation and the
financial institutions listed in paragraph (a)(1)(ii) of this section.
(iv) The number of DoD personnel in duty assignments that confine
them to the installation or who cannot obtain transportation (such as
hospital patients).
(v) The approximate loss of duty time due to DoD personnel leaving
the installation for banking services.
(vi) Sources from which the disbursing officer obtains operating
and payroll cash, the frequency of these acquisitions, and the amount
obtained monthly.
(vii) The name and location of the depositary used to make official
deposits for credit to the Treasury General Account (TGA).
(viii) The estimated savings to the disbursing officer if a banking
office is established on the installation.
(ix) A list of organizational and nonappropriated fund accounts,
the name and location of the financial institutions where deposited,
and the average daily activity and balance of each account.
(x) A written description and photographs of the space proposed for
banking office use.
(xi) A statement listing the requirements of the proposed banking
office for safes and a vault; alarm systems; and surveillance
equipment, when necessary.
(xii) Reasons for use of space controlled by the General Services
Administration (GSA). All the GSA-assigned space, whether leased space
or federal office building space, is reimbursable to the GSA at a
standard level user charge. As such, space occupied by a banking office
to serve military needs will be assigned and charged by the GSA.
(xiii) Any other information pertinent to the establishment of a
banking office.
(2) The Secretary of the Military Departments (or designee) shall:
(i) Review each request for the establishment of banking offices.
(ii) Conduct a solicitation for the services when warranted.
(iii) Approve proposals for banking offices.
(iv) Notify the selected financial institution either directly or
through the installation commander. The selected banking institution
will, in turn, obtain operating authority from their regulating
agencies.
(v) Forward proposals to establish TGAs to the DFAS for subsequent
forwarding to the Fiscal Assistant Secretary of the Treasury in
accordance with this part.
(b) Solicitations. The Secretary of the Military Department
concerned (or designee), or the installation commander with advice from
the cognizant Secretary of the Military Department (or designee), shall
conduct solicitations to include pre-proposal conferences for on-base
banking. Subject to the criteria for selection outlined in paragraph
(d) of this section, the preferred sources of on-base financial
services at domestic installations are federally-insured state or
federally-chartered banking institutions operating in the local area.
No commitment may be made to any banking institution regarding its
proposal until a designation is made by the appropriate regulatory
agency.
(1) Solicitations for banking services shall be accomplished in the
following order:
(i) Solicitation letters will be sent to local banking institutions
and a solicitation announcement will be published in the local
newspaper(s) and forwarded to financial institution associations.
(ii) If the Secretary of the Military Department concerned (or
designee) or, where delegated, the installation commander, determines
that the geographic scope of the solicitation needs to be expanded, a
prospectus will be forwarded to financial institutions in a larger
geographic area, as well as financial institution associations and
regulatory authorities in the state where the installation is located.
(iii) If the Secretary of the Military Department concerned (or
designee) or, where delegated, the installation commander, determines
that the geographic scope of the solicitation needs to be expanded
further, the prospectus will be published in the Commerce Business
Daily and financial institution trade journals.
(2) For solicitations conducted at the installation level, the
installation commander shall review proposals to establish banking
offices, select the banking institution making the best offer and
forward a recommendation to the Secretary of the Military Department
concerned (or designee) for final approval.
(3) Banking institutions will not be coerced when banking
arrangements are under consideration or after banking offices are
established. If otherwise proper, this prohibition does not preclude:
(i) Discussions with banking institutions prior to submitting a
proposal for a new banking office.
(ii) Helping banking offices extend their operations in support of
an installation requirement.
(iii) Discussions with banking institutions to improve services or
to create savings for the bank or DoD personnel.
(iv) Seeking proposals for banking service as directed by the
Secretary of the Military Department concerned (or designee).
(v) Negotiations preparatory to signing a banking agreement.
(4) When soliciting for banking services, proposals shall be
evaluated on specific factors identified in the solicitation. These
factors, at a minimum, will be predicated on the services to be
provided as outlined in paragraph 3 of Appendix A to this part, service
fees and charges, and the extent of logistical support required. Prior
to issuance of the solicitation, the preparing office will identify
(for internal use during the subsequent evaluation period) the weights
to be applied to the factors reflected in the solicitation. Proposals
will be evaluated and ultimate selection made based upon the factors
and weights developed for the solicitation.
(5) The Secretary of the Military Department concerned (or
designee), or the installation commander with advice from the cognizant
Secretary of the Military Department (or designee), shall make the
selection of the banking institution based on the provisions outlined
in this section.
[[Page 43864]]
(c) Terminations. (1) Requests for termination of financial
services shall be approved by the installation commander, substantiated
by sufficient evidence and forwarded to the Secretary of the Military
Department concerned (or designee). The installation commander only
under one of the following conditions shall initiate the termination of
banking office operations:
(i) The mission of the installation has changed, or is scheduled to
be changed, thereby eliminating or substantially reducing the
requirement for financial services.
(ii) Active military operations prevent continuation of on-base
financial services.
(iii) Performance of the banking office in providing services is
not satisfactory according to standards ordinarily associated with the
financial services industry or is inconsistent with the operating
agreements or the procedures prescribed in this section.
(iv) Merger, acquisition, change of control or other action results
in violation of the terms and conditions of the existing operating
agreement.
(2) The installation commander shall forward requests for
terminations to the Secretary of the Military Department concerned (or
designee). The Secretary of the Military Department (or designee) shall
coordinate such requests with the USD(C), through the Director, DFAS,
before notification to the appropriate regulatory agency. Subsequent to
this coordination process:
(i) The Secretary of the Military Department (or designee) shall
inform the regulatory agency of the action.
(ii) The installation commander shall revoke the authority of the
financial institution to operate. The lease will be terminated.
(3) Any banking office that intends to terminate its operations
should notify the installation commander at least 180 days before the
closing date. This notification should precede any public announcement
of the planned closure. When appropriate, the commander shall attempt
to negotiate an agreement permitting the banking office to continue
operations until the installation has made other arrangements.
Immediately upon notification of a closing, the commander shall advise
the DoD Component headquarters concerned. If it is determined that
continuation of banking services is justified, action to establish
another banking office shall be taken in accordance with the guidance
prescribed in this section.
(d) Leases or permits for existing government structures. (1) Lease
terms.
(i) The charge for lease of an existing structure shall be
determined by appraisal of fair market rental value.
(ii) The term shall be for 5 years subject to renewal by mutual
agreement and with the understanding that the cognizant Assistant
Secretary of the Military Department (Installations and Logistics) has
the authority to terminate the lease per the cancellation provisions
addressed in paragraphs (e)(3)(i) and (e)(3)(iii) of this section.
Terms in excess of 5 years must be approved by the Secretary of the
Military Department (or designee) following a determination that the
longer term will aid the national defense or be in the public interest.
If space occupied is assigned by GSA, charges to financial institutions
for space and services shall be at the standard level user rate of GSA.
(iii) When banking institutions use their own funds to improve
existing government space, leases, for a period not to exceed 5 years,
may be negotiated for a period commensurate with the appraised value of
the leasehold improvements divided by the annual lease fee. Terms in
excess of 5 years must be approved by the Secretary of the Military
Department (or designee) following a determination that the longer term
will aid the national defense or be in the public interest.
(iv) Banking institutions shall perform all maintenance, repair,
improvements, alterations, and construction on the banking premises.
(v) Banking institutions shall pay for all utilities and custodial,
janitorial, and other services furnished by the government at rates set
forth in the lease or by written agreement between the installation and
the banking institution.
(vi) The banking office shall be housed in a building accessible to
most DoD personnel on the installation and in a location permitting
reasonable security.
(2) Leases executed before [effective date of the final rule] may
not be altered solely as a result of the provisions of this part unless
a lessee specifically requests a renegotiation under these provisions.
Leases may not be negotiated or renegotiated, nor may any rights be
waived or surrendered without compensation to the government.
Compensation to the government may consist of added property value,
added banking services, or both.
(e) Land leases. (1) A lease for construction of a building to
house a bank shall be at the appraised fair market rental value.
Charges shall apply for the term of the lease not to exceed 5 years.
Terms in excess of 5 years shall be approved by the Secretary of the
Military Department (or designee) following a determination that the
longer term will aid the national defense or be in the public interest.
(2) Banking institutions that participate in the construction of a
shopping mall complex will be given a lease at fair market rental value
for a term not to exceed 5 years. Terms in excess of 5 years shall be
approved by the Secretary of the Military Department (or designee)
following a determination that the longer term will aid the national
defense or be in the public interest. The lease shall cover only land
where the banking office physically is located.
(3) Leases shall include the following provisions:
(i) The government has the right to terminate the lease due to
national emergency; installation inactivation, closing, or other
disposal action; or default by the lessee.
(ii) The lessee shall provide written notice 180 days prior to
voluntarily terminating the lease.
(iii) Upon a lease termination, the government has the option to
cause the title of all structures and other improvements to be conveyed
to the United States without reimbursement, or require the lessee to
remove the improvements and restore the land to its original condition.
(4) If determined to be in the government's interest, an existing
lease of land may be extended prior to expiration of its term. Passage
of title to facilities shall be deferred until all extensions have
expired. Such extensions shall be for periods not to exceed 5 years
with lease payments set at the appraised fair market rental of the land
only as determined on the date of each such extension. Banking
institution lessees shall continue to maintain the premises and pay for
utilities and services furnished.
(5) When under the terms of a lease, title to improvements passes
to the government, arrangements normally will be made as follows:
(i) When the square footage involved exceeds that authorized in DoD
4270.1-M,\9\ the banking institution shall be given first choice to
continue occupying the excess space under a lease that provides for
fair market rental for the land underlying that excess space.
---------------------------------------------------------------------------
\9\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(ii) The charge for continued occupancy of improved space by a
banking office shall be at fair market rental value only for the
associated land. The lessee shall continue to maintain the premises and
pay the cost of utilities and services furnished.
(6) Without exception, those leases executed before [effective date
of the
[[Page 43865]]
final rule] shall not be altered solely as a result of the provisions
of this part unless a lessee specifically requests a renegotiation
under these provisions. Lease contracts may not be negotiated or
renegotiated, nor may any rights thereunder be waived or surrendered,
without compensation to the government.
