4 FAH-2 H-600
U.S. DISBURSING OFFICER ACCOUNTS
4 FAH-2 H-610
U.S. GOVERNMENT BANK ACCOUNTS
(CT:DOH-31; 07-22-2013)
(Office of Origin: CGFS/FPRA/FP)
4 FAH-2 H-611 INTRODUCTION
(TL:DOH-1; 06-13-2001)
This subchapter prescribes the procedures for selection of
U.S. government depositaries abroad and maintenance of those bank accounts.
4 FAH-2 H-612 TYPES OF ACCOUNTS
4 FAH-2 H-612.1 Local Currency
(CT:DOH-31; 07-22-2013)
a. U.S. disbursing officer (USDO)
checking accountThis is the most common local currency bank account.
It is maintained in the city where the embassy or consulate is located and used
for the USDO operating expenses. Balances in the USDO bank account must be maintained
as close to zero as possible (1 TFM 4-9050compensating balances are not
allowed to reduce bank fees). The USDO should only have savings accounts if
the funds are restricted under the X7000 program, or it is a condition
according to host country banking laws to have checking accounts.
b. Sweep
(1) This is an account established to temporarily hold
collections made by the bank (i.e. Machine Readable Visa (MRV) fees) until the
bank transfers the funds to the USDO operating account. The bank usually
sweeps the account daily or weekly and sends the account balance to the USDO
operating account bank via a funds transfer. The funds transfer fee is billed
to the embassy or consulate and paid using account 20-(FY digit) 6763, Gains
and Deficiencies on Exchange Transactions, Treasury.
(2) The embassy will solicit bids for this service, in
coordination with the Bureau of Consular Affairs (CA) through posts consular
officer, by sending a letter to all U.S. owned, as well as leading local banks,
advising the banks that the embassy is soliciting banking (collection)
services. The letter should contain particulars about the solicited services,
such as the average number of collections or visa applications per year and
whether other services, such as an appointment system, are requested. The
letter should explain that the banks response will be evaluated in comparison
with responses from other local banks. The letter will request the bank be
prepared to enter into a written agreement regarding the services the bank will
provide. The responses will be evaluated by both the consular officer and
either the FMO or the management officer with the criteria being the interest
of the mission and the visa applicants. The approval of CA must be secured by
the consular officer before the execution of the agreement by either the FMO or
management officer. The collection fee charged by the bank will be charged to
posts MRV allotment.
(3) These collections are not considered USDO or post
funds until they are deposited into the USDO operating account. Post personnel
should not sign account opening forms for these accounts unless the bank
refuses to perform the collection service without the forms. Should the bank
require an U.S. embassy official to sign the account opening forms for the
sweep (or concentration) account, the embassy financial management officer
(FMO) or management officer should sign the forms with the understanding that they
cannot withdraw funds from the account, nor can they be held liable for any
losses of funds in the account. The agreement with the bank must specifically
state that the U.S. Government accepts no
fiscal liability for funds held in the account prior to transfer to the USDO
operating account. The memorandum of understanding (MOU) between the post and
bank must be signed or approved by CGFS/DO.
c. Cashier
(1) Under certain circumstances, a cashier may be
authorized by the USDO to open a cashier local currency bank account. Most
cashier accounts are used primarily to receive replenishment electronic funds
transfers (EFT) from the USDO or to make small EFT payments to local vendors.
Some may be authorized to write checks.
(2) Posts must request authorization for cashier bank
accounts from the USDO by cable. The request must provide strong justification
for the account, and document compliance with internal controls. See 4 FAH-2 H-821
for procedures on requesting approval for cashier bank accounts.
d. Direct debit account (prime pay)An
account that is established to pay utility and telephone bills using a direct
debit bank account. Payments are made prior to receipt and certification of an
invoice by CGFS or by post. The prime pay
program provides an alternative method for paying bills in countries where
payment is expected within an unusually short period of time. In these
situations, use of a prime pay bank account has shown to be more efficient and
less costly in terms of time, staffing, and late fees.
