[Federal Register Volume 66, Number 174 (Friday, September 7, 2001)]
[Rules and Regulations]
[Pages 46707-46727]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 01-22173]
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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: Final rule.
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SUMMARY: This final 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: This rule is effective June 1, 2001.
FOR FURTHER INFORMATION CONTACT: T. Summers, 703-602-0299.
SUPPLEMENTARY INFORMATION:
Background
Stateside military banking began in 1941 when the Department
realized that financial services were urgently needed by military and
civilian personnel on domestic installations. To address this need, the
Department permitted installation commanders to negotiate with nearby
local banks to establish branches on their installation. Today, there
are over 230 domestic installations that have either a bank or credit
union or both. To ensure consistency between installations in the
level, cost and types of financial services offered the Department
established regulations in parts 230 and 231 to govern the operation
and oversight of these institutions. These regulations limit the number
of financial institutions that may operate on an installation to one
bank and one credit union (with a grandfather provision). The
regulations require full and open competition for a full spectrum of
banking services (to include electronic banking services). Policy
guidance relating to the military banking program, by regulation, is
the responsibility of the Under Secretary of Defense (Comptroller)
while operational guidance rests with the Defense Finance and
Accounting Service (DFAS). To ensure financial services are available
on our overseas installations, the Department operates the overseas
military banking program. The DFAS has been assigned the program office
responsibilities for this effort, which is provided under contract by a
domestic financial institution. In FY 2000, the overseas military
banking program contractor operated 110 banking offices and over 250
automated teller machines in 10 foreign countries. Overseas military
banks support DoD personnel and their families, disbursing officers,
appropriated fund activities (such as the Defense Commissary Agency)
and nonappropriated fund activities (such as the Army and Air Force
Exchange Service).
Comments, and Changes to, the Proposed Rule
The Department of Defense published a proposed rule on August 11,
1999 (64 FR 43858). Over 240 comments from 55 entities were received in
response to the publication of the proposed rule. The majority of these
comments focused on three areas in the proposed rule: (1) Prohibiting
the assessment of automated teller machine (ATM) surcharging; (2) the
establishment of a ceiling for other fees and charges; and (3) monthly
financial reporting. The first two were addressed in 32 CFR part 230.
The comments and the disposition of those comments on monthly financial
reporting are specifically addressed below. The remainder of the
comments were either administrative in nature or suggested that
additional clarification was needed in certain areas. None of these
resulted in any significant changes to the proposed rule.
The previously published proposed rule (Sec. 231.4(g)(5)) would
have required that the on-base financial institution include in its
operating agreement with the installation commander a provision that it
will furnish copies of its monthly financial reports and other local
publications to the installation commander (or designee). Prior to the
consolidation of the guidance for banks and credit unions, the
provision for monthly reporting was only included in the credit union
guidance with periodic financial reporting required for banks only in
certain situations. Therefore, most of the comments received were
objections from on-base banks. The comments reflected that the banking
industry is highly regulated and quarterly reports are generated as
required by Federal and State regulators. Thus, they did not see a need
to require the monthly production of information that is neither
requested nor needed. It was suggested that when additional information
is needed, it would be more appropriate for it to be provided on an
``as requested'' basis. There may be occasions where the installation
commander will need financial information that is unobtainable from
sources other than the on-base financial institution. For example,
there may be a need for financial information by the installation
commander to accommodate an evaluation of a potential expansion of
existing on-base financial services or information may be required to
assist in the development of a solicitation when the on-base financial
institution has given notice of its intent to terminate operations on
the installation. Based on the comments received, the section has been
revised to require an on-base financial institution furnish copies of
its financial reports and other local publications only on an ``as
needed'' basis in response to a formal request from the installation
commander (or designee).
[[Page 46708]]
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.
Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''
It has been certified that the rule does not involve a Federal
mandate that may result in the expenditure by State, local and tribal
governments, in the aggregate, or by the private sector, of $100
million or more and that such rulemaking will not significantly or
uniquely affect small governments.
Executive Order 13132, ``Federalism''
It has been certified that the rule does not have federalism
implications. The rules do not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government.
List of Subjects in 32 CFR Part 231
Armed forces, Banks, Banking, Credit unions, Federal buildings and
facilities.
Accordingly, 32 CFR part 231 is 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 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 Applications of the Privacy Act to Financial
Institution Operations
231.11 Guidelines.
Appendix A to part 231--Sample Operating Agreement Between Military
Installations and Financial Institutions
Appendix B to part 231--In-store Banking.
Appendix C to part 231--Sample certificate of compliance for credit
unions.
Authority: 10 U.S.C. 136.
Subpart A--Guidelines
Sec. 231.1 Overview.
(a) Purpose. This part implements DoD Directive 1000.11 (32 CFR
part 230) \1\ 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
herein.
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\1\ Copies may be obtained via Internet at http://www.dtic.whs/
directives.
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(b) Applicability. This part applies to the Office of the Secretary
of Defense (OSD), the Military Departments, the Joint Chiefs of Staff
(JCS), the Joint Staff and the supporting Joint Agencies, the Combatant
Commands, the Inspector General of the Department of Defense (IG, DoD),
the Defense Agencies, the DoD Field Activities, the Uniformed Services
University of the Health Sciences (USUHS), all DoD nonappropriated fund
instrumentalities including the Military Exchange Services and morale,
welfare and recreation (MWR) activities, and all other organizational
entities within the Department of Defense.
Sec. 231.2 Policy.
The policy pertaining to financial institutions operating on DoD
installations is contained in DoD Directive 1000.11 (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 this part.
(b) The Under Secretary of Defense (Acquisition, Technology and
Logistics) (USD(AT&L)) shall monitor policies and procedures governing
logistical support furnished to financial institutions on DoD
installations, including the use of DoD real property and equipment.
(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
[[Page 46709]]
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(AT&L), 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.
(14) Maintain a listing of all geographic franchises assigned to
credit unions serving DoD overseas installations.
(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 banking institution, 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 (32 CFR part 230).
(4) Evaluate the services provided and related charges and fees 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 1000.11 (32 CFR part 230) to the USD(C)
through the Director, DFAS.
