[Code of Federal Regulations]
[Title 12 Volume 1]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR40.5]

[Page 363-364]
 
                       TITLE 12--BANKS AND BANKING
 
   CHAPTER I--COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY
 
PART 40--PRIVACY OF CONSUMER FINANCIAL INFORMATION--Table of Contents
 
                 Subpart A--Privacy and Opt Out Notices
 
Sec. 40.5  Annual privacy notice to customers required.

    (a)(1) General rule. A bank must provide a clear and conspicuous 
notice to customers that accurately reflects its privacy policies and 
practices not less than annually during the continuation of the customer 
relationship. Annually means at least once in any period of 12 
consecutive months during which that relationship exists. A bank may 
define the 12-consecutive-month period, but the bank must apply it to 
the customer on a consistent basis.
    (2) Example. A bank provides a notice annually if it defines the 12-
consecutive-month period as a calendar year and provides the annual 
notice to the customer once in each calendar year following the calendar 
year in which the bank provided the initial notice. For example, if a 
customer opens an account on any day of year 1, the bank must provide an 
annual notice to that customer by December 31 of year 2.
    (b)(1) Termination of customer relationship. A bank is not required 
to provide an annual notice to a former customer.
    (2) Examples. A bank's customer becomes a former customer when:
    (i) In the case of a deposit account, the account is inactive under 
the bank's policies;
    (ii) In the case of a closed-end loan, the customer pays the loan in 
full, the bank charges off the loan, or the bank sells the loan without 
retaining servicing rights;

[[Page 364]]

    (iii) In the case of a credit card relationship or other open-end 
credit relationship, the bank no longer provides any statements or 
notices to the customer concerning that relationship or the bank sells 
the credit card receivables without retaining servicing rights; or
    (iv) The bank has not communicated with the customer about the 
relationship for a period of 12 consecutive months, other than to 
provide annual privacy notices or promotional material.
    (c) Special rule for loans. If a bank does not have a customer 
relationship with a consumer under the special rule for loans in Sec. 
40.4(c)(2), then the bank need not provide an annual notice to that 
consumer under this section.
    (d) Delivery. When a bank is required to deliver an annual privacy 
notice by this section, the bank must deliver it according to Sec. 
40.9.