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CANS - Closed Account Notification System
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On April 1, representatives from IBAT
and the Texas Banking Department
presented a conference call to discuss
CANS and to answer questions. |
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Your bank must register for CANS with the Department of Banking
March 20, 2008
During the 80th Regular Session of the Texas Legislature, Representative Helen Giddings sponsored HB 2002, creating an electronic notification system that requires your bank, upon proper request by a customer, to alert check verification entities that the customer has closed an account because of actual fraud or compromised financial information. To implement this program, every bank, savings bank, and credit union maintaining an office, branch, or agency office in this state must register with the Department of Banking, which is administering the system. HB 2002 makes no distinction between state and federally chartered financial institutions. The Department has dubbed the system “CANS” (Closed Account Notification System) and had it operating on schedule on March 1, 2008. Your bank should have registered with the Department prior to March 1. There is no fee to register and no penalty for registering late.
As a service to our members, we have posted on our Web site a March 18th press release from Helen Giddings and a March 18th memo from the Banking Commissioner. You can cut and paste or click the following links to read the press release and memo:
Press Release - http://www.ibat.org/documents/08misc/08_cans_pr.pdf
Memo - http://www.ibat.org/documents/08misc/08_cans_memo.pdf
Bank registration form – https://www.banking.state.tx.us/cans/Default.aspx
The best place to learn more about CANS is at the CANS page on the Department’s website: http://www.banking.state.tx.us/bnt/banks_home.htm
To communicate with someone about registering for CANS, you may contact the Banking Department’s Director of Strategic Support Wendy Buitron at wbuitron@banking.state.tx.usor at 877-276-5554.
Frequently asked questions:
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[4.21.08]
Do we also report compromised debit cards to CANS?
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If a person commits an offense under Penal Code §32.51, the accountholder is entitled to have information sent through CANS. It doesn't matter if the offense occurred through use of a debit card, check, or other item/access device. In fact, it doesn't matter if an item or an access device is used at all. There doesn't even have to be a loss or an attempt to harm or defraud.
It is a violation of Penal Code §32.51 if someone obtains, possesses, transfers, or uses identifying information of another person, with intent to harm or defraud that other person. Of course, use of another person's identifying information with intent to harm or defraud is an offense. However, §32.51 provides that merely obtaining, possessing, or transferring identifying information of another person with intent to harm or defraud that person is an offense under §32.51.
Once an offense has occurred under Penal Code §32.51, then CANS can be utilized to send information to the registered check verification entities. Remember, your customer must close an account at your institution before you can send information on the offense through CANS. |
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[3.26.08]
We have a customer who had three checks stolen. They filed a police report and closed their account. They did not complete an ID theft affidavit because they know who stole the checks and do not feel like the thief will open accounts using their name. However, they do feel like the thief will forge the checks to defraud them. Can we report the closed account to CANS even though no ID theft affidavit was completed? According to the above mentioned paragraph two we can't.
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There is a model form on the DOB website that the customer must complete (Of course, a bank can create its own form from scratch, but I don't know why it would.). If the customer does not complete and sign a form authorizing your bank to send the information through CANS, you should not send it through. Now, if you are talking about the bank's forgery affidavit, there is no requirement that the customer complete the bank's forgery affidavit to send the information through CANS. In fact, information can be sent through CANS before a theft occurs. If a customer of yours believes someone "possesses" their personal information and plans to use it to commit a theft, the CANS system can be used once the customer files a police report and completes the authorization form. I would encourage your customer to use the CANS system, the passing forged checks is exactly what this was designed to stop. If a merchant uses one of the registered check verification entities (CVEs), when the forger shows up to write a check on the closed account, their CVE will recommend that they not accept the check. That saves the merchant money, saves the bank time and effort it takes to return a check on a closed account, and keeps these fraudulent checks off the customer's credit record. |
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[3.20.08] I am having trouble locating the form to register for CANS on the Department of Banking's Web site; can you tell me where it is?
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Click here:
CANS Financial Institution Registration Form
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[3.20.08] I went to the Department’s Web site, I clicked on “Banks & Holding Companies,” but I could not find the registration form. I did find a link named “CANS-Closed Account Notification System,” but it has a subtitle that says: “Password required.” Where exactly is the registration form?
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The link in the previous answer will take you directly to the bank registration form. Otherwise, go ahead and click on the link entitled “CANS-Closed Account Notification System.” When you get to the page entitled “Closed Account Notification System (CANS),” you will see the sentence: “First time users click here to create your account." Click on the words “click here” in that sentence and it will take you to the registration form. |
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[3.20.08] I followed the link you gave, but all the information seems to be directed toward the check verification entities, not financial institutions. Is there a place on the Department’s Web site for financial institutions to find information about CANS?
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The links we put in Capitol Comments and in the email this morning linked to the Check Verification Entities section of the Department’s Web site. We have now determined that portion of the Web site is mostly for the check verification entities. Financial institutions click on the Banks & Holding Companies link on the Department’s home page (www.banking.state.tx.us) |
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[3.20.08] I was reading 7 TAC §35.11stating who must register with the banking commissioner. It defines an Entity as a check verification entity if it meets one of three things. One being, if you are a consumer reporting agency as defined in the Fair Credit Reporting Act (15 USC Section 1681). Everything that I am reading makes me think that we need to register but when I reviewed the consumer reporting agency definition, I do not believe our bank meets that definition. I hope you can clarify this for me?
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There are two entities that must register--financial institutions and check verification entities. You are reading the registration requirements for check verification entities. The requirement regarding consumer reporting agency has nothing to do with the financial institutions that must register. There are not 3 things your bank must meet. |
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[3.20.08] Your email said that there was no fee to register; however, I looked on the registration form and saw that there was a $100 annual fee.
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The form you were looking at was for registering check verification entities. The first question above will link you to the correct registration form. The $100 annual fee for registering only applies to check verification entity registration. |
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