Section 1071 Firewall Requirement

One of the more potentially challenging aspects of the Section 1071 data collection and reporting requirements is the firewall. Financial institutions must generally ensure that certain people cannot view or otherwise have access to certain “restricted” data. In other words, there must be a “firewall”, of sorts, that prevents any decision maker from seeing the business ownership status and any demographic information. The Rule doesn’t limit the term “decision maker” to only those that might say yes or no to the applicant; however. A decision maker is anyone that might have any influence over an application and could include someone that:

• Makes, Participates or Recommends Approval, Denial, Counteroffer Decisions
• Participates on Loan Committee
• Underwrites Loans
• Sets Credit Terms, such as Loan Amounts, Credit Limits, Rates, etc.
• Determines the Need for Guarantors, Collateral, etc.

Keep in mind, there are some exceptions and misconceptions related to the firewall.

Jerod explains more in the video.

Published
2023/12/14