(f) Construction. Banking institutions may construct buildings
subject to the following provisions:
(1) The building shall be solely for the use of the banking
institution and may not provide for other commercial enterprises or
government instrumentalities.
(2) Construction projects must meet the criteria in DoD 4270.1-M.
(3) Construction projects approval authority.
(i) Projects costing $25,000 or more shall be approved by the Major
Command (or Claimant) with an information copy sent to the Secretary of
the Military Department concerned (or designee). The Secretary of the
Military Department (or designee) will have 30 days to provide comments
to the Major Command (or Claimant) before final approval can be
granted. Major Commands (or Claimants) may accept telephonic
concurrence from the Secretary of the Military Department (or
designee).
(ii) Projects costing less than $25,000, to include interior
alterations and room or office additions to existing banking offices,
shall be approved by installation commanders. Copies of approvals,
including the identification of project cost, shall be furnished to the
Secretary of the Military Department concerned (or designee).
(4) In accordance with applicable Military Department regulations,
the Congress must be notified of all construction projects using other
than appropriated funds and costing over $500,000.
(5) Proposals for construction of structures on installations at
banking institution expense shall be reviewed and reported in
accordance with cognizant Military Department regulations. The
following information shall be listed to support each proposal:
(i) Number of DoD personnel at the installation plus others who may
use the banking office.
(ii) Square footage of the proposed building.
(iii) Land area to be leased to the banking institution.
(iv) Term of the lease.
(v) Estimated cost of construction.
(vi) Estimated fair market value of the land to be leased.
(vii) A statement that the banking institution will be responsible
for utility connections and other utility and maintenance costs.
(viii) A statement that the building will be used only for
financial services.
(ix) A statement that management understands its potential loss of
the building in the event of installation closure or other delimiting
condition.
(x) Justification for a waiver of space criteria if the building
exceeds that specified in DoD 4270.1-M.
(6) Banking institutions shall pay for interior alterations and
maintenance as well as utilities, custodial, and other furnished
services.
(7) Banking institutions shall pay all construction costs.
(g) Bank liaison officer (BLO). Each installation commander having
a banking office shall appoint a BLO. The BLO's photograph, name and
duty telephone number shall be displayed prominently at each banking
office on the installation. As appropriate, the BLO's responsibility
shall be assigned to comptroller or resource management personnel.
Employees, officials or directors of a financial institution may not
serve as BLOs. The duties of a BLO are to:
(1) Ensure that the banking institution operating the banking
office has the latest version of this part.
(2) Ensure that traveler's checks and money orders are not being
sold by other on-base organizations when banking offices are open for
business. However, postal units and credit unions are exempt from this
restriction.
(3) Attend financial workshops, conferences, and seminars as
appropriate. Such gatherings offer excellent opportunities for
personnel of financial institutions and the Department to improve the
military banking program. Free discussion among the attendees gives an
excellent forum for planning, developing, and reviewing programs that
improve Military banking and financial services.
(4) Assist, when requested by the banking office manager or the
installation commander, in locating and collecting from individuals
tendering uncollectable checks, overdrawing accounts, or defaulting on
loans (within the guidelines of subpart B of this part) if not
otherwise prohibited by law.
(5) Maintain regular contact with the banking office manager to
confer and discuss quantitative and qualitative improvements in the
services provided. In executing this authority, the BLO shall not
become involved in the internal operations of the banking institution.
(6) Review the schedule of fees annually, and ensure that the
operating agreement is updated at least every 5 years. Renegotiate
services and fees as necessary.
(7) Assist in resolving customer complaints about banking services.
(8) Assist in resolving complaints of discrimination with financial
services by the banking institution. If a complaint cannot be resolved,
a written request for investigation shall be forwarded to the
appropriate regulatory agency. Any such request must document the
problem and command efforts taken toward its resolution. Information
copies of all related correspondence shall be sent through channels to
the Secretary of the Military Department concerned (or designee) for
transmittal to DFAS.
(9) Assist the installation commander to report to the appropriate
regulatory agency any evidence suggesting malpractice by banking office
personnel.
(h) In-store banking. Under the direction and approval of the
installation commander, an on-base financial institution may provide
in-store banking within the premises of the commissary, the Military
Exchange Service or other on-base retail facility.
(1) Provision of the requested services and the associated
stipulations arising from the provision of the requested services shall
be documented as an amendment to the existing operating agreement
between the installation commander and the on-base financial
institution that will provide in-store services.
(2) The amendment to the operating agreement shall be drafted
through close coordination between the requesting DoD Component
representative, the on-base financial institution representative, and
the installation commander. All three parties shall sign the amendment:
the installation commander, the DoD Component that hosts the in-store
banking operations, and the on-base financial institution.
(3) The installation commander shall extend the opportunity to
provide the requested in-store banking services to all financial
institutions located on the installation. The selection process is
outlined in Appendix B of this part.
(4) Space shall be granted through a lease to the banking
institution that will provide in-store service.
(i) Domestic military banking facilities (MBFs) (1) Domestic MBF
establishment. Requests to establish MBFs should be made only when a
need for services cannot be met by other means. During mobilization,
however, MBFs may be designated as an emergency measure.
[[Page 43866]]
(ii) Installation commanders shall send requests for an MBF with
justification for its establishment through the Secretary of the
Military Department concerned (or designee) to the Director, DFAS, for
coordination with the Department of the Treasury. The Department of the
Treasury may approve the designation of an MBF under provisions of 12
U.S.C. 265.
(iii) MBF operations may begin only after approval for MBF status
is granted by the Department of the Treasury.
(5) MBF conversion. (i) Where MBFs exist, installation commanders
shall encourage their conversion to independent or branch banks.
(ii) Proposals from the on-base banking institution to convert an
existing MBF to an independent or branch bank shall be sent through
command channels to the Secretary of the Military Department concerned
(or designee) for approval. The Secretary of the Military Department
(or designee), shall forward the request to the Director, DFAS, for
coordination with the Department of the Treasury.
(iii) Unsolicited proposals from banking institutions to establish
independent or branch banks where an MBF exists shall be forwarded
through command channels to the Secretary of the Military Department
concerned (or designee). Each proposal shall be evaluated on its own
merits.
(A) The installation commander shall inform the banking institution
operating the MBF that an unsolicited proposal for a banking office has
been received and shall offer that incumbent institution the
opportunity to submit its own proposal.
(B) Preference to operate an independent or branch bank shall be
given to the banking institution that has operated the MBF provided
that prior banking service has been satisfactory and that the
institution's proposal is adequate.
(6) MBF termination. The Director, DFAS, shall coordinate the
termination of a financial institution's authority to operate an MBF
with the Department of the Treasury.
Sec. 231.6 Procedures--overseas banks.
(a) General provisions of banking services overseas. The Department
acquires banking services overseas for use by authorized persons and
organizations by:
(1) MBFs operated under contract and authorized by the pertinent
status of forces agreement, other intergovernmental agreements, or
host-country law.
(2) Domestic and foreign banking institutions located on overseas
DoD installations. Each such institution shall be:
(i) Chartered to provide financial services in that country,
(ii) A party to a formal operating agreement with the installation
commander to provide such services, and
(iii) Identified, where applicable, in the status of forces
agreements, other intergovernmental agreements, or host-country law.
(b) Establishment. (1) Overseas MBFs operated under contract.
Installation or community commanders requiring banking services will
send a request through command channels to the Secretary of the
Military Department concerned (or designee) for concurrence and
subsequent transmittal to the Director, DFAS, for approval.
(i) Requests to establish MBFs will include, but are not limited
to, the following information:
(A) The approximate number of DoD personnel at the installation and
in the community and any other persons who may be authorized to use the
MBF.
(B) The distance between the installation and the nearest MBF and
credit union office, the names; addresses, and telephone numbers of the
operators of those institutions; and the installations and communities
where they are located.
(C) The availability of official and public transportation between
the installation or community and the nearest MBF and credit union
office.
(D) The approximate loss of duty time due to DoD personnel leaving
the installation or community to obtain banking services.
(E) Sources from which the disbursing officer obtains operating and
payroll cash, the frequency of these acquisitions, and the amount
obtained monthly.
(F) The name and location of the depository used to make official
deposits for credit to the TGA.
(G) The estimated savings to the disbursing officer if the MBF is
established on the installation.
(H) A list of organizational and nonappropriated fund accounts, the
name and location of the financial institutions where deposited, and
the average daily activity and balance of each account.
(I) A written description and photographs or drawings of the space
proposed for MBF use. The extent and approximate cost of required
alterations, including the construction of counters and teller cages.
(J) A statement that recognizes the logistical support, including
equipment, to be provided by the local command as detailed in paragraph
(c) of this section. The statement will include the costs of such
equipment and the manner in which it will be acquired.
(K) In countries where no MBFs currently are operated under
contract, a statement from the appropriate Combatant Command that the
requirement has been coordinated with the U.S. Chief of Diplomatic
Mission or U.S. Embassy and that the host country will permit the
operation in accordance with Sec. 231.3(f)(1)(i).
(L) Any other pertinent information to justify MBF establishment.
(ii) As a general rule, MBFs may be established only when the
installation or community population meets the following criteria:
(A) Full-time MBF. Except in unusual circumstances, a total of at
least 1,000 permanent military personnel and DoD civilian employees is
necessary to qualify for a full-time MBF.
(B) Part-time MBF. Except in unusual circumstances, a total of at
least 250 permanent military personnel and DoD civilian employees is
necessary to qualify for a part time MBF.
(iii) If the population at a certain remote area is not sufficient
to qualify under the criteria for full-or part-time MBFs, the
installation or community commander will explore all other alternatives
for acquiring limited banking services before requesting establishment
of an MBF as an exception to these provisions. Alternatives to limited
banking services include installation of ATMs and check cashing and
accommodation exchange service by disbursing officers and their agents.
(iv) Establishment of an overseas MBF is predicated on and
requires:
(A) Designation of the MBF contractor as a depositary and financial
agent of the U.S. Government by the Department of the Treasury.