(10) Monitor and encourage the use of financial institutions on DoD
installations to accomplish the following ends.
(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, including U.S. savings bonds. 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, without charge, basic financial education and counseling
services. Financial education and counseling services refer to basic
personal and family finances such as budgeting, checkbook balancing and
account reconciliation, benefits of savings, prudent use of credit, how
to start a savings program, how to shop and apply for credit, and the
consequences of excessive credit.
(12) Establish liaison, as appropriate, with federal and state
regulatory agencies and financial institution trade associations,
leagues, and councils.
(13) Make military locator services available to on-base financial
institutions in accordance with the Privacy Act guidelines in subpart B
of this part.
(14) Permit DoD personnel to serve on volunteer boards or
committees of on-base financial institutions, without compensation,
when neither a conflict of duty nor a conflict of interest is involved,
in accordance with DoD Directive 5500.7.\3\
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\3\ See footnote 1 to Sec. 231.1(a).
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(15) Allow DoD personnel to attend conferences and meetings that
bring together representatives of on-base financial institutions, when
neither a conflict of duty nor a conflict of interest is involved, 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 the following types of
requests affecting financial institutions overseas.
(i) Establish financial institutions in countries not presently
served. Such requests will include a statement 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.
(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 that 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
[[Page 46710]]
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 as specified in this part
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 volunteer boards or committees
of on-base financial institutions, without compensation, when neither a
conflict of duty nor a conflict of interest is involved, in accordance
with DoD Directive 5500.7.
(7) Allow DoD personnel to attend conferences and meetings that
bring together representatives of on-base financial institutions, when
neither a conflict of duty nor a conflict of interest is involved, 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 a valid
requirement.
Sec. 231.4 General provisions.
(a) Security. The installation commander (or designee) and
officials of the on-base financial institutions shall work with the
installation security authorities to establish an understanding as to
each entity's responsibilities. The on-base financial institutions are
encouraged to establish an ongoing relationship with installation
security authorities on all matters of asset protection.
(1) A written agreement shall be established outlining the security
procedures that the financial institution will follow and the role that
installation security authorities will play with regard to alarms,
movement of cash, and procedures to be followed in response to criminal
activity (e.g., armed robbery).
(2) Cash and other assets in on-base banking offices and credit
unions are the property of those financial institutions. Maintenance of
alarms and use of armored cars is the sole responsibility of the on-
base financial institution. The on-base financial institution is also
solely responsible for the guarding or escorting of cash unless the
installation commander determines that providing such services is
desirable or necessary.
(b) Central locator services. Military locator services shall be
provided per the guidelines in subpart B of 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. The
financial institution will pay the appropriate fee for each request to
the respective Military Department.
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\6\ See footnote 1 to Sec. 231.1(a).
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(2) The DoD Components shall 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, and cite
the cognizant Military Service regulation that authorizes the use of
locator services. If a financial institution needs immediate service,
the cognizant institution official 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 Worldwide Locator,
U.S. Army Enlisted Record and Evaluation Center, 8899 E. 56th Street,
Indianapolis, IN 46249-5301.
(ii) For addresses of Navy active, retired, separated and civilian
personnel, financial institutions may telephone (901) 874-3388 or write
to: Navy Personnel Command, PERS-312F, 5720 Integrity Drive,
Millington, TN 38055-3120.
(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: Air Force Personnel Center, MSIMDL Suite
50, 550 C Street West, Randolph AFB, TX 78150-4752.
(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) An on-base financial institution 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) An on-base financial institution 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 does not impose an unreasonable
workload.
(3) An on-base financial institution may include an insert in the
installation's newcomers package (or equivalent). This insert should
benefit newcomers by identifying the financial services that 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 are not permitted to distribute
competitive
[[Page 46711]]
literature or forms on the installation. These institutions, however,
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 advertisers are
not official publications and, thus, may include advertising paid for
by any financial institution.
(7) Installation activities, including Military Exchange Services
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 the Military Exchange
Services from distributing literature on affinity credit card services
that those Military Exchange Services may acquire centrally through
competitive solicitation.
(d) Automated teller machine (ATM) service. 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 ATMs on DoD
installations shall bear the cost of ATM installation, maintenance and
operation. The installation commander may enter into an agreement with
the on-base financial institution wherein the installation may acquire
and provide ATMs to on-base financial institutions under certain
circumstances, such as when it is advantageous to the government to
have one or more ATMs available for use but the acquisition cost to the
financial institution is prohibitive. No ATM shall be purchased by an
installation unless approved by the Secretary of the Military
Department concerned (or designee). In all such cases, installation
costs and all logistic support shall be borne by the financial
institution.
(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(c) and 231.7(b).
(3) The availability of ATM service shall not preclude the later
establishment of a banking office should conditions change on an
installation.
(4) Proposals by an installation commander to install ATMs on
domestic installations from other than on-base financial institutions,
including the Military Exchange Services, morale, welfare and
recreational activities and/or other nonappropriated fund
instrumentalities, shall be considered only when:
(i) ATM service is unavailable or existing service is inadequate,
and
(ii) 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. Any ATM service from other
than on-base financial institutions is considered an exception to
policy. The procedures to establish an on-base financial institution
set forth in Secs. 231.5(c) and 231.7(b) shall be followed when
soliciting for such ATM services. Proposals offering shared-access ATMs
(e.g., ATMs operated by two or more financial institutions where their
accountholders are not assessed any or all fees applicable to
nonaccountholders) 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. On installations
with MBFs operated under contract, the MBFs shall be the primary source
of the ATM service except when a determination has been made by the
cognizant contract program office that providing the service is either
not cost effective or precluded by pertinent status of forces
agreements, other intergovernmental agreements or host-country law. In
those instances where ATM service from foreign banking institutions is
authorized and provided by other than the on-base financial
institution, 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 submitted for approval by the
appropriate Combatant Commander (or designee) prior to its execution. A
copy of the operating agreement will be forwarded through DoD Component
channels to the DFAS.
(e) Domestic and international treasury general accounts. In cases
where authorization will be required for the on-base banking office or
credit union to act as a Treasury General Account (TGA) domestic
depositary (or, on overseas installations, an International Treasury
General Account (ITGA) depository), the financial institution shall
satisfy the risk management standard established by the Secretary 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.
