OCC and FDIC Regulation and Guidance
Financial Institution Audit Procedures
What do regulations say about a bank retaining e-mail records? Relevant statements have been issued by both the Office of the Comptroller of the Currency (OCC) (regulator for all national banks in the U.S.) and The Federal Deposit Insurance Corporation (FDIC).
The OCC issued an Advisor Letter on Electronic Record Retention June 21, 2004. The Advisory Letter points to the Electronic Signatures in Global and National Commerce Act (E-Sign) as special reason for financial institutions to set up electronic record keeping systems. The E-Sign Act generally confirms the legal effectiveness of electronic commerce transactions, including e-mail contracts. The implication for banks is that their electronic records, such as e-mail records, can be evidence of legally-binding contracts and other transactions.
Accordingly, the OCC Advisory Letter states:
"[B]anks should design, implement, and operate their electronic records systems so that they are adequate to serve the following purposes and functions according to the nature of the retained records:
* Potential use in litigation support,
* Internal and external audits and controls,
* Bank supervision, and
* Compliance with regulatory requirements."
Notice those are broad purposes, which suggests that the retention of e-records should be generous at a time when the quantity and importance of electronic transaction is growing. The Advisory Letter goes on specifically to emphasize the retention of electronic message and electronic mail records.
Consistent with the OCC Advisory Letter, FDIC has issued guidance on the retention of electronic records under the E-Sign Act. See FDIC Compliance Handbook — June 2006, page X-3.1. Although the FDIC Handbook does not provide as much detail as the OCC Advisory Letter, it says banks need good records of their electronic business transactions. Naturally, those records will include e-mail records, as the OCC Advisory Letter confirms.
The FCIC Handbook page X-3.1 states: "Record Retention. The E-Sign Act requires a financial institution to maintain electronic records accurately reflecting the information contained in applicable contracts, notices or disclosures and that they remain accessible to all persons who are legally entitled to access for the period required by law in a form that is capable of being accurately reproduced for later reference."
Further, the FDIC's 1998 Electronic Banking Safety and Soundness Examination Procedures specifically discuss record retention procedures for e-mail at page 8. Page 8 says bank examiners should expect banks to have retention policies for e-mail. It reads: "Determine if retention guidelines exist and are updated for source documents supporting electronic activities, such as account applications, instructions for account transactions, and other records. Determine whether the guidelines also address electronic mail, data files, and similar records." The implication is that if a bank does not have a retention policy, and FDIC examiner will expect the bank to create one.
PolicySo precisely how long should banks keep email records? I have led in-house workshops to address this question at numerous, diverse enterprises. The outcome of these workshops has varied, depending on many factors, including corporate culture.
In my experience, the best email retention policy is one that is developed by collaboration of the various stakeholder departments in the enterprise (legal, IT, HR, operations et al.). Normally, these different stakeholders will start with different positions on what the policy should say. But, in my experience, after the stakeholders have talked through the issues, they tend to compromise their positions and coalesce into a policy that is unique to the enterprise.
By Benjamin Wright, Senior Instructor on Law of Data Security and Investigations at the SANS Institute.
Related: How to write an enterprise records policy.
Update July 2012: Cost of Storage
I just led a workshop at a group of companies that owns two national banks. The purpose of the workshop was to help the stakeholders from the various enterprises develop a group-wide policy for the retention and destruction of email and other electronic records, including audio records of telephonic interactions with customers.
I have been leading workshops like this for years, and I have noticed from these workshops that something has changed. The cost of storage has become a non-issue. The raw cost of storing 100 terabytes of data is insignificant to an enterprise larger than a mom-and-pop. That is not to say that the raw cost of storage is the only issue in setting an electronic record retention policy. There are lots of issues, and no regulator is going to tell a bank how to resolve all of its issues. But the dynamics in these workshops has changed on account of how cheap storage has become.
[The above is only general information. If a bank needs legal advice, it should of course consult its lawyers.]