(B) The availability of banking contractors interested in bidding
for the operation of the facility and the viability of such proposals.
(C) The availability of appropriated funds to underwrite such
banking services.
(D) Establishment of a U.S. Dollar Currency Custody Account to
support banking operations.
(2) Other overseas banking offices. Where a need for financial
services has been identified; either the banking and currency control
laws of certain host countries do not permit MBFs to operate on DoD
installations or MBFs, where permitted, have not been established; and
there is a desire to establish banking services the following applies:
[[Page 43867]]
(i) Installation or community commanders will send requests for
banking services or unsolicited proposals from foreign banking
institutions to their Major Commands (or Claimants) with supporting
data as required in Sec. 231.5 (a).
(ii) Major Commands (or Claimants) will forward installation or
community commander requests to the Secretary of the Military
Department concerned (or designee) for approval. The Secretary of the
Military Department concerned (or designee) will coordinate with DFAS
to seek the designation of the parent foreign banking institution
designated as a depositary and financial agent of the U.S. Government
by the Department of the Treasury.
(iii) Banking offices in this category will become operational only
after the foreign parent banking institution has been designated a
depositary and financial agent of the U.S. Government. The institution
also must indicate a willingness and ability to provide collateral
backing for any official and nonappropriated fund U.S. dollar deposits.
Any collateral pledged must be in a form acceptable to DFAS and the
Department of the Treasury.
(c) Logistical support. (1) Overseas MBFs operated under contract.
(i) Installation or community commanders will provide logistical
support to MBFs. Such support normally includes:
(A) Adequate office space, including steel bars; grillwork;
security doors; a vault, safes, or both; security alarm systems and
camera surveillance equipment (where deemed necessary) that meet
documented requirements of the contractor's insurance carrier;
construction of counters, teller cages, and customer and work areas;
necessary modifications and alterations to existing buildings; and
construction of new MBF premises, if necessary.
(1) The size and arrangement of space should permit efficient
operations. Space assigned may not exceed that prescribed in DoD
4270.1-M.
(2) All maintenance, repair, rehabilitation, alterations, or
construction for banking offices shall comply with guidelines
established by the installation commander.
(B) Office space in a building that is accessible to the most users
and permits the maximum security.
(C) Office space for MBF area and district administrations and
storage space for retention of records, files, and storage of supplies.
(D) DoD housing on a rental basis to key MBF personnel who are
unable to find suitable, reasonably priced housing in the vicinity of
the DoD installation, subject to the assignment procedures and other
requirements of DoD 4165.63-M \10\
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\10\ See footnote 1 to Sec. 231.1(a).
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(E) Air-conditioning, which is considered a normal utility for
banking offices located at installations that qualify for air-
conditioning under applicable regulations. Banking space is classified
as administrative space at Military installations.
(F) Utilities (i.e., electricity, gas, water and sewage), heating,
intrastation telephone service, and custodial and janitorial services
to include garbage disposal and outdoor maintenance (such as grass
cutting and snow removal).
(G) Defense Switching Network (DSN) voice and data communication to
include Internet access.
(H) Military guards, civilian guards (for use within the
installation), military police, or other protective services to
accompany shipments of money. This level of protective service also
shall be provided at other times as required to include alarm system
failures and to avoid undue risks or insurance costs on the part of the
MBF.
(I) U.S. Military Postal Service access under DoD Directive 4525.6
\11\. Use of free intra-theater delivery system (IDS) is authorized for
all routine mail sent and received between Army Post Offices (APOs) and
Fleet Post Offices (FPOs) within a theater.
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\11\ See footnote 1 to Sec. 231.1(a).
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(J) Office equipment and furniture on memorandum receipt if
available from local stock. If office equipment or furniture is
unavailable, statements of nonavailability will be issued.
(K) Vehicle registration and fuel sales from government-owned
facilities for bank-operated vehicles if not in conflict with host
government agreements. Vehicle registration will be subject to normal
fees.
(L) The local commander for official may issue issuance of
invitational travel orders that authorize travel at no expense to the
U.S. Government on site visits by U.S. based banking institution
officials.
(ii) Suggestions for changes to the contract under which logistical
support is granted may be forwarded through command channels to the
Director, DFAS, for consideration.
(2) Other overseas banking offices. (i) Logistical support provided
to such offices will be negotiated with the parent foreign banking
institution and incorporated into the written operating agreement.
(ii) Logistical support will not exceed that provided to contract
MBFs as specified paragraph (c)(1) of this section.
(d) Operations. (1) General conditions of MBF operation. (i) Before
initiating MBF operations, a written agreement shall be directly
negotiated and signed by the installation or community commander and
management of the banking contractor or other financial institution
concerned. One copy of the agreement with U.S. banking contractors and
two copies of the agreement with institutions other than U.S. banking
contractors will be forwarded through command channels to the Secretary
of the Military Department concerned (or designee). The Secretary of
the Military Department (or designee) shall forward one copy of the
agreement with institutions other than U.S. banking contractors through
command channels to the Director, DFAS. A copy of the agreement also
shall be maintained at all times by the installation or community
commander and the banking institution manager.
(ii) For MBFs operated by U.S. banking contractors, the agreement
shall state operating details not set forth in the contract. Though the
contract limits the number of operating hours per week, local
commanders and MBF managers should set days and hours of operation to
best meet local needs. Operating times may include Saturdays and
evening hours when necessary to complement other retail services for
DoD personnel, provided the contractor can implement that service at no
additional cost to the government. When added cost is involved, the
commander will send a request including reasons for expanded or
modified times of operation, through command channels, to the Secretary
of the Military Department concerned (or designee) for action. If
approved, the request, with recommendations, will be forwarded to the
Director, DFAS.
(2) Overseas MBFs operated under contract. (i) General. Overseas
MBFs shall operate under terms and conditions established at the time
of annual contract negotiations and confirmed in respective contracts
or contracting officer determinations.
(ii) Authorized customers. DoD banking contracts specify the
personnel authorized to receive service. Additionally, overseas major
commanders may approve banking services for other individuals that
qualify for individual logistic support under the regulations of the
DoD Component concerned, provided that the use of banking services is
not prevented by status of forces agreements, other intergovernmental
agreements, or host-country law.
(iii) Services rendered. DoD banking contracts specify the services
to be
[[Page 43868]]
rendered and related charges. Suggestions for expansion or modification
of authorized services, fees or charges may be forwarded through DoD
Component channels to DFAS. Proposals for any new service must be
coordinated with the appropriate Combatant Command and U.S. Chief of
Diplomatic Mission or U.S. Embassy to make certain that the proposal
does not conflict with the status of forces agreements, other
intergovernmental agreements, or host-country law.
(iv) Regulation to be provided. The DFAS shall advise each U.S.
banking contractor operating an overseas MBF of this part and furnish a
copy to the contractor.
(v) Conditions of operation. (A) Part-time and payday service MBFs
will provide limited services that mirror, to the extent feasible,
those provided by full-time MBFs. Since part-time MBFs operate out of
nearby MBFs, installation or community commanders shall provide and
fund transportation and guards for their operation.
(B) Any deficiency of banking services under DoD banking contracts
shall be reported to the manager of the MBF within 7 calendar days of
noting the deficiency. If the problem has not been corrected within 30
calendar days after being noted, the commander shall report the problem
through DoD Component channels to DFAS.
(C) The MBF contractor and military disbursing officers shall
establish cash management practices that minimize the cash required to
conduct business.
(D) Commanders shall assist MBF contractors to develop and update
contingency plans for banking services in the event of hostilities or
other emergencies.
(E) MBF provision of foreign currency shall be in accordance with
Volume 5, Chapter 13 of DoD 7000.14-R.
(3) Other overseas banking offices. (i) Authorized customers. The
list of authorized customers shall be negotiated between the
installation commander and the bank and shall be reflected in the bank
operating agreement. Those customers identified as authorized in the
operating agreement shall be in accordance with applicable status of
forces agreements, other intergovernmental agreements, or host-country
law.
(ii) Services rendered. Services and charges shall parallel,
whenever practical, the services and charges of MBFs operated under
contract. Specific services shall be negotiated and included in the
agreement with the foreign banking institution. A copy of the agreement
shall be sent through DoD Component channels to the DFAS.
(iii) Operating agreements. Before agreements are executed, they
will be coordinated with and approved by the appropriate Combatant
Command (or designee).
(iv) Conditions of operation. A banking institution shall provide
equipment (except that furnished by the installation or community),
supplies, and trained bank personnel.
(4) Relocation of MBF. (i) When an MBF is moved from one location
to another at the same installation or community, the commander shall
notify the cognizant Military Department, through command channels. The
Military Department shall forward the information to the DFAS.
(ii) For all other relocations, prior approval from the DFAS must
be obtained through DoD Component channels.
(5) Comments. Installation or community commanders shall send their
banking comments through DoD Component channels to the DFAS for any of
the following:
(i) Major changes in installation population that would affect use
of the MBF.
(ii) Opinion that the space assigned is not adequate for the
efficient operation of the MBF. Include a statement concerning
corrective action.
(iii) Suggestions that might improve the MBF operation, increase
efficiency, or decrease costs.
(iv) Pending developments that may have a material impact on the
MBF operation.
(6) Bank liaison officer. The duties of the BLO are outlined in
Sec. 231.5 (g).
(e) Termination. Requests to eliminate any or all MBFs in a foreign
country must include documentation that the U.S. Chief of Diplomatic
Mission has been informed and arrangements for local termination
announcements and procedures have been made with the U.S. Embassy.
(1) Overseas MBFs operated under contract. In cases where an
installation or community no longer can justify overseas MBF
operations, the commander shall notify the Secretary of the Military
Department concerned (or designee) through command channels.
(i) The report shall state whether a part-time MBF should be
established and specify the days each week that the MBF would be
needed.
(ii) The Secretary of the Military Department (or designee) shall
send this report with recommendations to the DFAS.
(2) Other overseas banking offices. Termination actions, when
required, shall be taken in accordance with the applicable clauses in
the operating agreement. Notice of intent to terminate, including the
closing date, shall be sent through DoD Component channels to DFAS,
which shall notify the Department of the Treasury so that the foreign
banking institution's authority as a depositary and as a financial
agent of the U.S. Government at that location may be revoked.