(f) Staffing. (1) On-base financial institutions shall be staffed
adequately (i.e., commensurate with industry standards for similar
numbers of accountholders and financial services rendered). Staffing at
overseas MBFs operated under DoD contract shall be maintained within
negotiated ceilings.
(2) All staffing shall comply fully with applicable equal
employment opportunity laws and with the spirit of DoD equal employment
opportunity policies as set forth in DoD Directive 1440.1.\8\
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\8\ See footnote 1 to Sec. 231.1(a).
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(3) DoD personnel, excluding military retirees and their
dependents, may not serve as directors of domestic or foreign banking
institutions operating banking offices on those DoD installations where
they currently are assigned. This does not preclude 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, from retaining his or her directorship if called to
active duty.
(4) DoD personnel may not be detailed to duty with an on-base
financial institution located on a DoD installation. Off-duty
personnel, however, may be employed by an on-base financial institution
subject to approval by the installation commander (or designee). Such
employment must not interfere with the performance of the individual's
official duties and responsibilities.
(g) 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.
(h) Financial education. (1) Officials of on-base financial
institutions shall be
[[Page 46712]]
invited to take part in seminars to educate personnel on personal
financial management and financial services. Financial institutions
shall be encouraged to provide financial education and counseling
services as an integral part of their financial service offerings.
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 recommend
workable repayment plans that avoid further endangering credit ratings
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 difficulties in obtaining future
credit at reasonable rates and terms and shall recommend its use only
when no other alternative will alleviate the situation.
(i) Operating agreements. (1) Before operations of an on-base
banking office or credit union begin, a written operating agreement
(Appendix C of this part) and the appropriate real estate outgrant
(i.e., a lease, permit or license issued as identified in
Secs. 231.5(e), 231.5(f), 231.5(g), 231.7(d), 231.7(e) and 231.7(f)
shall be negotiated directly between the installation commander and
officials of the designated financial institution. Thereafter, the
operating agreement shall be jointly reviewed by the installation
commander and the financial institution at least once every 5 years.
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. 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:
(i) 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.
(ii) Agreement by both parties that they will comply with this part
and DoD Directive 1000.11 (32 CFR part 230).
(iii) Agreement by the on-base financial institution that it will
furnish copies of its financial reports and other local publications on
an ``as needed'' basis in response to a formal request from the
installation commander (or designee).
(iv) 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.
(v) 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.
(vi) Agreement by the on-base financial institution (or any
successor) that it will provide no less than 180 days advance written
notice to the installation commander before ceasing operations.
(vii) Specification of the security services to be provided for
guarding cash shipments, at times of unusual risk to the financial
institution and to avoid excessive insurance costs charged to that
institution.
(viii) 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.
(ix) 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.
(x) Agreement that the financial institution will reimburse the
installation for the provision of logistical support (such as
custodial, janitorial, and other services provided by the government)
at rates set forth in the lease or agreement between the installation
and the financial institution.
(xi) Statement that on-base financial institution operations shall
be terminated, when required, under provisions specified in this part.
(2) 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.
(j) Installation financial services. (1) Retail banking operations
shall not be performed by any DoD Component or nonappropriated fund
instrumentality including the Military Exchange Services and morale,
welfare and recreation (MWR) activities or any other organizational
entity within the Department of Defense.
(2) Financial services provided on DoD installations will be as
uniform as possible for all personnel. 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 in the surrounding geographic area.
(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 or 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) The on-base financial institution shall credit customer
accounts not later than the deposit date of the allotment check or
electronic funds transfer.
(ii) The initiation of an allotment is voluntary (See Volume 7a,
Chapter 42, Section 4202 of The DoD Financial Management Regulation
(7200.14-R)). Thus, DoD personnel generally cannot be required to
initiate an allotment for the repayment of a loan. Allotments
voluntarily established by DoD personnel for the purpose of repaying a
[[Page 46713]]
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 basic financial
education and counseling services available without charge to
individuals seeking these services. Financial education and counseling
services refer to basic personal and family finances such as budgeting,
checkbook balancing and account reconciliation, benefits of savings,
prudent use of credit, how to start a savings program, how to shop and
apply for credit, and the consequences of excessive credit. DoD
personnel in junior enlisted or civilian grades, or newly married
couples who apply for loans, shall be given special attention and
counseling.
(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(h)(8).
(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) General policy. Given their role in promoting morale and
welfare, on-base banks shall be recognized and assisted by DoD
Components at all levels.
(b) 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 of those institutions.
(iii) Available transportation between the installation and the
financial institutions listed in paragraph (b)(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 name and location of the depositary used to make official
deposits for credit to the TGA.
(vi) 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.
(vii) A written description and photographs of the space proposed
for banking office use.
(viii) A statement listing the requirements of the proposed banking
office for safes and a vault, alarm systems, and surveillance
equipment, when necessary.
(ix) 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 the
standard level user charge. As such, space occupied by a banking office
to serve military needs will be assigned and charged by the GSA.
(x) 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 Volume 5, Chapter 5, paragraph 050102 of The DoD
Financial Management Regulation (7000.14-R).
(c) 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
(c)(4) of this section the preferred sources of on-base financial
services at domestic installations are federally-insured, state-
chartered or federally-insured, federally-chartered banking
institutions operating in the local area. The guidance at paragraph
(c)(1) of this section addresses distribution of the solicitation only
and does not preclude any federally-insured, state-chartered or
federally-insured, federally-chartered banking institution from
responding at any stage (from local distribution in paragraph (c)(1)(i)
of this section to publication in the Commerce Business Daily and
financial institution trade journals as outlined in paragraph
(c)(1)(iii) of this section of the solicitation process. 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 shall 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.
[[Page 46714]]
(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 banking institution 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, shall be predicated on the services to be
provided as outlined in appendix A, paragraph 3, of this part, the
financial institution's schedule of service fees and charges, and the
extent of logistical support required. Prior to issuance of the
solicitation, the preparing office shall identify (for internal use
during the subsequent evaluation period) the weights to be applied to
the factors reflected in the solicitation. Proposals shall 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.
