The first instruction — An instruction given to the bank comes from the lender, which orders it to stop following the debtor`s instructions. The initial statement often contains a disposition order from the secure part, which allows the insured party to manage the flow of money from the deposit account. Active Deposit Account Control Agreement – A control agreement that orders the bank to accept the instructions of the secured party (not the debtor). UCC No. 9-104 — The “Single Code of Trade” section that deals with deposit account control. This section enhances the security interests on deposit accounts as an original guarantee. The lender should obtain a DACA from each third-party bank from which the borrower has a deposit account. A deposit bank that signs a DACA agrees to follow the lender`s instructions regarding the borrower`s money paid, without the borrower taking further action or the borrower`s agreement. Such an agreement gives the lender “control” of the deposit account required for perfection under the UCC. Secure Part (Lender) – part of a DACA that borrows funds and obtains a perfect security interest on the debtor`s deposit account when executing the contract. Deposit institutions should have an experienced internal team responsible for implementing all DACs. Relationship officers should not implement DAC, but should be informed of the importance of sending DACA applications through the filing institution`s DACA preparation, verification and enforcement protocol.
As long as DACA is carefully prepared and negotiated adequately by the custodian`s advisor, incorrect implementation of a DACA is the primary source of exposure to a custodian institution. The custodian ensures that all necessary checks have been carried out on the corresponding deposit accounts and that the depository is ready to implement and implement all the instructions it receives within the time frame set by the DACA. Small depots, in particular, should be alert to the lack of key personnel and have safeguard procedures in place to ensure that DACA instructions are always implemented in a timely manner.