Sec. 231.7 Procedures-domestic credit unions.
(a) General policy. Given their role in promoting morale and
welfare, on base credit unions shall be recognized and assisted by DoD
Components at all levels. These credit unions shall provide services to
DoD personnel of all ranks and grades within their respective fields of
membership.
(b) Establishment. A demonstrated need for credit union services
may be addressed by establishing a new full-service credit union or by
opening a branch office or facility of an existing credit union under
the common bond principle.
(1) DoD personnel seeking to establish a new full-service credit
union shall submit a proposal to the installation commander for review.
In addition to the information identified in Sec. 231.5(a)(1), the
proposal shall include a request for the establishment of a field of
membership that includes all personnel at the installation. Upon
installation commander concurrence, the proposal shall be forwarded
through DoD Component channels to the Secretary of the Military
Department (or designee).
(2) The Secretary of the Military Department concerned (or
designee) shall:
(i) Obtain a list of credit unions that are eligible to serve the
installation's military members and civilian employees from the
National Credit Union Administration (NCUA) Regional Office that has
geographic jurisdiction and the appropriate state regulatory agency.
(ii) Prepare and send formal solicitation letters to eligible
credit unions informing them of an opportunity to establish a branch
office at the installation.
(iii) In coordination with the installation commander, establish
the criteria for selection of a specific credit union in accordance
with Sec. 231.5(b)(4). Proposals shall be evaluated, and a selection
made, based upon the factors and weights developed for the
solicitation.
(3) Upon approval by the Secretary of the Military Department (or
designee), the NCUA or appropriate state regulatory agency shall be
notified and
[[Page 43869]]
asked to establish or amend the selected credit union's charter to
include the new location. For Federal credit unions, no specific NCUA
approval is required to open a branch.
(4) No commitment may be made to a credit union regarding its
proposal until the appropriate regulatory agency has announced a
selection.
(c) Terminations. (1) Voluntary credit union terminations. (i) When
a credit union plans to end operations on a DoD installation, it shall
be required to notify the installation commander 180 days before the
closing date. Such notification shall be required to precede public
announcement of the planned closure. When appropriate, the commander
shall attempt to negotiate an agreement permitting the credit union to
continue operations until the installation has made other arrangements.
(ii) The installation commander shall inform the Secretary of the
Military Department concerned (or designee) immediately upon receiving
notification of a closing. The report shall include a recommendation
about continued credit union service on the installation. Paragraph (b)
of this section applies if continued service is needed.
(2) Termination for cause. If, after discussion with credit union
officials, an installation commander determines that the operating
policies of a credit union are inconsistent with this part, a
recommendation for termination of logistical support and space
arrangements may be made through the Secretary of the Military
Department concerned (or designee). A credit union shall be removed
from the installation only with approval of the Secretary of the
Military Department (or designee) after coordination with DFAS and the
appropriate regulatory agency.
(3) Termination in the interest of national defense. At the option
of the government, leases may be terminated in the event of national
emergency or as a result of installation deactivation, closing, or
other disposal action.
(d) Use of space, logistical support, and military real property
for domestic credit unions. (1) Criteria for use of space on
Government-owned real property. (i) Criteria governing the assignment
of space and construction of new space for credit unions are in DoD
4270.1-M.
(ii) A credit union may be furnished space on a DoD installation at
one or more locations for periods not to exceed 5 years. Terms in
excess of 5 years must be approved by the Secretary of the Military
Department concerned (or designee) following a determination that the
longer term will aid the national defense or be in the public interest.
The cumulative total of space furnished shall be subject to the
limitations of DoD 4270.1-M.
(A) The furnishing of office space (including ATM placement) to on-
base credit unions is governed by the Federal Credit Union Act (12
U.S.C. 1751). The provision of no-cost office space is limited to
credit unions having a membership at least 95 percent of which is
composed of individuals who are, or who were at the time of admission
into the credit union, military personnel or federal employees, or
members of their families. This percentage criterion applies only to
members who use the on-base office, not to the total credit union
membership. A written statement, prepared on the credit union's
letterhead and signed by either the president of its board of directors
or its general manager to the effect that the credit union meets the 95
percent criterion, shall be required to justify and document the
allotment of free government space. A certification also shall be
required whenever there is a merger, takeover, or significant change in
a field of membership. This certification shall be required to serve as
justification and documentation for the continued allocation of free
government space including space renovated with credit union funds. The
statement shall be updated on renewal of lease. (See Appendix A to this
part for a sample format of the statement.)
(B) Credit unions that fail to meet the 95 percent criterion shall
be charged fair market rental for space provided. Except where more
than one credit union exists on an installation prior to July 1, 1999,
credit unions giving less than full service or not serving all assigned
DoD personnel are not authorized free space.
(C) When a credit union that meets the 95 percent criterion uses
its own funds to expand, modify, or renovate government-owned space, it
may be provided a no-cost permit or license for a period not to exceed
5 years. Duration of the permit or license shall be commensurate with
the extent of the improvements as determined by the DoD Component
concerned. Terms in excess of 5 years must be approved by the Secretary
of the Military Department concerned (or designee) following a
determination that the longer term will aid the national defense or be
in the public interest. The permit or license shall be effective until
the agreed date of expiration or until the credit union ceases to
satisfy the 95 percent criterion. In this latter case, the no-cost
permit shall be cancelled in favor of a lease immediately negotiated at
fair market value under the provisions of paragraph (d) of this
section. If the credit union desires, this lease at fair market value
may extend through the period identified in the original license not to
exceed 5 years. When the term proposed exceeds 5 years, the Secretary
of the Military Department concerned (or designee) must approve the
longer term following a determination that the longer term will aid the
national defense or be in the public interest.
(D) Similarly, a credit union not meeting the 95 percent criterion
that uses its own funds to expand, modify, or renovate government-owned
space, may be provided a lease at fair market value for a period not to
exceed 5 years. Duration of this lease shall be commensurate with the
extent of the improvements as determined by the DoD Component
concerned.
(2) Logistical support. When available, custodial and janitorial
services, heating and air conditioning, utilities (i.e., electricity,
gas, water, and sewage), fixtures, and maintenance shall be furnished
at no cost to credit unions occupying free space in government
buildings. However, credit unions shall be required to pay for all
communication services to include telephone lines, long distance data
services and Internet connections. Credit unions also shall pay for
space alterations. Should a credit union fail to meet the 95 percent
membership criterion, any logistical support furnished shall be on a
reimbursable basis.
(e) Credit unions offering ATM service shall do so in accordance
with Sec. 231.4(d) except that the installation commander may provide
ATMs to on-base credit unions under certain circumstances such as when
it is advantageous to the government to have one or more ATMs but the
acquisition cost to the credit union is prohibitive. In all such cases,
installation costs and all logistics support must be borne by the
credit union.
(f) Staffing. (1) On-base credit unions shall provide full service.
To do so, credit union offices shall be staffed by:
(i) A loan officer authorized to act for the credit committee.
(ii) An individual authorized to sign checks.
(iii) A qualified financial counselor available to serve members
during operating hours.
(2) Exceptions to paragraph (f)(1)(i) of this section may be
approved by the installation commander with advice from the Secretary
of the Military Department concerned (or designee) in the case of newly
organized credit unions.
[[Page 43870]]
(3) When an on-base credit union can support only minimum staffing,
one of the positions required in paragraph (f)(1)(i) or (f)(1)(ii) of
this section also may be subsumed under the counselor duties.
(4) Credit union remote service locations at the same installation
may be staffed with one person alone, provided that a direct courier or
an electronic or automated message service links each remote location
to the credit union's main office.
(5) All credit union staffing shall comply fully with the spirit
and intent of the DoD equal employment opportunity policies and
programs, in accordance with DoD Directive 1440.1.
(g) Credit union liaison officer (CULO) When a credit union office
is located on an installation, the commander shall appoint a CULO. As
appropriate, the CULO responsibility should be assigned to comptroller
or resource management personnel. The CULO's photograph, name and duty
telephone number shall be displayed conspicuously at each credit union
office on the installation. Anyone who serves as a credit union board
member or in any other official credit union capacity may not serve as
a CULO. The duties of a CULO are the same as the duties listed for a
BLO (see Sec. 231.5(g)).
(h) In-store banking. In-store banking services may be provided in
accordance with Sec. 231.5(h) except that:
(1) Credit unions interested in submitting proposals to provide
requested in-store banking services shall provide a statement from the
National Credit Union Administration (NCUA) certifying the credit
union's authority to offer the requested financial services to the
commissary, the Military Exchange Services, or other on-base
facilities.
(2) Space granted to a credit union selected to provide in-store
banking services should be issued through a no cost license in
accordance with the Federal Credit Union Act (12 U.S.C. 1751).
Sec. 231.8 Procedures--overseas credit unions.
(a) General policy. (1) Credit union services to authorized persons
and organizations may be provided by domestic on-base credit unions
operating under a geographic field of membership (franchise). The
Foreign Geographic Field of Membership (Franchise) Assignment listing
is included at Appendix D to this part.
(2) The extension of credit union service overseas is encouraged
consistent with the principles prescribed for domestic credit unions
and with applicable status of forces agreements or other
intergovernmental agreements, or host-country law. Where permitted by
the applicable status of forces agreement or other intergovernmental
agreements, or host-country law, the ultimate decision to provide
services overseas rests with the credit union itself.
(3) Where permitted by the status of forces agreements or other
intergovernmental agreements, or host-country law, only Federal credit
unions or federally insured state chartered credit unions may operate
on overseas DoD installations.
(b) Establishment. (1) Commanders shall notify the Secretary of the
Military Department concerned (or designee), through command channels,
when overseas credit union services are needed. Such requests shall
include:
(i) Full information about available space and logistical support.
(ii) The name and location of the nearest credit union facility or
branch.
(iii) The distance between the installation and the nearest credit
union facility or branch.
(iv) The availability of any official or public transportation.
(v) The number of DoD personnel in duty assignments that confine
them to the installation or who cannot obtain transportation (such as
hospital patients).