(d) 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 termination of banking office
operations shall be initiated by the installation commander only under
one of the following conditions:
(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 herein.
(iv) When merger, acquisition, change of control or other action
results in violation of the terms and conditions of the existing
operating agreement, the Secretary of the Military Department (or
designee) shall terminate the operating agreement with the existing
banking institution. When the merger, acquisition, change of control or
other action does not result in violation of the terms and conditions
of the existing operating agreement, the Secretary of the Military
Department (or designee) shall initiate a novation action of the
operating agreement identifying the change in control.
(2) The installation commander shall forward requests for
termination to the Secretary of the Military Department concerned (or
designee). The Secretary of the Military Department (or designee) shall
coordinate all termination actions 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 herein.
(e) Use of space, logistical support, and military real property
for domestic banks.--(1) Lease Terms. (i) The consideration for a lease
shall be determined by appraisal of fair market rental value in
accordance with 10 U.S.C. 2667. Periodic reappraisals shall be based
upon the fair market rental value exclusive of the improvements made by
the banks.
(ii) The term of the lease shall not exceed 5 years except where
the banking institution uses its own funds to improve existing
government space as outlined in paragraph (e)(5) of this section. If
space occupied is assigned by the GSA, charges to financial
institutions for space and services shall be at the GSA standard level
user rate.
(iii) Leases shall include the following provisions:
(A) 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.
(B) The lessee shall provide written notice 180 days prior to
voluntarily terminating the lease.
(C) 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.
(2) Logistical support. (i) The banking office shall be housed in a
building accessible to DoD personnel on the installation and in a
location permitting reasonable security.
(ii) Banking institutions shall perform all maintenance, repair,
improvements, alterations, and construction on the banking premises.
(iii) Banking institutions shall pay for all utilities (i.e.,
electricity, natural gas or fuel oil, water and sewage), heating and
air conditioning, intrastation telephone service, and custodial and
janitorial services to include garbage disposal and outdoor maintenance
(such as grass cutting and snow removal) at rates set forth in the
lease, operating agreement or other written agreement between the
installation and the banking institution.
(3) Leases executed before the issuance of this part may not be
altered solely as a result of the provisions of this part unless a
lessee specifically requests a renegotiation under these provisions. No
lease may be negotiated or renegotiated, nor may any rights be waived
or surrendered without compensation to the government.
(4) When a banking institution participates in the construction of
a shopping mall complex the lease shall cover only land where the
banking office physically is located.
(5) When a banking institution uses its own funds to improve
existing government space, leases, for a period not to exceed 25 years
subject to periodic review every 5 years to assess changes in fair
market value, may be negotiated for a period commensurate with the
appraised value of the leasehold improvements divided by the annual
lease fee.
(f) Land leases. (1) A lease for construction of a building to
house a banking office shall be at the appraised fair market rental
value. Charges shall apply for the term of the lease not to exceed 25
years, subject to periodic
[[Page 46715]]
review every 5 years to assess changes in fair market value.
(2) 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.
(3) 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.
(g) Construction. Banks 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 with an
information copy sent to the Secretary of the Military Department
concerned (or designee). The Secretary of the Military Department (or
designee) shall have 30 days to provide comments to the Major Command
before final approval can be granted.
(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) The Congress shall be notified of all construction projects,
using other than appropriated funds and costing over $500,000, in
accordance with DoD Instruction 7700.18 \10\.
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\10\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(5) Proposals for construction of structures on installations at a
banking institution's expense shall be reviewed and reported in
accordance with regulations of the Military Department concerned. 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) Statement that the banking institution will be responsible
for utility connections and other utility and maintenance costs
(viii) Statement that the building will be used only for financial
services
(ix) A statement that financial institution officials understand
the 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) Banks shall pay for interior alterations and maintenance as
well as utilities, custodial, and other furnished services.
(7) Banks shall pay all construction costs.
(h) Bank liaison officer (BLO). Each installation commander having
an on-base banking office shall appoint a BLO. The BLO's 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 BLO shall:
(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. Postal units and credit unions, however, are exempt from this
restriction. Also, ensure that other financial services, to include
vehicle financing on domestic installations, are offered only by the
banking office.
(3) Attend financial workshops, conferences, and seminars as
appropriate. These 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 financial services made available to DoD personnel and
organizations.
(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 C) 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 financial
institution.
(6) Review the schedule of service charges and fees annually, and
ensure that the operating agreement is updated at least every 5 years.
Renegotiate the financial services offered and related service charges
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 the DFAS.
(9) Assist the installation commander to report to the appropriate
regulatory agency any evidence suggesting malpractice by banking office
personnel.
(i) 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 a commissary operated by the
Defense Commissary Agency, a Military Exchange, or any other on-base
retail facility.
(1) Provision of the requested services, and any associated
stipulations, 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.
[[Page 46716]]
(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, the
bank liaison officer, and the installation commander (or designee). The
final amendment shall be signed by the installation commander and the
on-base financial institution with the acknowledgement of the DoD
Component that will host the in-store banking operation.
(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 by the installation commander through a
lease to the banking institution that will provide in-store service.
(j) Domestic military banking facilities (MBFs).--(1) Domestic MBF
establishment. (i) Requests to establish MBFs shall 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.
(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.
(2) 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 the banking service previously rendered has been satisfactory and
that the institution's proposal is adequate.
(3) 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 from the following sources:
(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.
(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 shall 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 name and location of the depository used to make official
deposits for credit to the TGA.
(E) 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.
(F) 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.
(G) 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.
(H) In countries where no MBFs currently are operated under
contract, a statement from the cognizant 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 paragraph (c)(1)(i) of this section.
(I) Any other pertinent information to justify the establishment of
an MBF.
(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 are
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 are
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-time 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
[[Page 46717]]
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 and 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,
then the following applies:
(i) Installation or community commanders shall send requests for
banking services or unsolicited proposals from foreign banking
institutions to their Major Commands with supporting data as required
in Sec. 231.5(b)(1).
(ii) Major Commands shall 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) shall coordinate with the DFAS to
seek the designation of the parent foreign banking institution as a
depositary and financial agent of the U.S. Government by the Department
of the Treasury.
