[Federal Register Volume 86, Number 27 (Thursday, February 11, 2021)]
[Notices]
[Pages 9068-9070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02782]


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FEDERAL DEPOSIT INSURANCE CORPORATION


Notice of the FDIC's Response to Exception Requests Pursuant to 
Recordkeeping for Timely Deposit Insurance Determination

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice of the FDIC's response to exception requests pursuant to 
the Recordkeeping for Timely Deposit Insurance Determination rule.

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SUMMARY: In accordance with its rule regarding recordkeeping for timely 
deposit insurance determination, the FDIC is providing notice that it 
has granted time-limited exception relief to covered institutions from: 
The information technology system and recordkeeping requirements 
applicable to certain formal revocable and irrevocable trust accounts; 
the information technology system requirements, general recordkeeping 
requirements, and alternative recordkeeping requirements applicable to 
certain deposit accounts for which the covered institution must perform 
data clean up to assign an appropriate ownership right and capacity 
code to the subject accounts and related system updates; the 
information technology system requirements and general recordkeeping 
requirements to certain internal (work-in-process) deposit accounts for 
which the covered institution's information technology system is not 
yet capable of calculating deposit insurance within 24 hours after the 
appointment of the FDIC as receiver; and the information technology 
system requirements, general recordkeeping requirements, and 
alternative recordkeeping requirements for a limited number of deposit 
accounts held in the covered institution's trust department, which acts 
in an agency or fiduciary capacity.

DATES: The FDIC's grants of exception relief were effective as of 
February 3, 2021.

FOR FURTHER INFORMATION CONTACT: Benjamin Schneider, Section Chief, 
Division of Complex Institution Supervision and Resolution; 
<a href="/cdn-cgi/l/email-protection#27454254444f49424e4342556741434e4409404851"><span class="__cf_email__" data-cfemail="b5d7d0c6d6dddbd0dcd1d0c7f5d3d1dcd69bd2dac3">[email protected]</span></a>; 917-320-2534.

SUPPLEMENTARY INFORMATION: The FDIC granted two time-limited exception 
requests to multiple covered institutions and three time-limited 
exception requests to a covered institution pursuant to the FDIC's rule 
entitled ``Recordkeeping for Timely Deposit Insurance Determination,'' 
codified at 12 CFR part 370 (part 370).\1\ Part 370 generally requires 
covered institutions to implement the information technology system and 
recordkeeping capabilities needed to quickly calculate the amount of 
deposit insurance coverage available for each deposit account in the 
event of failure. Pursuant to Sec.  370.8(b)(1), one or more covered 
institutions may submit a request in the form of a letter to the FDIC 
for an exception from one or more of the requirements of part 370 if 
circumstances exist that would make it impracticable or overly 
burdensome to meet those requirements. Pursuant to Sec.  370.8(b)(3), a 
covered institution may rely upon another covered institution's 
exception request which the FDIC has previously granted by notifying 
the FDIC that it will invoke relief from certain part 370 requirements 
and demonstrating that the covered institution has substantially 
similar facts and circumstances to those of the covered institution 
that has already received the FDIC's approval. The notification letter 
must also include the information required under Sec.  370.8(b)(1) and 
cite the applicable notice published pursuant to Sec.  370.8(b)(2). 
Unless informed otherwise by the FDIC within 120 days after the FDIC's 
receipt of a complete notification for exception, the exception will be 
deemed granted subject to the same conditions set forth in the FDIC's 
published notice.
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    \1\ 12 CFR part 370.
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    These grants of relief will be subject to ongoing FDIC review, 
analysis, and verification during the FDIC's routine part 370 
compliance tests. The FDIC presumes each covered institution is

[[Page 9069]]

meeting all the requirements set forth in the Rule unless relief has 
otherwise been granted. These grants of relief may be rescinded or 
modified upon: Discovery of misrepresentation; material change of 
circumstances or conditions related to the subject accounts; or failure 
to satisfy conditions applicable to each. The following exceptions were 
granted by the FDIC as of February 3, 2021.