4 FAH-2 H-612.2 U.S. Dollar
(CT:DOH-31; 07-22-2013)
a. Neither the Department of State nor the Treasury
Department encourages holding U.S. dollars in banks abroad due to the internal
control problems and increased risk. However, there are instances where a U.S.
dollar account is necessary due to conditions in the host country. For
example, the local currency is not viable and the U.S. dollar is the accepted
currency for business transactions.
b. If post believes that a U.S. dollar account is
needed, the FMO or Management Officer should contact the USDO. If the USDO
agrees that the U.S. dollar account is necessary, the USDO will coordinate the
request with CGFS/DO. If CGFS/DO concurs, the request will be presented
to the U.S. Treasury. The Bank Bid Questionnaire for U.S. dollars should be
obtained from CGFS/DO.
c. Treasury requires the bank to put up collateral
before it will approve a U.S. dollar account. Treasury will consider waiving
this collateral requirement if the bank account is maintained at a zero
balance. If the balance will not be kept at zero, the local bank must provide
collateral and place it on deposit with the Federal Reserve Bank (FRB) of New
York. CGFS/DO will work with each post or
bank individually to place the U.S. Government securities
with the Federal Reserve Bank of New York.
(1) The amount of collateral required is dependent on
the highest dollar amount (not the average) which moves through the account,
i.e. if the amount on a given day is $50,000 and on another day it is $100,000,
the collateral pledged should cover the $100,000. Acceptable collateral would
be U.S. Treasury bills, notes, and bonds.
(2) As part of Treasurys general policy to
collateralize U.S. dollar accounts with commercial financial institutions, and
due to the conditions reported for certain posts, Treasury will authorize an
exception to the collateral requirements based on the assurances that this is
the best procedure given the conditions in the country and the banks refusal
to collateralize the account. Treasury requires the Department to closely
oversee these U.S. dollar accounts without collateral and ensure that the
accounts are being maintained at a zero balance to protect the U.S. Government from exposure to risk. Recovery of
any loss would be considered the Department of States responsibility.
d. Cashier accounts
(1) Under certain circumstances, a cashier may be
authorized to open a cashier U.S. dollar bank account. The bank must meet the
Treasury collateral requirements prescribed by Treasury and explained in 4 FAH-2
H-612.2 c.
(2) Posts must request authorization for cashier bank
accounts from the USDO by cable. The request must provide strong justification
for the account and document compliance with internal controls. If the USDO
agrees that the U.S. dollar account is necessary, the USDO will coordinate the
request with CGFS/DO. If CGFS/DO concurs, the request will be presented
to the U.S. Treasury.
(3) The bank bid questionnaire for U.S. dollars
accounts should be obtained from CGFS/DO. See
4 FAH-2 H-821
for procedures on requesting approval for cashier bank accounts.
4 FAH-2 H-613 APPROVAL OF A U.S.
DEPOSITARY
(CT:DOH-31; 07-22-2013)
a. The USDO must formally request approval and
designation from Treasury to open a local currency or U.S. dollar (USD) or
cashier operating account with a financial institution.
b. To change the existing bank, the post and USDO must
rebid the requirements. Instructions on rebidding are contained in the bank
questionnaire package, which should be obtained from CGFS/DO. The post evaluates the bank bids,
identifies its preference, and forwards all the completed bank questionnaires
to the USDO. The USDO reviews the questionnaires to determine which bank
offers the best terms. The USDO then forwards the preferences to CGFS/DO. CGFS/DO confers
with the U.S. Treasury to approve the selected bank. CGFS/DO will notify the USDO when the U.S.
Treasury approves the bank.
c. Upon Treasurys approval of the new bank, the USDO
should open the new bank account as soon as possible. The USDO must inform CGFS/DO of the effective date of the new bank
account.
d. Immediately after opening the new account, the USDO
must start procedures for final reconciliation and closure of the old bank
account. When the bank account is closed, the USDO must inform CGFS/DO, which will forward the information to
Treasury. If the USDO is unable to reconcile and close the old account within
12 months of the opening of the new account, he or she must advise CGFS/DO of the reasons why it cannot be closed.
CGFS/DO will provide further assistance.