(vi) In countries not presently served, a statement concurred in by
the Combatant Command that the requirement has been coordinated with
the U.S. Chief of Diplomatic Mission or U.S. Embassy. The statement
shall include that the host country will permit the operations, with
any conditions imposed by the host country identified.
(2) Subsequent to approval of the request from the installation or
community commander to establish an overseas credit union facility, the
Secretary of the Military Department concerned (or designee) shall
solicit proposals for the provision of full credit union services as
follows:
(i) Where there is a DoD designated geographic field of membership
(franchise) with a specific field of membership, the Secretary of the
Military Department (or designee) shall direct the installation or
community commander to contact the servicing defense credit union and
request that a branch or facility be established. The basic decision
concerning such extensions of service rests with the servicing credit
union.
(ii) Where there is no DoD designated geographic field of
membership (franchise), the Secretary of the Military Department (or
designee) shall:
(A) Coordinate requests, through the DFAS, to obtain a geographic
field of membership (franchise). A geographic field of membership
(franchise) is the authorization granted to a credit union by the
Office of the Under Secretary of Defense (Comptroller) to provide
financial services in a specific geographic region located outside the
United States and its territories.
(B) Solicit proposals from credit unions currently operating on DoD
installations.
(C) Review proposals of interested credit unions.
(D) Coordinate with field commands, as needed.
(E) Recommend selection to National Credit Union Administration
(NCUA) or appropriate state regulatory agency with a copy to the DFAS
and the OUSD(C), requesting that the appropriate field of membership
adjustment be made. Such a recommendation shall identify the primary
installations on which the credit union would operate and, if
applicable, the contiguous geographic boundaries for future facilities
and branches.
(3) Where there is an existing field of membership, the Secretary
of the Military Department concerned (or designee) shall take the
following actions:
(i) If a credit union on an installation terminates operation,
afford any other credit union having a geographic field of membership
(franchise) within that country an opportunity to assume the franchise
being vacated. If all such institutions decline, the geographic field
of membership (franchise) shall be offered to the federally insured
defense credit union community. If, as a result of a credit union
decision to decline service to an installation or a termination action,
another credit union is assigned the former geographic field of
membership (franchise) or portion thereof, the NCUA or the applicable
state regulatory agency shall be notified and requested to make
appropriate field of membership adjustments.
(ii) When other credit union(s) having a geographic field of
membership (franchise) within a country decline the opportunity, or
there is no other credit union having a franchise within that country,
the provisions of paragraph (b)(2)(ii) of this section apply.
(4) No commitment may be made to a credit union regarding its
proposal until the appropriate regulatory agency has announced a
selection.
(c) Logistical support. Installation or community commanders will
provide logistical credit union support. Such support normally shall
include:
[[Page 43871]]
(1) Adequate office space, including steel bars; grillwork;
security doors; a vault, safes or both; security alarm systems and
camera surveillance equipment (where deemed necessary) that meet
documented requirements of the contractor's insurance carrier;
construction of counters, teller cages, and customer and work areas;
necessary modifications and alterations to existing buildings; and
construction of a new premises, if necessary. The size and arrangement
of space should permit efficient operations. The credit union shall pay
for all improvements to the space given. Space assigned may not exceed
that prescribed in DoD 4270.1-M.
(2) DoD housing on a rental basis to key credit union personnel
unable to find suitable, reasonably priced housing in the vicinity of
the DoD installation, if available.
(3) Utilities (i.e., electricity, gas, water and sewage), heating,
intrastation telephone service, and custodial and janitorial services
to include garbage disposal and outdoor maintenance (such as grass
cutting and snow removal).
(4) Defense Switched Network (DSN) voice and data communication to
include internet access.
(5) U.S. Military Postal Service support under DoD Directive 4525.6
(reference (q)). Use of free intra-theater delivery system (IDS) is
authorized for all routine mail sent and received between Army Post
Offices (APOs) and Fleet Post Offices (FPOs) within a theater.
(d) Travel. Travel by credit union officials must be at no expense
to the U.S. Government. Overseas commanders may issue invitational
travel orders for official on-base visits by credit union officials at
no cost to the U.S. Government.
(e) Operations. (1) An overseas credit union shall confine its
field of membership to individuals or organizations eligible by law or
regulation to receive services and benefits from the installation.
Services shall not be provided to those personnel precluded such
services by applicable status of forces agreements, other
intergovernmental agreements, or host-country law.
(2) The Department assigns overseas credit unions a prescribed
geographic field of membership (franchise). However, any credit union
may continue to serve its members stationed overseas by mail or
telecommunications.
(3) A credit union proposing any new service not authorized by the
operating agreement must coordinate the establishment of the new
service through the cognizant Component command to the Combatant
Command. The new service can be offered only after the appropriate
command's approval and coordination with the U.S. Chief of Diplomatic
Mission or U.S. Embassy to ensure that the service does not conflict
with the status of forces agreements, other intergovernmental
agreements, or host-country law.
(4) Credit unions that operate full service branches shall have
U.S. currency and coin available for member transactions. In areas
served by currency custody accounts, transactional U. S. currency and
coins shall be made available from the servicing MBF with no direct or
analysis charge to the credit union, provided settlement is made via
the local MBF account or equivalent arrangements are made with the MBF.
(5) In countries served by MBFs operated under contract, credit
unions shall purchase foreign currency only from the servicing MBF.
(i) The bulk rate purchase price shall apply to currency used by
the credit union to make payments to vendors or to make payroll
payments.
(ii) Credit unions that desire and are authorized to provide
accommodation exchange services to its members shall acquire foreign
currency from the servicing MBF at the MBF accommodation rate and sell
it at a rate of exchange no more favorable than that available to
customers of the MBF.
(6) The NCUA may review operations of overseas credit union offices
either when it examines the main credit union or at other times of its
choosing. For federally insured, state chartered credit unions, the
applicable state regulatory agency also may examine credit unions
operations.
Sec. 231.9 Definitions.
Automated teller machine (ATM). An electronic machine that
dispenses cash, and may perform such other functions as funds transfers
among a customer's various accounts and acceptance of deposits.
Equipment generally is activated by a plastic card in combination with
a personal identification number (PIN). Typically, when the
cardholder's account is with a financial institution other than that
operating the ATM, its use results in the assessment of a fee from the
ATM network (Armed Forces Financial Network (AFFN), Cirrus, PLUS)
handling the transaction. Shared access, which is predicated on a
formal agreement between financial institutions, refers to ATMs that
may be used by cardholders of more than one financial institution
without being assessed a network fee.
Banking institution. An entity chartered by a state or the federal
government to provide financial services.
Banking office. A branch bank, or independent bank operated by a
banking institution on a domestic DoD installation or by a foreign
banking institution on an overseas DoD installation.
Branch bank. A separate unit chartered to operate at an on-base
location geographically remote from its parent banking institution.
Credit union. A cooperative nonprofit association, incorporated
under the Federal Credit Union Act, 12 U.S.C. 1751 et seq., or similar
state statute, for the purposes of encouraging thrift among its members
and creating a source of credit at a fair and reasonable rate of
interest.
Credit union facility. A facility employing a communications system
with the parent credit union to conduct business at remote locations
where a full-service credit union or credit union branch is
impractical. Credit union facilities need not provide cash transaction
services but must disburse loans and shares by check or draft and
provide competent financial counseling during normal working hours.
Defense credit union. A state or federally insured credit union
with a field of membership composed primarily of DoD personnel.
Discrimination. Any differential treatment in provision of
services, including loan services, by a financial institution to DoD
personnel and their dependents on the basis of race, color, religion,
national origin, sex, marital status, age, rank, or grade. However, if
uniformly applied, the amount of credit extended may be directly based
on an applicant's total income.
DoD Component. For the purposes of this part, DoD Components
include the Office of the Secretary of Defense, the Military
Departments, the Joint Chiefs of Staff, the Joint Staff and the
supporting Joint Agencies, the Combatant Commands, the Inspector
General of the Department of Defense, the Uniformed Services University
of the Health Sciences, the Defense Agencies, the DoD Field Activities,
and all nonappropriated fund instrumentalities including the Military
Exchange Services, and Morale, Welfare and Recreation activities.
DoD Personnel. All military personnel; DoD civil service employees;
other civilian employees, including special government employees of all
offices, Agencies, and Departments performing functions on a DoD
installation (including nonappropriated
[[Page 43872]]
fund instrumentalities); and their dependents. On domestic DoD
installations, retired U.S. military personnel and their dependents are
included.
Domestic DoD installation. For the purposes of this part, a
military installation located within a state of the United States, the
District of Columbia, Guam or the Commonwealth of Puerto Rico.
Fair Market Rental. A reasonable charge for on-base land,
buildings, or building space. Rental is determined by a government
appraisal based on comparable properties in the local civilian economy.
However, the appraiser will consider that on-base property may not
always be comparable to similar property in the local commercial
geographic area. Examples of circumstances that may affect fair market
rental include limitations of usage and access to the financial
institution by persons other than those on the installation, proximity
to the community center or installation business district, and the
government's right to terminate the lease or take title to improvements
constructed at the financial institution's expense.
Field of membership. A group of people entitled to credit union
membership because of a common bond of occupation, association,
employment, or residence within a well-defined neighborhood, community
or rural district. A field of membership is defined in the credit
union's charter by the appropriate regulatory agency.
Financial institution. This term encompasses any banking
institution, credit union, and subordinate office or facility, each as
separately defined in this section.
Financial services. Those services commonly associated with
financial institutions in the United States, such as electronic banking
(e.g., ATMs and personal computing banking), in-store banking,
checking, share and savings accounts, funds transfers, sales of
official checks, money orders, and travelers checks, loan services,
safe deposit boxes, trust services, sale and redemption of U.S. Savings
Bonds, and acceptance of utility payments and any other services
provided by financial institutions.
Foreign banking institution. A bank located outside the United
States chartered by the country in which it is domiciled.
Full service credit union. A credit union that provides full-time
counter transaction services, to include cash operations, and is
staffed during normal working hours by a loan officer, a person
authorized to sign checks, and a qualified financial counselor. In
overseas areas, ``full service'' includes cash operations where not
prevented by:
(a) Status of forces agreements, other intergovernmental
agreements, or host-country law.