I. Certain Formal Revocable and Irrevocable Trust Accounts With 
Transactional Features for Which the Covered Institution Must Maintain 
a Unique Identifier for a Grantor in its Deposit Account Records

    The FDIC granted time-limited exception relief from the information 
technology system requirements set forth in Sec.  370.3 and certain 
recordkeeping requirements set forth in Sec.  370.4(b)(2) of the rule 
to two covered institutions for up to 18 months from their compliance 
date. These covered institutions requested exception relief in order to 
review records, perform customer outreach where necessary, and update 
recordkeeping and information technology systems in order to maintain a 
unique identifier of a grantor in the deposit account records for a 
limited number of deposit accounts held in connection with a formal 
revocable or irrevocable trust that would be insured as described in 12 
CFR 330.10 or 12 CFR 330.13.
    These covered institutions represented that they had not maintained 
a unique identifier (which may be, but is not required to be, a 
government issued identification number such as a social security 
number or tax identification number) for a grantor of a formal trust 
with transactional features in its records for the subject accounts. 
The covered institutions believe that they can obtain the information 
needed to maintain a unique identifier for such a grantor through a 
review of trust-related documents and customer outreach, but that 
information technology system updates are also necessary to ensure a 
unique identifier for each grantor can be maintained in deposit account 
records.
    In connection with the FDIC's grants of relief, these covered 
institutions have represented that they will maintain the capability to 
place holds on the deposit accounts subject to the exception in the 
event of failure until a deposit insurance determination can be made 
and place all such accounts into the pending file of its part 370 
output files during the relief period. As conditions of relief, these 
covered institutions must submit a status report to <a href="/cdn-cgi/l/email-protection#d1a1b0a3a5e2e6e191b7b5b8b2ffb6bea7"><span class="__cf_email__" data-cfemail="1c6c7d6e682f2b2c5c7a78757f327b736a">[email protected]</span></a> at 
the midpoint of the exception relief period and immediately bring to 
the FDIC's attention any change of circumstances or conditions.

II. Certain Deposit Accounts for Which the Covered Institution's 
Information Technology System Is Not Capable of Completing Deposit 
Insurance Calculation Process Because Additional Time Is Required for 
Data Cleanup To Assign an Ownership, Right and Capacity Code and for 
Related System Updates

    The FDIC granted time-limited exception relief from the information 
technology system requirements set forth in Sec.  370.3, general 
recordkeeping requirements set forth in Sec.  370.4(a), and alternative 
recordkeeping requirements set forth in Sec.  370.4(b) of the rule to a 
covered institution for up to 12 months from the granted relief date. 
The covered institution requested exception relief to perform data 
cleanup of account records, make system updates, and assign ownership, 
right and capacity codes to a limited number of various deposit 
accounts. These data cleanup and system update efforts are needed so 
that the covered institution's deposit account records and part 370-
compliant information technology system capabilities can be used to 
calculate deposit insurance for the subject accounts.
    The covered institution has identified data quality issues that led 
to inappropriate ownership, right and capacity codes being assigned to 
various deposit accounts. Data quality issues included inappropriate 
ownership, right and capacity codes being assigned to the subject 
accounts due to system logic misidentifying keywords in account titles. 
For example, a single account opened by `James Bond' might be assigned 
the public bond account ownership right and capacity code of PBA. In 
other instances, a limited number of accounts were not assigned an 
ownership right and capacity code due to unclear account titling, 
insufficient records, and general data quality issues.
    The covered institution requested time-limited relief to review 
records, assign the appropriate ownership right and capacity code, and 
ensure its systems can calculate deposit insurance for the subject 
accounts. In addition, the covered institution represented that it will 
be able to identify the applicable ownership right and capacity code 
upon the completion of remediation efforts for the majority of 
accounts.
    In connection with the FDIC's grant of relief, the covered 
institution will investigate the reason accounts were placed into the 
pending file of the covered institution's part 370 output files, review 
account records, write new system logic to ensure the applicable 
ownership right and capacity code is applied to the subject accounts, 
and, in the event of its failure, ensure that holds can be placed on 
all deposit accounts subject to this time-limited exception relief 
until sufficient information is obtained to enable calculation of 
deposit insurance coverage. As conditions of relief, the covered 
institution must submit a status report to <a href="/cdn-cgi/l/email-protection#90e0f1e2e4a3a7a0d0f6f4f9f3bef7ffe6"><span class="__cf_email__" data-cfemail="33435241470004037355575a501d545c45">[email protected]</span></a> at the 
midpoint of the exception relief period and immediately bring to the 
FDIC's attention any change of circumstances or conditions.

