OCC 2001-36
OCC Bulletin
Subject: Electronic Banking: Notice of Proposed 
         Rulemaking
Description: Proposed Rule
Date: July 16, 2001

TO:	Chief Executive Officers of All National Banks, 
Department and Division Heads, All Examining Personnel 
and Other Interested Parties


The attached proposed rule provides guidance to national 
banks regarding permissible electronic banking 
activities.  The proposed rule also codifies several 
positions that the OCC has taken previously in published 
interpretive letters to national banks. The regulation 
was published in the Federal Register on July 2, 2001.  
The comment period ends on August 31, 2001.

This proposed rule is the result of a review by the OCC 
of its regulations with the goal of revising them in ways 
that would facilitate bank use of technology, consistent 
with safety and soundness.  This review began with the 
publishing of an advance notice of proposed rulemaking 
(ANPR) in the Federal Register on February 2, 2000 
(65 Fed. Reg. 4895). The NPRM furthers the requirements 
of section 729 of the Gramm-Leach-Bliley Act, which 
directs the OCC to conduct a study of its regulations 
concerning the delivery of financial services and to make 
recommendations adapting existing requirements to on-line 
banking and lending.

Among the most significant changes, the proposal:

· Codifies recent OCC interpretative letters approving 
  the use of the finder authority by national banks to 
  engage in activities made possible by technological 
  developments.  The proposed regulation includes 
  examples, both in the electronic banking context and 
  the non-electronic banking context, illustrating the 
  full range of finder activities that the OCC has 
  authorized.  

· Sets forth the factors the OCC considers in determining
  whether an electronic activity is part of, or 
  incidental to, the business of banking. These factors 
  are based on case law as well as long-standing OCC 
  precedents and will provide better guidance to national 
  banks seeking to engage in new electronic activities.  

· Clarifies that State law applies to a national bank's 
  conduct of activities electronically only to the same 
  extent it would apply if the activity were conducted 
  through traditional means.

· Codifies OCC interpretations that permit national banks
  as part of a digital signature transaction to act as a 
  certification authority that issues certificates 
  verifying the identity of the certificate holder.  The 
  proposal also requests comments on whether this 
  authority should include the ability of a national bank
  to issue a digital certificate that verifies that the 
  holder has certain authority or the financial capacity 
  to engage in a transaction, how these activities will 
  be structured, and whether these activities present 
  unique risks.

· Codifies OCC interpretations that permit a national 
  bank to collect, process, transcribe, analyze and store 
  banking, financial and economic data for itself and its 
  customers as part of the business of banking.  The 
  proposal also requests comments on whether the OCC 
  should issue a rule on incidental data processing that 
  would recognize that a national bank may generally 
  derive a certain specified percentage of its total 
  annual data processing revenue from processing non-
  financial data as incidental to its financial data 
  processing services.

· Clarifies that a national bank will not be considered 
  "located" in a state simply because it maintains 
  technology, such as a server or an automated loan 
  center, in that state or because customers in that 
  state electronically access a bank's products and 
  services. 

· Requires, as a matter of safety and soundness, that 
  banks that share co-branded Web sites or other 
  electronic space with affiliated or unaffiliated third 
  parties take reasonable steps to enable customers to 
  distinguish between products and services offered by 
  the bank and those offered by the third party. 

The proposal creates a new Subpart E to Part 7 of the 
OCC's regulations to house these and other OCC provisions
related to the conduct of national bank activities 
through electronic means. 

For further information, contact James Gillespie, 
assistant chief counsel, (202) 874-5200; Stuart 
Feldstein, assistant director, Legislative and Regulatory
Activities Division, (202) 874-5090; or Heidi M. Thomas, 
counsel, Legislative and Regulatory Activities Division, 
(202) 874-5090.



_____________________________________
Julie L. Williams
First Senior Deputy Comptroller and Chief Counsel




Attachment:  66 FR 34855