(b) Physical security requirements that cannot be resolved by the
credit union or local command.
Geographic field of membership (franchise). Authorization granted
to a credit union by the Office of the Under Secretary of Defense
(Comptroller) to provide financial services in a specific geographic
region located outside the United States and its territories.
Independent bank. A bank specifically chartered to operate on a DoD
installation or DoD installations whose directors and officers usually
come from the local business and professional community. Such
operations are thus differentiated from county-wide or state-wide
branch systems consisting of a head office and one or more
geographically separate branch offices.
In-store banking. An expansion of financial services provided by an
on-base financial institution within the premises of the commissary,
exchange, and/or other on base retail facility.
Malpractice. Any unreasonable lack of skill or fidelity in
fiduciary duties or the intentional violation of an applicable law or
regulation or both that governs the operations of the financial
institution. A violation shall be considered intentional if the
responsible officials know that the applicable action or inaction
violated a law or regulation.
Military banking facility (MBF). A banking office located on a DoD
installation and operated by a financial institution that the
Department of the Treasury has specifically authorized, under its
designation as a ``Depository and Financial Agent of the U.S.
Government,'' to provide certain banking services at the installation.
National bank. An association approved and chartered by the
Comptroller of the Currency to operate a banking business.
On-base. Refers to physical presence on a domestic or overseas DoD
installation.
Operating agreement. A mutual agreement between the installation
commander and the on-base financial institution to document their
relationships.
Overseas DoD installation. A military installation (or community)
located outside the states of the United States, the District of
Columbia, Guam or the Commonwealth of Puerto Rico.
Part-time MBF. A MBF that operates fewer than 5 days a week
exclusive of additional payday service. When only payday service is
provided, the MBF may be termed a ``payday service facility.''
Regulatory agency. Includes the Office of the Comptroller of the
Currency, Department of the Treasury; the Federal Deposit Insurance
Corporation; the Board of Governors of the Federal Reserve System; the
respective Federal Reserve District Banks; the National Credit Union
Administration; the various state agencies and commissions that oversee
financial institutions; and, for military banking facilities (MBFs),
the Fiscal Assistant Secretary of the Treasury (or designee).
State bank. An institution organized and chartered under the laws
of one of the states of the United States to operate a banking business
within that state.
Surcharge. A fee typically assessed on nonaccountholders to access
an ATM. In accordance with Federal Reserve Board Regulation E, such a
fee must be disclosed at the ATM either through a sign or screen
disclosure. For the purposes of this chapter, surcharges are limited to
ATMs.
Subpart B--DoD Directive 1000.11
Sec. 231.10 Financial institutions on DoD installations.
(a) Purpose. This subpart:
(1) Updates policies and responsibilities for financial
institutions that serve Department of Defense (DoD) personnel on DoD
installations worldwide. Associated procedures are contained in DoD
7000.14-R.
(2) Ensures that arrangements for the provision of services by
financial institutions are consistent among the DoD Components, and
that financial institutions operating on DoD installations provide, and
are provided, support consistent with the policies stated in this
subpart.
(b) Applicability. This subpart applies to the Office of the
Secretary of Defense, the Military Departments, the Joint Chiefs of
Staff, the Joint Staff and the supporting Joint Agencies, the Combatant
Commands, the Inspector General of the Department of Defense, the
Uniformed Services University of the Health Sciences, the Defense
Agencies, the DoD Field Activities, and all nonappropriated fund
instrumentalities including the Military Exchange Services and morale,
welfare and recreation (MWR) activities.
(c) Definitions. Terms used in this subpart are set forth in Volume
5 of DoD 7000.14-R.
(d) Policy. (1) The following pertains to financial institutions on
domestic DoD installations:
[[Page 43873]]
(i) Except where they already may exist as of July 1, 1999, no more
than one banking institution and one credit union shall be permitted to
operate on a DoD installation.
(ii) Upon the request of an installation commander and with the
approval of the Secretary of the Military Department concerned (or
designee), duly chartered financial institutions may be authorized to
provide financial services on DoD installations to enhance the morale
and welfare of DoD personnel and facilitate the administration of
public and quasi-public monies. Arrangement for the provision of such
services shall be in accordance with this subpart and related
issuances.
(iii) Financial institutions, or branches thereof, shall be
established on DoD installations only after approval by the Secretary
of the Military Department concerned (or designee) and the appropriate
regulatory agency.
(A) Only banking institutions insured by the Federal Deposit
Insurance Corporation (FDIC) and credit unions insured by the National
Credit Union Share Insurance Fund (NCUSIF) shall operate on DoD
installations. These financial institutions may be either state or
federally chartered. Foreign banking institutions operating on overseas
DoD installations and chartered to provide financial services in that
country are excepted from this requirement.
(B) Military banking facilities (MBFs) shall be established on DoD
installations only when a demonstrated and justified need cannot be met
through other means. Normally, MBFs shall be authorized only at
overseas locations. They may be considered for use at domestic DoD
installations only when DoD Components have been unable to obtain,
through normal means, financial services from a state or federally
chartered financial institution authorized to operate in that state. In
times of mobilization, it may become necessary to designate additional
MBFs as an emergency measure. The Director, Defense Finance and
Accounting Service (DFAS) may recommend the designation of banking
facilities to the Department of the Treasury under provisions of 12
U.S.C. 265.
(C) Retail banking operations shall not be performed by any DoD
Component. Solicitations for such services shall be issued, or
proposals accepted, only in accordance with the policies identified in
this subpart. DoD Components shall rely on commercially available
sources in accordance with DoD Directive 4100.15.\12\
---------------------------------------------------------------------------
\12\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(D) Retail fees and services for products (to include related
minimum balance requirements for noninterest checking, Negotiable Order
of Withdrawal (NOW) and savings accounts) offered by financial
institutions operating on domestic installations and domestic credit
unions operating on DoD installations overseas shall not exceed 110
percent of the industry-wide averages for banks in the ``Annual Report
to Congress on Retail Fees and Services of Depository Institutions,''
published by the Board of Governors of the Federal Reserve System.
(iv) Installation commanders shall not seek the provision of
financial services from any entity other than the on-base banking
office or credit union. The Director, DFAS, with the concurrence of the
Under Secretary of Defense Comptroller (USD(C)), may approve exceptions
to this policy. Such requests for exception shall be proposed through
the Secretary of the Military Department concerned (or designee).
(v) Financial institutions authorized to locate on DoD
installations shall be provided logistic support as set forth in Volume
5 of DoD 7000.14-R.
(vi) Military disbursing offices, nonappropriated fund
instrumentalities including MWR activities, the Military Exchange
Services and other DoD Component activities requiring financial
services shall use on-base financial institutions to the maximum extent
feasible and consistent with sound management practice.
(vii) The Department encourages the delivery of retail financial
services on DoD installations via nationally networked automated teller
machines (ATMs). ATMs are considered electronic banking services and,
as such, shall be provided only by duly chartered financial
institutions.
(A) Notwithstanding the provisions contained in paragraph
(d)(1)(iii)(D) of this section, on-base ATM service offered by
financial institutions operating on domestic installations and domestic
credit unions operating on DoD installations overseas shall be provided
without surcharge.
(B) Proposals by the installation commander to install ATMs from
other than on-base financial institutions shall comply with the
provisions of paragraph (d)(1)(iv) of this section and will be
considered only when ATM service is unavailable or existing service is
inadequate and the on-base financial institution(s) either declines to
provide the service, fails to improve the existing service so that it
is adequate or does not formally respond to the request within 30 days
of the date of the request.
(viii) Expansion of financial services (to include in-store
banking) provided by on-base financial institutions must be approved by
the installation commander. Such requests for expansion of services
should be coordinated with the installation bank/credit union liaison
officer prior to the commander's consideration. Approved expansion of
services will be documented as an amendment to the existing operating
agreement between the installation commander and the on-base financial
institution. The amendment to the operating agreement and any required
lease (to include a change to an existing lease) shall be in place
prior to the initiation of new financial services or offices.
(ix) The installation commander shall ensure, to the maximum extent
feasible, that all financial institutions operating on his or her
installation are given the opportunity to participate in pilot programs
to demonstrate new financial-related technology (e.g., smart cards) or
establish new business lines (e.g., in-store banking) where a
determination has been made by the installation commander that the
offering of such services is warranted.
(x) Requests for termination of financial services must be approved
by the installation commander, substantiated by sufficient evidence and
forwarded to the Secretary of the Military Department concerned (or
designee). The Secretary of the Military Department (or designee) shall
coordinate such requests with the Under Secretary of Defense
(Comptroller), through the Director, DFAS, before notification to the
appropriate regulatory agency.
(2) The following pertains to financial institutions on overseas
DoD installations:
(i) The extension of services by MBFs and credit unions overseas
shall be consistent with the policies stated in this subpart and with
the pertinent status of forces agreement, other intergovernmental
agreement, or host-country law.
(ii) The policies governing the operation of financial institutions
on domestic DoD installations identified in paragraph (d)(1) of this
section shall apply to financial institutions operating overseas.
(iii) Financial services at overseas DoD installations may be
provided by:
(A) Domestic on-base credit unions operating overseas under a
geographic franchise and, where applicable, as authorized by the
pertinent status of forces agreement, other intergovernmental
agreement, or host-country law.
[[Page 43874]]
(B) MBFs operated under and authorized by the pertinent status of
forces agreement, other intergovernmental agreement, or host-country
law.
(C) Domestic and foreign banks located on overseas DoD
installations that are:
(1) Chartered to provide financial services in that country, and
(2) A party to a formal operating agreement with the installation
commander to provide such services, and
(3) Identified, where applicable, in the status of forces
agreements, other intergovernmental agreements, or host-country law.
(iv) Financial institutions authorized to locate on DoD
installations shall be provided logistical support as set forth in the
Volume 5 of DoD 7000.14-R.
(v) In countries served by MBFs operated under contract,
nonappropriated fund instrumentalities and on-base credit unions that
desire and are authorized to provide accommodation exchange services
shall acquire foreign currency from the MBF at the MBF accommodation
rate; and shall sell such foreign currency at a rate of exchange that
is no more favorable to the customer than that available from the MBF.
