# O **NEWS RELEASE**

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| ## Comptroller of the Currency      | ##### NR 2002- 44              |
|                                     |                                |
| Administrator of National Banks     |                                |
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FOR IMMEDIATE RELEASE Contact: Robert M. Garsson

May 16, 2002 (202) 874-5770

**OCC Issues Final Rule on Electronic Banking**

WASHINGTON \-- The Office of the Comptroller of the Currency published a
final rule today that will facilitate the use of electronic technologies
by national banks, consistent with safety and soundness.

"The OCC has long recognized that technology is reshaping the financial
services industry in profound ways, and we have responded over the years
by addressing individual issues through interpretive letters and
rulings," said Julie L. Williams, First Senior Deputy Comptroller and
Chief Counsel.

"This rule represents a comprehensive effort to codify those rulings,
and provides additional guidance on several other issues that are
becoming important to national banks," Ms. Williams added.

One key principle incorporated in the rule is the OCC's "transparency
doctrine." Instead of evaluating the electronic means of delivery, the
OCC looks through the transmission system and asks if the underlying
product is one that national banks can lawfully offer.

For example, finder authority -- bringing together buyers and sellers,
without taking a part in negotiating the transaction -- is a
long-standing permissible bank activity. Recently, based upon the
transparency doctrine, the OCC has allowed national banks to use finder
authority to operate "virtual malls" on the Internet.

The rule also updates the OCC's general rule authorizing national banks
to act as finders as part of the business of banking. Among other
things, the amended general finder provision provides examples that
illustrate the range of finder activities that the OCC has authorized
without regard to the technology used.

The rule also notes the importance of national bank preemption in the
age of the Internet and electronic banking.

"When you are offering financial products electronically, your customers
may come from all over the country. The application of multiple state
standards to an activity conducted via the Internet can, in itself, be
an obstacle to national banks engaging in permissible activities through
electronic means," Ms. Williams stated. "Uniform standards of operation
benefit both national banks and their customers through increased
efficiency."

The final rule establishes a new subpart 7 of OCC regulations that
addresses the authority of national banks to conduct activities by
electronic means and codifies many of the OCC's prior interpretations on
electronic banking. For example, the new section codifies a national
bank's authority to:

-   act as a digital certification authority, including the ability to
    issue financial capacity certificates with appropriate disclaimers;

-   engage in data processing activities and provide limited amounts of
    nonfinancial information processing for customers in conjunction
    with financial data processing; and

-   market and sell legitimate excess electronic capacity and electronic
    by-products.

The rule offers guidance to national banks seeking to conduct new
activities electronically by describing the factors the OCC uses to
determine if an electronic activity is part of, or incidental to, the
business of banking. It also clarifies that a national bank electronic
activity will not be exempt from general OCC guidance applicable to the
underlying activity conducted through conventional means.

The rule provides that a national bank will not be considered to be
located in a state simply because it maintains a technology-based
facility, such as an automated loan center or a network server, in that
state or because customers in that state electronically access a bank's
products and services. This approach is consistent with the trend
reflected in recent judicial rulings.

Finally, the rule requires that national banks that share electronic
space (such as web pages or web sites) with other businesses take
reasonable steps to clearly, conspicuously, and understandably
distinguish between products and services offered by the bank and those
offered by the other business.

The OCC's electronic banking website at
[www.occ.treas.gov/netbank/ibi.htm](http://www.occ.treas.gov/netbank/ibi.htm)
contains the OCC interpretive letters on electronic banking that formed
the basis for many of the provisions adopted in this rulemaking. Other
OCC information on electronic banking, such as risk management guidance
and research, is at [www.occ.treas.gov/netbank/netbank.htm]{.underline}.

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  The OCC charters, regulates and examines approximately 2,200 national
  banks and 52 federal branches of foreign banks in the U.S., accounting
  for more than 54 percent of the nation's banking assets. Its mission is
  to ensure a safe and sound and competitive national banking system that
  supports the citizens, communities and economy of the United States.
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