Difficulty: Easy

Average Score: 100%

Which action should a financial institution take when it receives a grand-jury subpoena regarding a customer?

Rationale

Have the institution's assigned legal counsel review the subpoena.

It is essential for a financial institution to have its legal counsel review a grand-jury subpoena to ensure compliance with legal requirements and to protect the rights of the customer involved. Legal counsel can provide guidance on how to respond appropriately while safeguarding the institution's interests.

A (Keep the customer's accounts open at the enforcement agency's verbal request) YOUR ANSWER

Keeping the customer's accounts open based on a verbal request from an enforcement agency is not advisable. Institutions must adhere to legal procedures and documented requests, as verbal instructions do not offer the necessary legal protection or clarity regarding compliance with the subpoena.

C (Make copies of the customer's documents and submit the originals to the enforcement agency) YOUR ANSWER

Submitting original documents without proper legal review can expose the institution to legal risks, including potential violations of customer privacy and data protection laws. It is critical to first consult legal counsel to determine the appropriate action regarding document submission in response to the subpoena.

D (Notify the customer being investigated before submitting documents) YOUR ANSWER

Notifying the customer prior to submitting documents in response to a grand-jury subpoena can interfere with ongoing investigations and may violate the terms of the subpoena itself. In many cases, the enforcement agency may specifically request that the institution refrain from informing the customer until the investigation is complete.

Conclusion

When a financial institution receives a grand-jury subpoena, it is crucial to have legal counsel review the subpoena before taking any action. This ensures compliance with legal obligations while protecting both the institution and the customer's rights. Other options, such as submitting original documents or notifying the customer, can lead to legal complications or hinder investigations, making legal oversight the best practice in this scenario.

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