SunTrust 2012 Annual Report Download - page 22

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scope derivative transactions by and between SunTrust Bank or its subsidiaries and the Company or other Company subsidiaries.
The Federal Reserve enforces the terms of 23A and 23B and audits the enterprise for compliance.
In October 2011, the Federal Reserve and other regulators jointly issued a proposed rule implementing requirements of a new
Section 13 to the BHC Act, commonly referred to as the “Volcker Rule.” The proposed rule generally prohibits the Company
and its subsidiaries from (i) engaging in proprietary trading for its own account, (ii) acquiring or retaining an ownership interest
in or sponsoring a “covered fund,” and (iii) entering into certain relationships with a “covered fund,” all subject to certain
exceptions. The proposed rule also clarifies certain activities in which the Company and its subsidiaries may continue to
engage. The proposed rule, when finalized, is likely to further restrict and limit the types of activities in which the Company
and its subsidiaries may engage. Moreover, the proposed rule, when finalized, is likely to require the Company and its
subsidiaries to adopt complex compliance monitoring systems in order to assure compliance with the final rule while engaging
in activities that the Company and its subsidiaries currently conduct.
The Patriot Act substantially broadened existing anti-money laundering legislation and the extraterritorial jurisdiction of the
U.S.; imposes compliance and due diligence obligations; creates crimes and penalties; compels the production of documents
located both inside and outside the U.S., including those of non-U.S. institutions that have a correspondent relationship in the
U.S.; and clarifies the safe harbor from civil liability to clients. The U.S. Treasury has issued a number of regulations that
further clarify the Patriot Act's requirements or provide more specific guidance on their application. The Patriot Act requires
all “financial institutions,” as defined, to establish certain anti-money laundering compliance and due diligence programs.
The Patriot Act requires financial institutions that maintain correspondent accounts for non-U.S. institutions, or persons that
are involved in private banking for “non-U.S. persons” or their representatives, to establish, “appropriate, specific and, where
necessary, enhanced due diligence policies, procedures, and controls that are reasonably designed to detect and report instances
of money laundering through those accounts.” Recently the Financial Crimes Enforcement Network (“FinCEN”), which drafts
regulations implementing the Patriot Act and other anti-money laundering and bank secrecy act legislation, proposed a rule
that would require financial institutions to obtain beneficial ownership information with respect to all legal entities with which
such institutions conduct business. The scope and compliance requirements of such a rule have yet to be formalized or
completed. Bank regulators are focusing their examinations on anti-money laundering compliance, and we continue to enhance
our anti-money laundering compliance programs.
During the fourth quarter of 2011, the Federal Reserve's final rules related to debit card interchange fees became effective.
These rules significantly limit the amount of interchange fees that we may charge for electronic debit transactions. Similarly,
in 2009, the Federal Reserve adopted amendments to its Regulation E that restrict our ability to charge our clients overdraft
fees for ATM and everyday debit card transactions. Pursuant to the adopted regulation, clients must opt-in to an overdraft
service in order for banks to collect overdraft fees. Overdraft fees have in the past represented a significant amount of noninterest
fees collected by the Company's banking subsidiary.
Pursuant to the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, bank holding companies from any state
may acquire banks located in any other state, subject to certain conditions, including concentration limits. Additionally, a bank
may establish branches across state lines by merging with a bank in another state and, as amended by the Dodd-Frank Act,
subject to few restrictions. A bank holding company may not directly or indirectly acquire ownership or control of more than
5% of the voting shares or substantially all of the assets of any bank or merge or consolidate with another bank holding
company without the prior approval of the Federal Reserve. Under the Dodd-Frank Act, a bank holding company may not
acquire another bank or engage in new activities that are financial in nature or acquire a non-bank company that engages in
activities that are financial in nature unless the bank holding company is both "well capitalized" and deemed by the Federal
Reserve to be "well managed." Moreover, a bank and its affiliates may not, after the acquisition of another bank, control more
than 10% of the amount of deposits of insured depository institutions in the U.S. and a financial company may not merge,
consolidate or acquire another company if the total consolidated liabilities of the acquiring financial company after such
acquisition exceeds 10% of the aggregated consolidated liabilities of all financial companies at the end of the year preceding
the transaction. Additionally, certain states may have limitations on the amount of deposits any bank may hold within that
state.
On July 21, 2010, the Federal Reserve and other regulators jointly published final guidance for structuring incentive
compensation arrangements at financial organizations. The guidance does not set forth any formulas or pay caps for, but
contains certain principles which companies would be required to follow with respect to, employees and groups of employees
that may expose the company to material amounts of risk. The three primary principles are (i) balanced risk-taking incentives,
(ii) compatibility with effective controls and risk management, and (iii) strong corporate governance. The Federal Reserve
will monitor compliance with this guidance as part of its safety and soundness oversight.
The Company's non-banking subsidiaries are regulated and supervised by various other regulatory bodies. For example, STRH
is a broker-dealer registered with the SEC and the FINRA. STIS is also a broker-dealer and investment adviser registered with
the SEC and a member of the FINRA. RidgeWorth and several of RidgeWorth's subsidiaries are investment advisers registered