(iii) Banking offices in this category cannot become operational
until the foreign parent banking institution has been designated a
depositary and financial agent of the U.S. Government. The institution
also shall indicate a willingness and ability to provide collateral
backing for any official and nonappropriated fund U.S. dollar deposits.
Any collateral pledged shall be in a form acceptable to the DFAS and
the Department of the Treasury.
(c) Logistical support.--(1) Overseas MBFs operated under contract.
(i) Given that appropriated funds support those MBFs that are operated
under contract, installation or community commanders shall provide the
MBFs logistical support to the maximum possible extent. 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 MBF 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 most users and
permits the maximum security. In addition, office space for MBF area
and district administrations and storage space for retention of
records, files, and storage of supplies.
(C) DoD housing on a rental basis to assigned MBF staff that are
designated as key and essential MBF managerial 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.\11\
---------------------------------------------------------------------------
\11\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(D) Education, on a space-available, tuition-paying basis, provided
by the Department of Defense Education Activity to minor dependents of
assigned staff in accordance with DoD Directive 1342.13.\12\
---------------------------------------------------------------------------
\12\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(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, natural gas or fuel oil, 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 Switched Network (DSN) voice and data communication to
include, where feasible, 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 replenishment
of ATM currency and receipts, alarm system failures, and to avoid undue
risks or insurance costs on the part of the MBF.
(I) U.S. Military Postal Service access in accordance with DoD
Directive 4525.6.\13\ 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.
---------------------------------------------------------------------------
\13\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(J) Office equipment and furniture on memorandum receipt if
available from local stock. If office equipment or furniture is
unavailable, statements of nonavailability shall 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 shall be subject to normal
fees.
(L) Issuance by local commanders of invitational travel orders, at
no expense to the U.S. Government when required for official onsite
visits by U.S. based banking institution officials.
(ii) Suggestions for changes to the logistical support provisions
of the MBF contract may be forwarded for consideration through command
channels to the Director, DFAS.
(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 shall not exceed that provided to contract
MBFs, as specified in paragraph (c)(1) of this section.
(d) Operations.--(1) General conditions of MBF operation. (i)
Before initiating MBF operations, a written agreement shall be
negotiated directly and signed by the installation or community
commander and a senior official 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 shall 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
[[Page 46718]]
additional cost to the government. When added cost is involved, the
commander shall 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, shall be forwarded to the
Director, DFAS (or designee).
(2) Overseas MBFs operated under contract.--(i) General. Overseas
MBFs shall operate under terms and conditions established at the time
of 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 precluded by status of forces agreements, other intergovernmental
agreements, or host-country law.
(iii) Services rendered. DoD banking contracts specify the services
to be rendered and related charges. Suggestions for expansion or
modification of authorized services, fees or charges may be forwarded
through DoD Component channels to the Director, 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 Director, DFAS (or designee)
shall advise each U.S. banking contractor operating an overseas MBF of
this Regulation and furnish a copy to the contractor.
(v) Conditions of operation. (A) Part-time and payday service MBFs
shall 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 the Director, DFAS (or designee).
(C) The MBF contractor and military disbursing officers shall
establish cash management practices that minimize the cash required
conducting 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 The DoD Financial Management Regulation (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 foreign banking
institution and shall be reflected in the operating agreement. The list
of authorized customers included in the operating agreement shall be
consistent with the applicable status of forces agreement, 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 Director, DFAS (or
designee).
(iii) Operating agreements. Before agreements are executed, they
will be coordinated with and approved by the cognizant Combatant
Command (or designee).
(iv) Conditions of operation. A foreign banking institution shall
provide equipment (except that furnished by the installation or
community), supplies, and trained 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 Director, DFAS
(or designee).
(ii) For all other relocations, prior approval from the Director,
DFAS (or designee) shall be obtained through DoD Component channels.
(5) Comments. Installation or community commanders shall send their
banking comments through DoD Component channels to the Director, DFAS
(or designee) 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 including 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(h).
(e) Termination. Requests to eliminate any or all MBFs in a foreign
country shall include documentation that the U.S. Chief of Diplomatic
Mission has been informed and that arrangement 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 Director, DFAS (or
designee).
(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 Director,
DFAS (or designee), who shall notify the Department of the Treasury so
that the foreign banking institution's authority as a Depositary and
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 financial institutions 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.
[[Page 46719]]
(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(b)(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 could establish eligibility
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 applicable 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(c)(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 applicable state regulatory agency shall be
notified and asked to establish or amend the selected credit union's
charter to include the new location.
(4) No commitment may be made to a credit union regarding its
proposal until the appropriate regulatory agency has approved the
requested charter change.
(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 Regulation, 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 the USD(C)
through the Director, 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.
(4) Termination resulting from merger, acquisition, or change of
control. When merger, acquisition, change of control or other action
results in violation of the terms and conditions of the existing
operating agreement, the Secretary of the Military Department (or
designee) shall, subsequent to coordination with the USD(C), through
the Director, DFAS, terminate the operating agreement with the existing
credit union. When the merger, acquisition, change of control or other
action does not result in violation of the terms and conditions of the
existing operating agreement, the Secretary of the Military Department
(or designee) shall initiate a novation action of the operating
agreement identifying the change in control.
(5) Termination of lease. The lessee shall provide written notice
180 days prior to a voluntary termination of the lease. Upon 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.
(d) Use of space, logistical support, and military real property
for domestic credit unions.--(1) Criteria for use of space in
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 exceeding 5 years except where
the credit union uses its own funds to improve existing government
space as outlined in paragraphs (d)(1)(ii)(C) and (d)(1)(ii)(D) of this
section. 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 section 170 of the Federal Credit
Union Act (12 U.S.C. 1770). The provision of no-cost office space for a
period not to exceed 5 years is limited to credit unions if at least 95
percent of the membership to be served by the allotment of space 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. A written statement 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. This
statement shall be prepared on the credit union's letterhead and signed
either by the chairman of the board of directors or the president. A
certification also shall be required whenever there is a merger,
takeover, or significant change in a field of membership. This
certification shall 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 every 5 years
and on renewal of each no-cost permit or license. (See appendix C of
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 June 9, 2000,
credit unions giving less than full service or not serving all assigned
DoD personnel are not authorized no-cost office 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 commensurate
with the extent of the improvements not to exceed 25 years as
determined by the DoD Component concerned. 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)(1)(ii)(B) of this section. If the credit union desires, this permit
or license may extend through the period identified in the
[[Page 46720]]
original permit or license not to exceed 25 years.