(vi) Additional guidance pertaining to financial services overseas
is set forth in Volume 5 of DoD 7000.14-R.
(e) Responsibilities. (1) The Under Secretary of Defense
(Comptroller) (USD(C)) shall develop and monitor policies governing
establishment, operation, and termination of financial institutions on
DoD installations and take final action on requests for exceptions to
this subpart.
(2) The Under Secretary of Defense (Acquisition and Technology)
(USD(A&T)) shall develop and monitor policies and procedures governing
logistical support furnished to financial institutions on DoD
installations, including the use of DoD real property and equipment.
(3) The Under Secretary of Defense (Personnel and Readiness)
(USD(P&R)) shall advise the USD(C) on all aspects of on-base financial
institution services that affect the morale and welfare of DoD
personnel.
(4) DoD Component responsibilities pertaining to this Directive are
set forth in Volume 5 of DoD 7000.14-R.
Subpart C--Guidelines for Application of the Privacy Act to
Financial Institution Operations
Sec. 231.11 Guidelines.
(a) The following guidelines govern the application of DoD
Directive 5400.11 to those financial institutions that operate under
this subpart:
(1) Financial institutions and their branches and facilities
operating on DoD military installations do not fall within the purview
of 5 U.S.C. 552 et seq.
(i) These financial institutions do not fit the definition of
``agency'' to which the Privacy Act applies, that is, any executive
department, Military Department, government corporation, government-
controlled corporation, or other establishment in the executive branch
of the government (including the Executive Office of the President), or
an independent regulatory agency (5 U.S.C. 552(e) and 552a(a)(1)).
(ii) These financial institutions are not ``government
contractors'' within the meaning of 5 U.S.C. 552a(o), as they do not
operate a system of records on behalf of an agency to accomplish an
agency function. According to the Office of Management and Budget
Privacy Act Guidelines, the provision relating to government
contractors applies only to systems of records actually taking the
place of a Federal system which, but for the contract, would have been
performed by an agency and covered by the Privacy Act. Clearly, the
subject institutions do not meet these criteria.
(iii) Since the Act does not apply to them, these financial
institutions are not required to comply with 5 U.S.C. 552a(e)(3) in
obtaining and making use of personal information in their relationships
with personnel authorized to use such institutions. Thus, these
institutions are not required to inform individuals from whom
information is requested of the authority for its solicitation, the
principal purpose for which it is intended to be used, the routine uses
that may be made of it, or the effects of not providing the
information. There also is no requirement to post information of this
nature within on-base banking and credit union offices.
(2) The financial institutions concerned hold the same position and
relationship to their account holders, members, and to the government
as they did before enactment of OMB Circular A-130. Within their usual
business relationships, they still are responsible for safeguarding the
information provided by their account holders or members and for
obtaining only such information as is reasonable and necessary to
conduct business. This includes credit information and proper
identification, which may include social security number, as a
precondition for the cashing of checks.
(3)(i) Financial institutions may incorporate the following
conditions of disclosure of personal identification in all contracts,
including loan agreements, account signature cards, certificates of
deposit agreements, and any other agreements signed by their account
holders or members:
I hereby authorize the Department of Defense and its various
Components to verify my social security number or other identifier
and disclose my home address to authorized (name of financial
institution) officials so that they may contact me in connection
with my business with (name of financial institution). All
information furnished will be used solely in connection with my
financial relationship with (name of financial institution).
(ii) When the financial institution presents such signed
authorizations, the receiving military command or installation shall
provide the appropriate information.
(4) Even though an agreement described in paragraph (a)(3) of this
section has not been obtained, the Department of Defense may provide
these financial institutions with salary information and, when
pertinent, the length or type of civilian or military appointment,
consistent with DoD Directives 5400.11 and 5400.7. Some examples of
personal information pertaining to DoD personnel that normally can be
released without creating an unwarranted invasion of personal privacy
are name, rank, date of rank, salary, present and past duty
assignments, future assignments that have been finalized, office phone
number, source of commission, and promotion sequence number.
(5) When DoD personnel with financial obligations are reassigned
and fail to inform the financial institution of their whereabouts, they
should be located by contacting the individual's last known commander
or supervisor at the official position or duty station within that
particular DoD Component. That commander or supervisor either shall
furnish the individual's new official duty location address to the
financial institution, or shall forward, through official channels, any
correspondence received pertaining thereto to the individual's new
commander or supervisor for appropriate assistance and response.
Correspondence addressed to the individual concerned at his or her last
official place of business or duty station shall be forwarded as
provided by postal regulations to the new location. However, once an
individual's affiliation with the Department of Defense is terminated
through separation or retirement, the Department's ability to render
locator assistance (i.e., disclose a home address) is severely
curtailed unless the public
[[Page 43875]]
interest dictates disclosure of the last known home address. The
Department may, at its discretion, forward correspondence to the
individual's last known home address. The Department may not act as an
intermediary for private matters concerning former DoD personnel who
are no longer affiliated with the Department.
(b) Questions concerning this guidance should be forwarded through
channels to the Deputy Chief Financial Officer, Office of the Under
Secretary of Defense (Comptroller), The Pentagon, Washington, DC 20301-
1100.
Appendix A to Part 231--Sample Operating Agreement
Operating Agreement Between Military Installations and Banks/Credit
Unions
Note: The following operating agreement template identifies
general arrangement and content. Content of the actual operating
agreement may vary according to the circumstances of each
installation.
Operating Agreement Between (Name of Installation), (State or Country
Installation Located) and (Name of Bank/Credit Union).
This Agreement is made and entered into this day by and between
the installation commander of (Name of Installation) in his or her
official capacity as installation commander, hereinafter referred to
as the ``Commander'' and the (Name of Bank/Credit Union), having its
principal office at (Location of Home Office) hereinafter referred
to as the ``Bank/Credit Union,'' together hereinafter referred to as
``the parties.'' Whereas the Commander and the Bank/Credit Union
enter into this Operating Agreement upon the mutual consideration of
the promises, covenants, and agreements hereinafter contained:
1. The parties understand and agree that this Agreement shall in
no way modify, change, or alter the terms and conditions of Lease
Number (number of lease) covering the use of real property described
therein, and this Agreement shall continue, subject to the
termination provisions herein-after set forth, during the terms of
said lease and any extensions thereof. In the case of a bank
operating a military banking facility (MBF) overseas, this agreement
will not change the conditions of the contract between the bank and
the Department of Defense.
2. The Bank/Credit Union agrees to operate a (State Bank,
National Bank, Independent Bank, Branch Bank, Military Banking
Facility or Credit Union) on-base in accordance with the policies
and procedures set forth in Volume 5, Chapter 34 of the DoD
Financial Management Regulation or, for the Overseas Military
Banking Program (OMBP), the policies and procedures set forth in
Volume 5, Chapter 34 of the DoD Financial Management Regulation and
the applicable DoD contract. The hours of operations shall be
between (Hour Office Opens) and (Hour Office Closes), and on the
following days (Week Days Office Open), except on government
holidays when the Bank/Credit Union may be closed. The Program
Office for the OMBP shall notify the commander of any changes to the
DoD contract.
3. The Bank/Credit Union shall provide the following services:
a. Services for Individuals
(1) Demand (checking) account services.
(2) Cashing personal checks and government checks for
accountholders.
(3) Maintaining savings accounts and (any other interest-bearing
accounts).
(4) Selling official checks, money orders, and traveler's
checks.
(5) Selling and redeeming United States savings bonds.
(6) Providing direct deposit service.
(7) Electronic banking (Automated Teller Machines).
b. Services for Disbursing Officers
(1) Furnishing cash (if the financial institution's terms for
doing so is consistent with sound management practices).
(2) Accepting deposits for credit to the Treasury General
Account (where the financial institution has entered into an
agreement with the Department of the Treasury).
c. Services for Nonappropriated Fund Instrumentalities and Private
Organizations
(1) Demand (checking) account services, including wire
transfers.
(2) Savings accounts and nonnegotiable certificates of deposit
or other interest-bearing accounts offered by the bank.
(3) Currency and coin for change.
4. Service charges shall be as follows:
a. Service for Individuals.
(1) No fees shall be charged to individuals for the services
listed in subpara graph 3.a.(2), 3.a.(5) and 3.a.(7), above, except
that checks drawn on other financial institutions may be treated in
accordance with the financial institution's established policy. Any
charge to cash a government check shall not exceed that typically
charged by financial institutions in the vicinity of the
installation.
(2) Checking and savings accounts. Fees for individual checking
and savings accounts shall be the customary service charges of the
bank/credit union or those negotiated for base personnel per the
attached schedule.
(3) Sale of official checks, money orders, traveler's checks and
other types of financial paper. Charges for these services shall be
the customary charges of the financial institution operating the on-
base banking/credit union office.
b. Service for Disbursing Officers. No charge shall be made for
the services listed in subparagraph 3.b.(2), above. Compensation to
the financial institution shall be per its separate agreement with
the Department of the Treasury. Charges, if any, for the services
stated in subparagraph 3.b.(1) shall be as locally negotiated with
the financial institution.
c. Nonappropriated Fund Instrumentalities and Private
Organizations. State the charges or refer to a schedule of charges
for funds and organizations that do not participate in a central
banking program. For those activities participating in a central
banking program, determine the compensation to the financial
institution by account analysis.
