News

Mass. division of banks issues letter on interactive teller machines

July 8, 2013

The division of banks in the Commonwealth of Massachusetts recently issued a legal opinion on the regulatory approval process for the installation of an interactive teller machine at a location other than an existing banking office.

A report on the website Lexology said that an ITM would be considered an "electronic branch," and as such, would follow the same application process used for an ATM.

Under that regulation, the applicant would submit a notice to the division of banks within 30 days after opening the ATM location.

In the article, Boston law firm Nutter McClennen & Fish LLP said that "The Division also considered whether the interactive features of ITMs would make them 'manned electronic branches,' which are prohibited under Chapter 167B, Section 3 of the General Laws of Massachusetts unless located at a banking office."

Given that the machines are operated by the customer because there is no bank employee on site, ITMs are not manned branches, but rather, automated machines.

Similarly, Nutter attorneys Kenneth F. Ehrlich and Michael K. Krebs said, the U.S. Treasury Office of the Comptroller of the Currency determined in 1999 that a so-called remote service unit was not technically a bank branch, but an "automated facility, operated by a customer of a bank" and that such a device may be equipped for phone or video contact with a bank employee.

In August 2012, the General Counsel for the National Credit Union Association issued its own letter clarifying that "a video-teller machine ... may serve as a service facility in the context of both select group additions and underserved areas."

Read more about regulatory issues.