(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 25 years subject to periodic review every 5 years to assess
changes in fair market value. Duration of this lease shall be
commensurate with the extent of the improvements as determined by the
DoD Component concerned.
(iii) All space assigned by the GSA, whether leased or in a federal
office building, is reimbursable to the GSA at the standard level user
charge. Consequently, the GSA shall charge the benefiting DoD Component
for any space assigned for credit union operations. Such space is
subject to the provisions of paragraph (d)(1)(i) and (ii) of this
section.
(2) Logistical support. When available, custodial and janitorial
services to include garbage disposal and outdoor maintenance (such as
grass cutting and snow removal), heating and air conditioning,
utilities (i.e., electricity, natural gas or fuel oil, water, and
sewage), fixtures, and maintenance shall be furnished without cost to
credit unions occupying no-cost office space in government buildings.
With the exception of intrastation telephone service, 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.
(3) Leases executed before the issuance of this part may not be
altered solely as a result of the provisions of this part unless a
lessee specifically requests a renegotiation under these provisions. No
lease may be negotiated or renegotiated, nor may any rights be waived
or surrendered without compensation to the government.
(4) When a credit union participates in the construction of a
shopping mall complex the lease shall cover only land where the branch
or facility physically is located.
(5) Administrative fees. All administrative fees associated with
the initiation, modification, or renewal of an outgrant shall be borne
by the installation, provided that the credit union satisfies the 95
percent membership criterion requirement for no-cost office space as
outlined paragraph (d)(1)(ii)(A) of this section, and that the fees are
associated with the no-cost space.
(e) Land leases. Credit unions entering into a land lease to
construct a building on a DoD installation shall do so in accordance
with Sec. 231.5(f).
(f) Construction. Credit unions constructing a building on a DoD
installation shall do so in accordance with Sec. 231.5(g).
(g) Credit unions offering ATM service shall do so in accordance
with Sec. 231.4(d).
(h) Staffing. (1) On-base credit unions shall provide full service.
To do so, credit union offices shall be staffed by:
(i) An official authorized to act on loan applications.
(ii) An individual authorized to sign checks; and
(iii) A qualified financial counselor available to serve members
during operating hours.
(2) Exceptions to paragraph (h)(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.
(3) When an on-base credit union can support only minimum staffing,
one of the positions required in paragraph (h)(1)(i) of this section or
paragraph (h)(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.
(i) 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 name and duty telephone
number shall be displayed prominently 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(h)).
(j) In-store banking. In-store banking services may be provided in
accordance with Sec. 231.5(i) except that:
(1) Credit unions interested in submitting proposals to provide
requested in-store banking services shall provide a statement from the
NCUA or applicable state regulatory agency certifying the credit
union's authority to offer the requested financial services to the
commissary, Military Exchange, 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 section 170 of the Federal Credit Union Act (12 U.S.C.
1770).
Sec. 231.8 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 franchise.
(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.
(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. The ultimate decision to provide
services overseas rests with the credit union itself.
(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 cognizant 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 credit
union operations and will indicate any conditions imposed by the host
country with respect to those operations.
(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
[[Page 46721]]
union services under the following provisions.
(i) Where there is a DoD designated geographic 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 supporting 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. The Director, DFAS
(or designee) shall maintain a listing of all geographic franchises
assigned to credit unions serving DoD overseas installations.
(ii) Where there is no DoD designated geographic franchise, the
Secretary of the Military Department (or designee) shall:
(A) Coordinate requests, through the Director, DFAS (or designee),
to obtain a geographic franchise. A geographic franchise is the
authorization granted to a credit union by the Office of the Under
Secretary of Defense (Comptroller) (OUSD(C)) to provide financial
services in a specific geographic region located outside the United
States, its territories and possessions.
(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 the NCUA or applicable 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 franchise within that
country an opportunity to assume the franchise being vacated. If all
such institutions decline, the geographic franchise shall be offered to
the federally insured 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:
(A) Offers to provide service.
(B) Meets host country requirements (if any) and
(C) Is assigned the former geographic 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 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 shall
provide logistical credit union support. Such support normally shall
include:
(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 credit union's insurance carrier;
construction of counters, teller cages, and customer and work areas;
necessary modifications and alterations to existing buildings. 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) Education, on a space-available, tuition-paying basis, provided
by the Department of Defense Education Activity to minor dependents of
assigned staff in accordance with DoD Directive 1342.13.
(4) Utilities (i.e., electricity, natural gas or fuel oil, water
and sewage), heating, intrastation telephone service, and custodial and
janitorial services.
(5) DSN voice and data communication to include, where feasible,
internet access.
(6) U.S. Military Postal Service support under DoD Directive
4525.6. The 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.
(7) Military guards, civilian guards (for use within the
installation), military police, or other protective services to
accompany shipments of money from the MBF to the credit union and
return where it is impractical or not authorized to have a local
armored car service or civilian police authorities entering a military
installation to provide cash escort service or when the cost of
obtaining such service is prohibitive. This level of protective service
also shall be provided at other times as required to include
replenishment of ATM currency and receipts, alarm system failures, and
to avoid undue risks or insurance costs.
(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 the applicable status of forces agreement, other
intergovernmental agreements, or host-country law.
(2) The Department assigns overseas credit unions a prescribed
geographic franchise. Any credit union, however, may continue to serve
its members stationed overseas by mail or telecommunications, to
include access to the Internet.
(3) A credit union proposing a new service to be offered by a
branch office that is not authorized by the operating agreement shall
coordinate the establishment of the new service through the cognizant
Component command to the Combatant Command. The new service shall 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 applicable status of forces
agreement, 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
[[Page 46722]]
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 wholesale rate and sell it
at a rate of exchange no more favorable than that available to
customers of the MBF.