5. It is agreed that the Bank/Credit Union shall:
a. Notify the Commander of any proposed changes to the attached
schedule of fees and services at least 30 days prior to
implementation.
b. Follow the requirements in Volume 5, Chapter 34 of the DoD
Financial Management Regulation and any changes thereto.
c. Comply with Department of the Treasury requirements for
establishment and operation of a Treasury General Account where the
bank/credit union agrees to act as a depository for government
funds.
d. Absolve the (Military Service) and its representatives of
responsibility or liability for the financial operation of the bank/
credit union; and for any loss (including losses due to criminal
activity), expenses, or claims for damages arising from bank/credit
union operations.
e. Indemnify, and hold harmless the United States from (and
against) any loss, expense, claim, or demand, including attorney
fees, court costs, and costs of litigation, to which the government
may be subjected as a result of death, loss, destruction, or damage
in connection with the use and occupancy of (Military Service)
premises occasioned in whole or in part by officers, agents or
employees of the institution operating a bank/credit union office.
f. Favorably respond, whenever feasible, to reasonable local
command requests for lectures and printed materials to support
consumer credit education programs, financial management program and
newcomer's briefings.
g. Prominently post in the lobby of the bank/credit union the
name, duty telephone number and photograph of the Bank/Credit Union
Liaison Officer.
h. Allow, with reasonable notification, authorized auditors or
installation comptroller representatives to verify financial
operational data provided by the institution at the request of the
installation commander.
i. Accept the government travel card in all on-base ATMs
operated by the bank/credit union.
j. Abide by the installation fire protection program, including
immediate correction of fire hazards noted by the installation fire
inspector during periodic fire prevention inspections.
6. The Commander shall provide the following space and support:
a. Space requirements for bank/credit union operations will be
administered in accordance with the existing lease. (Show Number of
Lease).
b. Utilities (i.e., electricity, gas, water and sewage),
heating, intrastation telephone service, and custodial and
janitorial services to include garbage disposal and outdoor
maintenance (such as grass cutting and snow removal) on a
reimbursable basis.
c. Assistance in locating military personnel and civilian
employees who tender uncollectable checks, overdraw their accounts,
default on loans, or otherwise owe money to (or are owed money by)
the Bank/Credit Union.
d. Making recovery of funds in such cases as allowed by
regulation.
7. Termination of this Agreement shall be consistent with the
termination provision of
[[Page 43876]]
the real property lease and Volume 5, Chapter 34, of the DoD
Financial Management Regulation. The Secretary of the (Military
Department) shall have the right to terminate this Agreement at any
time. Any termination of the right of the Bank/Credit Union to
operate on the installation shall render this Agreement terminated
without any applicable action by the Commander.
8. Any provision of this Agreement that is contrary to or
violates any laws, rules, or regulations of the United States, its
agencies, or the state of (State Bank/Credit Union Located) that
apply on federal installations shall be void and have no force or
effect; however, both parties to this Agreement agree to notify the
other party promptly of any known or suspected continuing violation
of such laws, rules, or regulations.
9. So long as this Agreement remains in effect, it shall be
reviewed jointly by the Commander and the Bank/Credit Union at least
once every 5 years to ensure compatibility with current DoD
issuances and to determine if any changes are required to the
Agreement.
In witness whereof, the Commander, and the Bank/Credit Union, by
their duly authorized office, have hereunto set their hands this day
of (Day, Month, Year).
----------------------------------------------------------------------
Bank/Credit Union Official
----------------------------------------------------------------------
Installation Commander
Appendix B to Part 231--In-Store Banking
A. Selection Process. The purpose of this guidance is to assure
an impartial and thorough process to select the best on-base
financial institution to provide in-store banking services when such
services are desired and approved by the installation commander.
1. Consistent with DoD Component delegation, the final decision
to solicit for an in-store banking office rests with the
installation commander.
2. The DoD Component seeking in-store banking (e.g., Defense
Commissary Agency, Military Exchange Services and MWR activities)
shall draft the solicitation letter.
3. The solicitation letter shall be reviewed by the installation
legal counsel prior to its release.
4. Close coordination among all cognizant DoD elements is
essential throughout the selection process.
5. The Bank/Credit Union Liaison Officer(s) shall be the focal
point(s) of the selection process.
6. During the selection process, all communication between
requesting DoD Component and the financial institutions shall be
channeled through the Bank/Credit Union Liaison Officer(s).
B. Specific Procedures:
1. The need for in-store banking service may be identified from
either:
a. An unsolicited proposal from an on-base financial
institution,
b. A DoD Component's request, or
c. An installation commander's request.
2. The cognizant installation commander is responsible for
assessing the environment and authorizing the Bank/Credit Union
Liaison Officer(s) to pursue the acquisition of in-store banking
services. If no authorization is given, no further action is
required.
3. The cognizant installation commander shall determine whether
a solicitation is required. (A solicitation shall be required
whenever there is two or more financial institutions on a DoD
installation). If no solicitation is required, then the Bank/Credit
Union Liaison Officer shall work directly with the on base financial
institution to obtain the requested services. Where there is neither
a banking office nor an on-base credit union, the solicitation
process outlined in paragraph 340502, as supplemented by the
provisions outlined in paragraph A, above, apply.
4. The requesting DoD Component shall prepare a solicitation
letter and present the letter, through the Bank/Credit Union Liaison
Officer, to the installation commander for signature. The
solicitation letter shall identify the financial services being
requested and classify these services as either mandatory or
optional. In addition, the solicitation letter shall highlight any
services that will be weighed as more important than others during
the evaluation of the proposals. Any space consideration and terms
of the proposed agreement also shall be identified in the letter.
5. In order to maintain the integrity of the solicitation
process, all communications among the requesting agency, the
installation commander, and the interested financial institutions
shall be directed through the Bank/Credit Union Liaison Officer(s).
The Bank/Credit Union Liaison Officer(s) shall forward the
solicitation letter to both on-base financial institutions. All
proposals shall be referred to the requesting DoD Component for
evaluation and subsequent selection. Credit union proposals must
contain certification from the NCUA or appropriate state regulatory
agency that the provision of the requested services complies fully
with regulatory guidelines and statute. The requesting DoD Component
shall submit a written recommendation, and supporting rationale, to
the installation commander for final approval. The installation
commander shall approve or disapprove the requesting DoD Component's
recommendation and notify the requesting agency of that decision.
6. The Bank/Credit Union Liaison Officer(s) shall notify in
writing the selected financial institution and request that
institution to coordinate with the proper activity to begin any
construction, modifications or renovations necessary to open the in-
store banking office. The cognizant facility management personnel
shall begin the process of obtaining the necessary outgrant
instruments. Concurrently, the requesting DoD Component
representative and the financial institution representative shall
draft the appropriate amendment to the operating agreement. The
amendment shall contain provisions regarding: (a) the roles and
responsibilities of all parties involved, (b) the financial services
to be provided, and (c) the logistical support arrangements to
include custodial services and security provisions. The amendment
shall be coordinated with the Bank/Credit Union Liaison Officer(s)
prior to forwarding that document to the installation commander for
signature. The amendment shall be signed by the installation
commander and the appropriate representatives from the financial
institution and the requesting DoD Component.
Appendix C to Part 231--Sample Certificate of Compliance for Credit
Unions
Certificate of Compliance
I, (name), general manager of the (credit union), located at
(place), certify that this credit union complies with the
requirements of the Federal Credit Union Act, section 124 (12 U.S.C.
1770), for the allotment of space in Federal buildings without
charge for rent or services. At least 95 percent of the (credit
union and branch) current membership is composed of persons who are
now, or were when they joined this credit union, military personnel
or Federal employees, or members of their families.
Date-------------------------------------------------------------------
Name-------------------------------------------------------------------
(President of the board of directors or general manager)
(Note: The Certificate of Compliance is posted on credit union
letterhead)
Appendix D to Part 231--Foreign Geographic Field of Membership
(Franchise) Assignment Listing
Credit Union services to authorized persons and organizations on
DoD installations overseas are provided by domestic defense credit
unions operating under a geographic field of membership (franchise).
The DoD geographic fields of membership (franchises) are as follows:
Bahrain
Navy Federal Credit Union
Belgium
Andrews Federal Credit Union
Canada
Navy Federal Credit Union
Cuba
Navy Federal Credit Union
Diego Garcia
Navy Federal Credit Union
Federal Republic of Germany
Andrews Federal Credit Union:
State of Hessen
State of Nordrhein Westfalen
Hamlen Pymont--Sub District of Hannover County/District State of
Niedersachsen
Mainz--Sub District of County/District Rheinhessen State of
Rheinlandpfalz
Bad Kreuznach--Sub District of Koblenz County/District State of
Rheinlandpfalz
County/District of Unterfranken--State of Bayern
Finance Center Federal Credit Union:
State of Bayern excluding County/District of Unterfranken
Pentagon Federal Credit Union:
State of Hamburg
State of Schleswig Holstein
[[Page 43877]]
State of Bremen
State of Niedersachsen excluding Hamlen Pymont Sub District
Hannover County/District
Service Federal Credit Union:
State of Berlin
State of Baden-Wurttemburg
State of Saarland
State of Rheinlandpfalz excluding:
Bad Krueznach--Sub District of Koblenz
Mainz--Sub District of Rheinhessen
Greece/Crete
Army and Air Force Mather Federal Credit Union
Navy and Marine Corps--Navy Federal Credit Union
Hong Kong
Navy Federal Credit Union
Iceland
Navy Federal Credit Union
Italy
Army and Air Force--Global Credit Union
Navy and Marine Corps Navy--Federal Credit Union
Japan
Army and Air Force--United Services of America Federal Credit Union
Navy and Marine Corps--Navy Federal Credit Union
Korea
United Services of America Federal Credit Union
The Netherlands
Andrews Federal Credit Union
Okinawa (Prefecture of Japan)
Army and Air Force--Pentagon Federal Credit Union
Navy and Marine Corps--Navy Federal Credit Union
The Philippines
Army and Air Force--Alaska USA Federal Credit Union
Navy/Marine Corps--Navy Federal Credit Union
Portugal
Pentagon Federal Credit Union
Spain
Army and Air Force--Pentagon Federal Credit Union
Navy and Marine Corps--Navy Federal Credit Union
Turkey
Pentagon Federal Credit Union
United Kingdom
Army and Air Force--Keesler Federal Credit Union
Navy/Marine Corps--Navy Federal Credit Union
World-Wide
Tower Federal Credit Union (representative offices only)
Security Service Federal Credit Union (representative offices only)
Note: Questions concerning this guidance should be forwarded
through channels to the Deputy Chief Financial Officer, Office of
the Under Secretary of Defense (Comptroller), The Pentagon,
Washington, DC 20301-1100.
Dated: August 5, 1999.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 99-20509 Filed 8-10-99; 8:45 am]
BILLING CODE 5001-10-P
