millennium
FED Checklist - guidelines for a happy new year 2000
Wbat you need to know
about your customers
The guidelines worked out by the US central bank appear pretty basic, but it is often the
obvious that is forgotten. Perhaps they can act as a basic checklist for use in other countries.
Here follow the main points laid down by the FED and an overview of a spin-off checklist for
due diligences on customers. These pointers may seem simple and straightforward at first sight,
but don't be misled. There's a lot to be done before we can start celebrating a new millennium.
By 30 June 1998, Rabobank must have implemented
a formal due diligence plan by which we:
identify all material customers
>- evaluate their year 2000 readiness
assess risk of such customers to Rabobank
>- implement controls to manage and mitigate the
Y2K risk from such customers
The FED has identified three major types of customers
that may expose banking institutions to risk:
funds takers
>- funds providers
capital market and asset management
counterparties
By 30 September 1998, the assessment of each
customer's Y2K preparedness and its risk impact
should be substantially completed.
We are required to provide quarterly reports to
senior management identifying material customers
who are not effective addressing Y2K problems and
actions taken to manage this risk.
New York's outline for customer due diligence
Identify all material customers
Request Y2K information from all customers
send/deliver questionnaires
Assess Y2K risk
train RMs and credit analysts
complete customer evaluations
Implement controls to manage and
mitigate risks for:
>- funds takers
>- funds providers
>- capital market and asset management
counterparties
What'sNewS Issue 7-July 1998 5
If your customers are not millennium compliant by the
deadline, then not only they could be in big trouble. So
could you. Lack of compliance could delay servicing of
loans, can affect their credit rating, and could even put
them out of business. So it is in your interest to check out
the status of your customers. Who knows? You may give
your customers the stimulance they need to get starred.
Dan McHale will send you examples of his team's
questionnaire on request.