(6) Credit unions operating under a geographic franchise on an
overseas DoD installation shall not publicize, display or sell vehicles
on the installation.
(7) The NCUA or applicable state regulatory agency 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.
(f) Glossary of terms.--
(1) 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 (e.g., Armed Forces Financial Network (AFFN), Cirrus, or
PLUS) that processes the transaction.
(2) Banking institution. An entity chartered by a state or the
federal government to provide financial services.
(3) 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.
(4) Branch bank. A separate unit chartered to operate at an on-base
location geographically remote from its parent banking institution.
(5) 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.
(6) 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.
(7) 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.
(8) 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 Defense Agencies, the DoD
Field Activities, the Uniformed Services University of the Health
Sciences, all nonappropriated fund instrumentalities including the
Military Exchange Services, and morale, welfare and recreation
activities, and all other organizational entities within the Department
of Defense.
(9) 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 fund
instrumentalities); and their dependents. On domestic DoD
installations, retired U.S. military personnel and their dependents are
included.
(10) Domestic DoD installation. For the purposes of this
Regulation, a military installation located within a state of the
United States, the District of Columbia, Guam or the Commonwealth of
Puerto Rico.
(11) 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.
The appraiser, however, shall 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.
(12) 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,
rural district, and other persons sharing a common bond as described by
credit union board of directors policy or by Interpretation Ruling and
Policy Statement (IRPS) 99-1. A field of membership is defined in the
credit union's charter by the appropriate regulatory agency.
(13) Financial institution. This term encompasses any banking
institution, credit union, thrift institution and subordinate office
branch or facility, each as separately defined herein.
(14) 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.
(15) Foreign banking institution. A bank located outside the United
States chartered by the country in which it is domiciled.
(16) 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:
(i) Status of forces agreements, other intergovernmental
agreements, or host-country law.
(ii) Physical security requirements that cannot be resolved by the
credit union or local command.
(17) Geographic 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, its territories and possessions.
(18) Independent bank. A bank specifically chartered to operate on
one or more 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.
[[Page 46723]]
(19) In-store banking. An expansion of financial services provided
by an on-base financial institution within the premises of a commissary
store operated by the Defense Commissary Agency, a Military Exchange
outlet, and other on-base retail facilities.
(20) 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.
(21) Military banking facility (MBF). A banking office located on a
DoD installation and operated by a financial institution that the
Department of the Treasury specifically has authorized, under its
designation as a ``Depository and Financial Agent of the U.S.
Government,'' to provide certain banking services at the installation.
(22) National bank. An association approved and chartered by the
Comptroller of the Currency to operate a banking business.
(23) On-base. Refers to physical presence on a domestic or overseas
DoD installation.
(24) Operating agreement. A mutual agreement between the
installation commander and the on-base financial institution to
document their relationships.
(25) 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.
(26) 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.''
(27) 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 Banks; the National Credit Union
Administration; Office of Thrift Supervision; 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).
(28) 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.
(29) Thrift institution. An institution organized and chartered
under federal or state law as a Savings Bank, Savings Association, or
Savings and Loan Association.
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 subpart
A of this part.
(2) Prescribes consistent arrangements for the provision of
services by financial institutions among the DoD Components, and
requires that financial institutions operating on DoD installations
provide, and are provided, support consistent with the policies stated
herein.
(b) Applicability. This subpart applies to the Office of the
Secretary of Defense, the Military Departments, the Chairman of the
Joint Chiefs of Staff, the Combatant Commands, the Inspector General of
the Department of Defense, the Defense Agencies, the DoD Field
Activities, and all other organizational entities within the Department
of Defense (hereafter collectively referred to as ``the DoD
Components''), 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
subpart A of this part.
(d) Policy. (1) The following pertains to financial institutions on
DoD installations:
(i) Except where they already may exist as of May 1, 2000, 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 the applicable
provisions of subpart A of this part.
(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) Except in limited situations overseas (see paragraph
(d)(2)(ii)(C) of this section), only banking institutions insured by
the Federal Deposit Insurance Corporation and credit unions insured by
the National Credit Union Share Insurance Fund or by another insurance
organization specifically qualified by the Secretary of the Treasury,
shall operate on DoD installations. These financial institutions may
either be State or federally chartered; however, U.S. credit unions
operated overseas shall be federally insured.
(B) Military banking facilities (MBFs) shall be established on DoD
installations only when a demonstrated and justified need cannot be met
through other means. An MBF is a financial institution that is
established by the Department of the Treasury under statutory authority
that is separate from State or Federal laws that govern commercial
banking. Section 265 of title 12, United States Code contains the
provisions for the Department of the Treasury to establish MBFs.
Normally, MBFs shall be authorized only at overseas locations. This
form of financial institution may be considered for use at domestic DoD
installations only when the cognizant DoD Component has been unable to
obtain, through normal means, financial services from a State or
federally chartered financial institution authorized to operate in the
State in which the installation is located. 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 MBFs to the Department of the
Treasury.
(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. The DoD Components shall rely on commercially available
sources in accordance with DoD Directive 4100.15.\14\
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\14\ See footnote 1 to Sec. 231.1(a).
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(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.
(v) Financial institutions authorized to locate on DoD
installations shall be provided logistic support as set forth in
subpart A of this part.
[[Page 46724]]
(vi) Military disbursing offices, nonappropriated fund
instrumentalities (including MWR activities and the Military Exchange
Services) and other DoD Component activities requiring financial
services shall use on-base financial institutions to the maximum extent
feasible.
(vii) The Department encourages the delivery of retail financial
services on DoD installations via nationally networked automated teller
machines (ATMs).
(A) ATMs are considered electronic banking services and, as such,
shall be provided only by financial institutions that are chartered and
insured in accordance with the provisions of paragraph (d)(1)(iii) of
this section.
(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.
(viii) Expansion of financial services (to include in-store
banking) requiring the outgrant of additional space or logistical
support shall be approved by the installation commander. Any DoD
activity or financial institution seeking to expand financial services
shall coordinate such requests with the installation bank/credit union
liaison officer prior to the commander's consideration.