III. A Limited Number of Internal (Work-in-Process) Deposit Accounts 
for Which the Covered Institution's Information Technology System Is 
Not Capable of Completing Deposit Insurance Calculation Process Within 
24 Hours of Failure

    The FDIC granted time-limited exception relief from the information 
technology requirements set forth in Sec.  370.3 and general 
recordkeeping requirements set forth in Sec.  370.4(a) of the rule to a 
covered institution for up to 18 months from its compliance date for 
certain internal (work-in-process) accounts that the covered 
institution's information technology system cannot calculate deposit 
insurance within 24 hours of failure. The covered institution 
identified these internal accounts as accounts utilized for functions 
such as clearing, settlement, suspense or work-in-process. Such 
accounts do not qualify for alternative recordkeeping.
    In connection with the FDIC's grant of relief, the covered 
institution described the internal (work-in-process) accounts in 
detail, including, account titling, the number of accounts, account 
balances, data and trends regarding transaction settlement cycles, 
business-as-usual processes in place, and zero-balance accounts. The 
covered institution has represented that it will place all such 
accounts into the pending file of the covered institution's part 370 
output files; document procedures and processes to upload the data into 
the covered institution's deposit insurance calculation engine; and 
certify that the covered institution can obtain information from 
internal business lines necessary to make a deposit insurance 
determination as soon as possible after appointment of the FDIC as 
receiver.
    As conditions of relief, the covered institution must submit a 
status report to <a href="/cdn-cgi/l/email-protection#106071626423272050767479733e777f66"><span class="__cf_email__" data-cfemail="8cfcedfef8bfbbbccceae8e5efa2ebe3fa">[email protected]</span></a> at the midpoint of the exception 
relief period setting forth progress made towards rule compliance for 
the subject accounts; provide

[[Page 9070]]

annually data regarding the number of and amount of deposits held in 
the internal accounts covered by this exception; provide a final copy 
of the documentation that describes the processes put in place to 
obtain beneficial ownership information necessary to make an insurance 
determination for the subject accounts as quickly as possible; confirm 
that the covered institution currently has the capability to restrict 
access to any or all of the subject accounts if required; make 
reasonable efforts, in the ordinary course of upgrading its information 
technology systems, to implement an information technology solution 
that would permit a deposit insurance determination for the subject 
accounts within 24 hours; and immediately bring to the FDIC's attention 
any change of circumstances or conditions.

IV. A Limited Number of Deposit Accounts for Which the Covered 
Institution's Trust Department Acts in an Agency or Fiduciary Capacity

    The FDIC granted time-limited exception relief from the information 
technology requirements set forth in Sec.  370.3, general recordkeeping 
requirements set forth in Sec.  370.4(a), and alternative recordkeeping 
requirements set forth in Sec.  370.4(b) of the rule for up to 18 
months from its compliance date for a limited number of deposit 
accounts for which its trust department acts in an agency or fiduciary 
capacity. The covered institution's trust department \2\ provides 
fiduciary and agency services to corporations, retirement plans, and 
individuals. These services include safeguarding assets, making 
investment decisions, or facilitating clients' complex business 
transactions.
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    \2\ The covered institution's trust department is a separate 
department that segregates its client data from other parts of the 
Bank, uses a separate client accounting system of record, observes 
trust department rules that do not apply to banks, and follows other 
distinct processes.
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    In performing such services, the trust department opens deposit 
accounts that hold funds from uninvested cash, sweeps, or other 
transactions on behalf of its customers. The account records for the 
subject accounts, which the trust department maintains on a separate 
system of record, reflect that funds are held by the covered 
institution's trust department as an agent or fiduciary for its 
clients.
    The covered institution must perform system enhancements to assign 
an ownership, right and capacity code to the subject accounts and up 
the trust department's systems of record in order to calculate deposit 
insurance. The covered institution represented that it must review 
account records to assign an ownership, right and capacity code to the 
subject accounts; input missing information or data into the trust 
department's systems of record; enhance information technology system 
logic; develop new account opening procedures at account onboarding; 
and if necessary, amend trust agreements and provide notices to third-
party recordkeepers for accounts that qualify for alternative 
recordkeeping treatment with transactional features.\3\
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    \3\ The requirements of Sec.  370.4(b)(2)(ii) require the Bank 
obtain grantor unique identification information for accounts with 
transactional features.
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    In connection with the FDIC's grant of relief, the covered 
institution will ensure that, in the event of its failure, holds can be 
placed on all deposit accounts subject to this time-limited exception 
relief until sufficient information is obtained to enable calculation 
of deposit insurance coverage. As conditions of relief, the covered 
institution must submit a status report to <a href="/cdn-cgi/l/email-protection#2e5e4f5c5a1d191e6e484a474d00494158"><span class="__cf_email__" data-cfemail="54243526206763641432303d377a333b22">[email protected]</span></a> at the 
midpoint of the exception relief period and immediately bring to the 
FDIC's attention any change of circumstances or conditions.

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on February 5, 2021.
James P. Sheesley,
Assistant Executive Secretary.
[FR Doc. 2021-02782 Filed 2-10-21; 8:45 am]
BILLING CODE 6714-01-P


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