On October 24, the Office of Thrift Supervision (OTS) issued examination procedures on identity theft and address discrepancies. The procedures were developed following a joint rulemaking proposed by the other federal banking agencies and the Federal Trade Commission and implement the Fair and Accurate Credit Transactions Act (FACT Act), which amended the Fair Credit Reporting Act.

The FACT Act requires financial institutions, including federal savings associations, that have “covered accounts” to develop and implement awritten Identity Theft Prevention Program to combat identity theft in connection with new and existing accounts. According to the OTS examination procedures, such a program must include reasonable policies and procedures for detecting, preventing and mitigating identity theft and must permit the institution to: (i) identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the program; (ii) detect red flags that have been incorporated into the program; (iii) respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and (iv) ensure the program is updated periodically to reflect changes in risks from identity theft.

The examination procedures went into effect on November 1 and are found in OTS Examination Handbook Section 341, Information Technology Risks and Controls, and Section 1300, Fair Credit Reporting Act

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