(ix) The installation commander shall ensure, to the maximum extent
feasible, that all financial institutions operating on that
installation are given the opportunity to participate in pilot programs
to demonstrate new financial-related technology or establish new
business lines (e.g., in-store banking) where a determination has been
made by the respective DoD Component that the offering of such services
is warranted.
(x) The installation commander shall approve requests for
termination of financial services that are 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 USD(C), through the
Director, DFAS, before notification to the appropriate regulatory
agency.
(xi) Additional guidance pertaining to financial services is set
forth in subpart A of this part.
(2) The following additional provisions pertain to only 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 herein and with the
applicable status of forces agreements, other intergovernmental
agreements, or host-country law.
(ii) 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 agreements, other intergovernmental
agreements, or host-country law.
(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.
(iii) 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 the customer rate available
at the MBF.
(e) Responsibilities. (1) The Under Secretary of Defense
(Comptroller) (USD(C)) shall develop 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, Technology and
Logistics) (USD(AT&L)) shall 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 subpart are
set forth in subpart A of this part.
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 \15\ to those financial institutions that operate
under this part:
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\15\ See footnote 1 to Sec. 231.1(a).
---------------------------------------------------------------------------
(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
[[Page 46725]]
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) 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.\16\ 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.
---------------------------------------------------------------------------
\16\ See footnote 1 to 231.1(a).
---------------------------------------------------------------------------
(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. Once an
individual's affiliation with the Department of Defense is terminated
through separation or retirement, however, the Department's ability to
render locator assistance (i.e., disclose a home address) is severely
curtailed unless the public 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
Sample Operating Agreement Between Military Installations and Financial
Institutions
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 Financial Institution).
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 financial institution), having
its principal office at (location of home office) hereinafter
referred to as the ``financial institution,'' together hereinafter
referred to as ``the parties.'' Whereas the commander and the
financial institution 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 banking
institution operating a military banking facility (MBF) overseas,
this agreement will not change the conditions of the contract
between the banking institution and the Department of Defense.
2. The financial institution agrees to operate a (federally or
state) chartered office on-base in accordance with the policies and
procedures set forth in DoD Directive 1000.11, and Volume 5, Chapter
34, of the DoD 7000.14-R (as codified in the Code of Federal
Regulations (CFR) at 32 CFR parts 230 and 231, respectively); and,
in addition for the Overseas Military Banking Program (OMBP), the
policies and procedures set forth in the applicable DoD contract.
The hours of operations shall be between (hour office opens) and
(hour office closes), and on the following days (weekdays office
open), except on government holidays when the financial institution
may be closed. The Program Office for the OMBP shall notify the
commander of any changes to the DoD contract.
3. The financial institution 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 interestbearing
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) Loan services.
(8) Electronic banking (i.e., automated teller machines,
internet banking).
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 interestbearing accounts offered by the banking
institution.
(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 subparagraphs 3.a.(2), and 3.a.(5), above, except for
subparagraph 3.a.(2), wherein 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. Fees assessed to
accountholders and nonaccountholders for use of automated teller
machines shall be the customary service charges of the financial
institution or those negotiated for base personnel per the attached
schedule.
(2) Checking and savings accounts. Fees for individual checking
and savings accounts shall be the customary service charges of the
financial institution 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 office.
[[Page 46726]]
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 financial institution shall:
a. Notify the commander or designated representative 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 DoD
7000.14-R, as codified in the Code of Federal Regulations (CFR), and
any changes thereto.
c. Comply with Department of the Treasury requirements for
establishment and operation of a Treasury General Account where the
financial institution 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
financial institution; and for any loss (including losses due to
criminal activity), expenses, or claims for damages arising from
financial institution 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 financial institution operating an office of the
financial institution.
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 financial institution
the name, duty telephone number of the (Bank or Credit Union)
Liaison Officer.
h. Accept the government travel card in all on-base ATMs
operated by the financial institution.
i. 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 financial institution operations shall
be administered in accordance with the existing outgrant (i.e.,
lease, permit or license). (Show Number of Outgrant).
b. Utilities (i.e., electricity, natural gas or fuel oil, water
and sewage), heating and air conditioning, 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. DoD housing and minor dependent education in overseas
locations for military banking facility (MBF) and credit union
personnel in accordance with Secs. 231.6(c)(1)(i)(C),
231.6(c)(1)(D), 231.8(c)(2) and 231.8(c)(3).
7. Termination of this Agreement shall be consistent with the
termination provision of the real property lease and subpart A. The
Secretary of the (Military Department) shall have the right to
terminate this Agreement at any time. Any termination of the right
of the financial institution 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 in which the financial institution
is 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 financial institution 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 financial
institution, by their duly authorized office, have hereunto set
their hands this day of (month, day, year).
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Financial Institution Official
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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., in
buildings operated by the Defense Commissary Agency, Military
Exchange Services and MWR activities) shall draft the solicitation
letter.
3. Close coordination among all cognizant DoD organizations is
essential throughout the selection process.
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 (or designee) 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 are 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, use the solicitation
process outlined in Sec. 231.5(c) of this chapter, as supplemented
by the provisions outlined in paragraph A, above.
4. 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. The installation commander (or designee) formally shall
notify 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 should 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 should 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 (or designee) and the appropriate financial institution
official with a copy furnished to the Secretary of the Military
Department concerned (or designee) and the Director, DFAS (or
designee).
Appendix C to Part 231--Sample Certificate of Compliance for Credit
Unions Certificate of Compliance
I, (name), Chairman of the Board of Directors or President of
the (credit union), located at (place), certify that this credit
union complies with the requirements of section 170 of the Federal
Credit Union Act (12 U.S.C 1770), for the allotment of space in
federal buildings without charge for rent or
[[Page 46727]]
services. The provision of no-cost office space is limited to credit
unions if at least 95 percent of the membership to be served by the
allotment of space 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.
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(Date)
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(Name)
(Chairman of the Board of Directors or the President)
Note: The Certificate of Compliance shall be written on credit
union letterhead.
Dated: August 29, 2001.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, DoD.
[FR Doc. 01-22173 Filed 9-6-01; 8:45 am]
BILLING CODe 5001-08-P