Pub. 7 2012-2013 Issue 1

May/June 2012 19 Extraordinary Service for Extraordinary Members. experience direction Omaha 402.392.1040 Lincoln 402.473.7600 BKD, LLP has helped 1,200 financial services clients manage change and stay compliant by offering audit and internal audit, tax, regulatory compliance, loan review services and more. Let us help you chart a course to success . Learn more at bkd.com and get the latest industry insights at FinancialReformInsights.com. For more information, contact Kansas Bankers Surety Co. at (785) 228-0000. documents be certified by a “certifying officer.” Bank officers may act as certifying officers. The regulations require the certifying officer to establish the identity of the signer in accordance with the “Treasury instructions and identification guidelines” and place a notation on the back of the document, or in a separate re- cord, show how identification was established. So the first thing a banker will need to do before acting as a certifying officer is to learn and follow the “Treasury instructions and identification guidelines” and then properly record how identification was established. The regulation also requires the certifying officer to “affix, as part of the certification, his or her official signature, title, seal, or issuing agent’s stamp, address, and date of execution.” While a seal or stamp must be used, the regulation itself does not require anything called a “Signature Validation Stamp.” The forms themselves only refer to a stamp or a corporate seal. Therefore, the bank’s corporate seal can be used if the bank does not want to create a special stamp for the certifying officer to use for this purpose. Clearly the bank is not required by TreasuryDirect to join the Signature Validation Program and use a special Signature Validation Stamp. If the bank uses the Signature Validation Stamp, the bank is subjecting itself to potential additional liability above the federal regulation require- ments because of the liability it agrees to incur under the SVP Indemnity Agreement. Inmy opinion, banks should not sign up for the Signature Validation Program. Banks that have already signed up for this program should terminate their participation in the pro- gram. Banks should be very wary of allowing the Signature Validation Program to grow because it creates a substantial new risk to banks. If a bank does decide for whatever reason to participate in the Signature Validation Program, it should do so with extreme caution. The bank needs to evaluate each document on which the bank uses the Signature Validation Stamp to determine if the bank can document, and forever prove, that the person signing had actual authority to sign. The bank also should attempt to determine the amount of the bank’s potential risk with regard to that document in order to evaluate if the small fee, or other benefit, that the bank may receive in exchange is worth the potential liability the bank may incur. 