4 FAH-2 H-614 CRITERIA FOR OPENING A
BANK ACCOUNT
(CT:DOH-31; 07-22-2013)
a. A review of the arrangement with the designated
depositary should be performed every three years or immediately if any of the
following conditions for considering change are met.
(1) The embassy or the USDO is not satisfied with the
services being provided, or feels the fee structure is no longer competitive.
(2) The embassy receives an unsolicited request for
the embassy bank account from a bank and that bank offers a more beneficial
banking arrangement than currently received, or reflects a higher level of U.S.
ownership than the present depositary.
(3) When unstable conditions in the country could
affect current banking arrangements.
b. 1 TFM 4-9030 requires that operating account
balances or forfeiture of potential interest earnings on the account will not
be used to subsidize banking services that would otherwise be funded through
the appropriation process, e. g. cashier services.
c. The level of the account balances will be
determined solely by the disbursing requirements, therefore, minimum or
compensating balances are not allowed. Account balances cannot be set to
produce extra bank income to support special services requested by the
embassy. If the bank proposes, or the embassy requests, special services,
and/or minimum account balances are proposed by the bank, the evaluation
process must include a finding that the balances are consistent only with
disbursing requirements. However, a bank may be willing to provide banking
services based on the average daily balance the USDO maintains to cover the
float of issued checks. In this case, strong consideration will be given in
the selection of the bank to service the embassy. Should the embassy wish
banking services in addition to what the bank is willing to provide based on
the average daily balance the USDO maintains to cover the float of issued
checks, the embassy may request separate and unrelated proposals from local
banks to provide those additional banking services on a fee basis. The fee
will have to be charged to the embassy program allotment.
d. Various factors will be evaluated in the selection
of a new bank. These factors are described in the recapitulation grid in the
bank bid questionnaire package obtained from CGFS/DO.
4 FAH-2 H-615 SOLICITATION, REVIEW, AND
DESIGNATION PROCEDURES
(CT:DOH-31; 07-22-2013)
a. IntroductionWhen the review
determines that a bank should be considered for a change, the bank will be
identified as a priority bank for rebid. The primary emphasis must be placed
on the USDO and Treasury concerns and not on services performed for the post.
In all requests, it is of paramount importance that
the agency exercise due diligence when recommending a bank for designation as a
depositary. The agency must ensure the bank is a valid, financially secure,
dependable, and reliable financial institution to avoid and ensure U.S.
Government funds are protected.
b. Soliciting Bids
(1) When it has been determined that a bank
solicitation will be initiated, the USDO will send the embassy a questionnaire
that may be further developed and refined to reflect the embassys particular
needs. Soft copies (files) of the WORD and EXCEL documents for this questionnaire
may be obtained from CGFS/DO. Bank bid
packages are available for a USDO local currency bank account as well as a U.S.
dollar bank account.
(2) The embassy will send a letter, with the
questionnaire attached, to all U.S. owned, as well as leading local banks,
advising the banks that the embassy is soliciting banking services. The letter
and questionnaire should contain particulars about the account, such as the
average balance estimated to be maintained, how it will be funded, the number
of checks written each month, any special banking services required (with
reference to the restriction on minimum balances), etc. The letter should
explain that the questionnaire will be evaluated on the basis of the banks
response in comparison with responses from other local banks. The letter will
request the bank be prepared to enter into a written agreement regarding the
services the bank will provide. If the bank will not enter into a written
agreement, the embassy must document why not and what services the embassy
understands will be provided by the banks. If special services are requested,
such as providing accommodation exchange on embassy premises, the letter should
contain a disclaimer statement similar to the following:
(a) The embassy will not make good any dishonored checks
that have been accepted and negotiated by the bank. The embassy will provide
the best information available, or attempt to obtain the information, on the
current whereabouts of the makers of such checks, consistent with applicable
laws and regulations; and
(b) Although the embassy exercises diligence in
maintaining security of property on embassy premises, the U.S. Government does
not accept liability for loss or damage to bank personal property kept on the
embassy premises for the purpose of providing these services.
