Consigned Items and Other Customer Services

Safekeeping

In addition to items held as collateral for loans, banks occasionally hold customers’ valuables for short periods of time. Although the bank’s commercial department may administer safekeeping services, most banks choose to offer these services through a separate trust department. Regardless of the way in which such customer services are offered, management should establish a specific fee schedule for safekeeping services. In exchange for payment of the fee, customers receive assurance that their assets will be protected. Customers may also use safekeeping services to hold assets under escrow.

Controls over items placed in safekeeping generally should be the same as those for handling collateral. Two employees should work together to inventory items the bank will store. They should then keep the items under dual control in the bank’s vault. They should also prepare safekeeping receipts with a full description of the items accepted. The bank should never accept sealed packages with contents unknown for safekeeping.

If the items held for safekeeping are U.S. government securities, 17 CFR 450 requires special handling, record keeping, and auditing procedures.

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