Opening, Refusing to Open, Closing, Accessing Funds Disclosure
Opening of Deposit Accounts
The credit union will open a Deposit Account for any individual whose identity it can verify. Identity will be verified in accordance with the credit union’s Deposit Account Opening process. At a minimum, the identification requirements in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act will be used to verify identity.
The credit union may refuse to open a deposit account if it has a sound business reason for doing so, including if the applicant represents an unacceptable risk to the credit union, as outlined below. The credit union cannot refuse to open a Deposit Account if the refusal is based on a reason that is prohibited grounds of discrimination, or if the applicant does not have a job or has been bankrupt, or if reasonable restrictions can be imposed to manage risk to the credit union.
Refusal to Open a Deposit Account
The credit union may refuse to open a Deposit Account if it has a sound business reason to do so. A sound business reason can include the following:
- That the account will be used to break the law or commit fraud;
- That the applicant intentionally provided false information when the account was opened;
- The opening of the account will expose the credit union Members or Account Holders, or employees to physical harm, harassment, or abuse;
- The applicant has a history of illegal or fraudulent activity with the credit union or any provider of financial services;
- The applicant cannot or will not provide acceptable identification in accordance with the credit union’s Deposit Account opening process;
- The applicant will not allow the credit union to verify identification or information provided;
- The credit union has a sound business reason to place restrictions on the Deposit Account, and the applicant will not accept the restrictions;
- The applicant represents an unacceptable risk to the credit union
Refusal to Open a Deposit Account – write-offs and poor credit bureau score
The credit union may also refuse to open a Deposit Account if the applicant has previous write-offs and losses or a poor credit bureau score. However, the credit union will assess whether imposing restrictions on the account would sufficiently mitigate the risk before refusing to open a Deposit Account for either of these reasons.
Write-offs and Losses
For applicants with previous write-offs or losses, the credit union will assess whether imposing restrictions will sufficiently mitigate the risk to the credit union by considering the amount of the loss, the length of time since the loss, and any extenuating circumstances that may have caused the loss or write-off (such as job loss or injury). For example, if the credit union has suffered a significant loss because of an applicant, it may consider the risk too significant to sufficiently mitigate it with restrictions and may refuse to open the Deposit Account.
Poor Credit Bureau Score
Not every poor credit bureau score may justify a refusal to open a Deposit Account. Some weak credit bureau scores may suggest the credit union need only place restrictions on the Deposit Account as highlighted below.
When the Credit Union Refuses to Open a Deposit Account
When the credit union refuses to open a Deposit Account, it will inform the applicant that it will not be opening the Account
Closing a Deposit Account
Where the credit union closes a Deposit Account, it will do so in accordance with the Agreement that governs the relationship between the Member or Account Holder as outlined in the Member Agreement Terms and Condition, provided to you at the time of the account opening, which states:
You may close my account(s) without notice if I do not operate my account(s) or conduct my business at the Credit Union in a satisfactory manner, for example, if I maintain an unauthorized overdrawn balance due to NSF cheques or debit items or outstanding service charges or I use the account(s) for illegal purposes or, if, in your opinion, there is illegal, unusual, improper or suspicious activity in my account(s). You may apply any of my funds to any debt of mine to you.
Restrictions on Deposit Accounts
The credit union may choose to impose reasonable restrictions on certain Deposit Accounts for risk management purposes. Restrictions may include:
- Placing temporary holds on cheques deposited to allow reasonable time for such items to clear;
- Limiting the amount of cash provided back on cheque deposits;
- Limiting or revoking:
- Overdraft or chequing privileges,
- Online privileges,
- Debit card privileges, including Automated Teller Machine (ATM) withdrawal limits,
- Placing restrictions mandated by law or legal judgement that applies to the credit union,
- Placing any other reasonable restrictions necessary for risk management purposes
Access to Funds
When you deposit at Morell Credit Union with a cheque, your account is instantly credited the cheque amount. You may be unable to access the total amount of the funds from that deposit immediately, as a hold may be placed on some or all of your deposit. The amount is held upon deposit, and the hold period begins the next business day, not the calendar day. A business day means Monday to Friday unless one of those days is a statutory holiday.
A ”Cheque” refers to cheques, drafts, certified cheques, money orders, orders for payment, coupons, promissory notes, or other bills of exchange.
The reason we may place a hold and have a hold funds policy is that a cheque is not the same as cash - it is a promise to pay by one party to another party. The hold funds policy allows the credit union to verify that the funds are available in the issuer’s bank or credit union account. If the account the cheque is issued from doesn't have enough funds, or if the cheque is fraudulent, the cheque can be returned, and your account will be debited the amount of the deposit.
The length of the hold will vary depending on these three factors (See table for more details):
- Amount
- Currency
- The way you deposit the cheque (i.e. On-line/Mobile, ATM, Branch)
When we remove the hold after the hold period, the funds will be available to you. A cheque can be returned after the hold period. If the cheque is returned for any reason, we will need to debit your account for the total amount.
The following table highlights how long it may take for you to get access to your funds after you deposit a cheque:
| Canadian Dollar Cheques | Ways of Banking | Days Account Open | Hold Period | ||||
|---|---|---|---|---|---|---|---|
| Equal to or less than $1,500 |
|
Less than 90-days |
|
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| Equal to or less than $1,500 |
|
90-days or greater |
|
||||
| Greater than $1,500 |
|
Less than, equal to, or greater than 90 days |
|
| Non-Canadian Currency | Ways of Banking | Days Account Open | Hold Period |
|---|---|---|---|
| Cheques in Non-Canadian currency drawn on a Canadian financial institution or drawn from a Non-Canadian financial institution | Branch | Cheques issued in U.S. dollars drawn on a Canadian financial institution | 5 business days |
| Mobile | 6 business days | ||
| Branch | Cheques from a U.S. financial institution | 15 business days | |
| Cheques from a financial institution located outside of Canada or the U.S. | 30 business days |
We may make the maximum hold period longer if: (a) we have reasonable grounds to believe there may be illegal or fraudulent activity in relation to the account; (b) if the date on the cheque is more than 6 months prior to the day you deposit it to your account; or (c) if a cheque was drawn on a foreign financial institution and payment from the cheque has not been received by us from the foreign financial institution within the initial maximum hold period.
Cashing of Government of Canada Cheques
The Access to Basic Banking Services Regulations for federally and regulated financial institutions, including credit unions, require that any branch that dispenses cash through a teller must cash a Government of Canada cheque if the cheque is for $1,750 or less. The individual cashing the cheque shows acceptable identification. The federal government provides an indemnity of up to $1,750, per occurrence, to all financial institutions, including credit unions that provide this service and are members of the Canadian Payments Association.
Canada’s Financial Administration Act provides that those financial institutions, including the credit union, shall not charge a fee for cashing a Government of Canada cheque.
Refusal to Cash Government of Canada Cheques
The credit union may refuse to cash a Government of Canada cheque if one or more of the following apply:
- The cheque is for more than $1,750. The credit union can decide to place a hold on any funds over $1,750.
- The individual requesting to cash the cheque cannot produce acceptable identification
- The cheque has been endorsed or signed by a third party;
- There is evidence that the cheque has been altered in any way or is counterfeit;
- The credit union has reasonable grounds to believe47 that there has been illegal or fraudulent activity in relation to the cheque; or
- The credit union cannot verify that the cheque is legitimate after contacting the federal government’s Cheque Redemption and Control Directorate.