(3) The embassy must establish a deadline for
responses, which should take into consideration the urgency of the need. If
there is no immediate need to change banks, a 30-day deadline is recommended.
(4) The embassy may wish to advise the banks that the
maintenance of the disbursing officers operating account may lead also to the
eventual transfer of unofficial account(s) to the bank, if any exist at the
post. The embassy may wish to provide necessary background information on the
unofficial account(s), such as the number of account(s), average balances in
the account(s), etc. Should the embassy elect to provide this information, it
should be made clear to the banks that the post has no control over the account(s),
and that the unofficial account(s) may or may not move with the embassy
account. The bank should also be made aware that these accounts are not in any
way linked to the USDOs official account and that the bank may not charge the
USDOs account for uncollectible items originally credited to or drawn on other
unofficial accounts.
(5) The embassy will consolidate the responses to the
questionnaires and send the original responses to the servicing USDO for
review. Along with the responses, the embassy should also prepare and forward
to the USDO a memorandum that provides any additional information helpful in
making a selection. Preferences should be stated with explanations. Special
services required should be discussed, including reasons and a statement that
proposed balances are consistent with disbursing requirements and should not
result in forfeiture of interest or extra income to the bank to support the
services.
c. Reviewing Bids
(1) The USDO will forward the following to CGFS/DO:
(a) Analysis of bank bids and scorecard, along with the
embassys memorandum containing its choice and the justification for the
selection. The USDO should ensure that all bank bids (and eventual agreements)
are in English; and
(b) A memorandum from the USDO to CGFS/DO, stating concurrence or nonconcurrence
with the post recommendation, with additional USDO comments as appropriate.
(2) Upon receipt of the bid package from the USDO, CGFS/DO will review the bank bids to determine
the most beneficial bid. CGFS/DO will then
forward the request to Treasury to designate the selected banking institution
(designated depositary), including in the request a statement that the proposed
depositary and the account meet the criteria of 1 TFM 4-9030.
d. Designating New Bank
(1) Treasury will prepare a letter designating the
selected banking institution as a depositary of U.S.
Government funds. The Treasury will send the letter to CGFS/DO, which in turn will send the original
letter and one copy to the embassy, and to the USDO.
(2) The embassy will present the original designation
letter to the bank. Post obtains the necessary forms from the bank to open an
account and sends the forms to the USDO.
(3) The USDO completes the bank forms and returns the
forms to the post. The USDO will sign signature cards; normally the USDO will
make an imprint of their signature die on the banks signature card.
(4) The USDO will obtain new bank checks after
determining if the bank will accept a USDO universal check or if a special size
and formatted check is required.
4 FAH-2 H-616 RETENTION OF BANKING
FILES
(CT:DOH-31; 07-22-2013)
a. Bank Bidsthe USDO will
accumulate all completed questionnaires received from the competing banks in
one folder. Other communications to be included in the folder are:
(1) The completed, returned questionnaires (bids);
(2) A cost-benefit analysis of each bid;
(3) A comparative analysis of USDO requirements; i.e.
EFT, automated bank statements, overdraft protection, electronic inquiry
capabilities, etc.; and
(4) Formal agreement with the winning bank.
b. Bank Statementsestablish a
folder for each month. File the bank account statement (if a paper copy is
received), financial system reports, and correspondence in the monthly
folders. Retain the folders for three years; then move to a long-term storage
facility as prescribed in the appropriate files management directives.
c. Bank Action Itemsthe USDO
will maintain bank action item files, which will contain correspondence
pertaining to any item listed on the schedules for Form FS-440, Statement of
Depository and Report of Checks Drawn, which are more than 90 days old. The
necessity to keep the schedules clear of items over 30 days old cannot be
over-emphasized. The immediate identification of differences and clearing of
those differences is essential to keeping a reconciled account.
d. Unreconciled Itemsany
unreconciled items on any of the schedules for 120 days will be reported to CGFS/OMA with copies of all applicable
correspondence pertaining to clearing the items. CGFS/OMA will review the documentation and
provide guidance on clearing the item.
4 FAH-2 H-617 through H-619 UNASSIGNED