This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

80135 

Vol. 89, No. 191 

Wednesday, October 2, 2024 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 375 

RIN 3064–AG07 

Recordkeeping for Custodial Accounts 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Federal Deposit 

Insurance Corporation (FDIC) is 

proposing requirements that would 

strengthen FDIC-insured depository 

institutions’ (IDI) recordkeeping for 

custodial deposit accounts with 

transactional features and preserve 

beneficial owners’ and depositors’ 

entitlement to the protections afforded 

by Federal deposit insurance. The 

proposal is intended to promote the 

FDIC’s ability to promptly make deposit 

insurance determinations and, if 

necessary, pay deposit insurance claims 

‘‘as soon as possible’’ in the event of the 

failure of an IDI holding custodial 

accounts with transactional features. 

The proposed requirements also are 

expected to result in depositor and 

consumer protection benefits, such as 

promoting timely access by consumers 

to their funds, even in the absence of the 

failure of an IDI. The requirements 

described in this document would only 

apply to IDIs offering custodial accounts 

with transactional features and that are 

not specifically exempted as provided 

in this document. 

DATES: Comments must be received on 

or before December 2, 2024. 

ADDRESSES: You may submit comments, 

identified by RIN 3064–AG07, by any of 

the following methods: 

• FDIC Website: https://

www.fdic.gov/regulations/laws/federal/. 

Follow instructions for submitting 

comments on the agency website. 

• Email: Comments@fdic.gov. Include 

RIN 3064–AG07 in the subject line of 

the message. 

• Mail: James P. Sheesley, Assistant 

Executive Secretary, Attention: 

Comments—RIN 3064–AG07, Federal 

Deposit Insurance Corporation, 550 17th 

Street NW, Washington, DC 20429. 

• Hand Delivery to FDIC: Comments 

may be hand-delivered to the guard 

station at the rear of the 550 17th Street 

NW building (located on F Street) on 

business days between 7 a.m. and 5 p.m. 

• Public Inspection: Comments 

received, including any personal 

information provided, may be posted 

without change to https://www.fdic.gov/ 

resources/regulations/federal-registerpublications/. Commenters should 

submit only information that the 

commenter wishes to make available 

publicly. The FDIC may review, redact, 

or refrain from posting all or any portion 

of any comment that it may deem to be 

inappropriate for publication, such as 

irrelevant or obscene material. The FDIC 

may post only a single representative 

example of identical or substantially 

identical comments, and in such cases 

will generally identify the number of 

identical or substantially identical 

comments represented by the posted 

example. All comments that have been 

redacted, as well as those that have not 

been posted, that contain comments on 

the merits of the proposed rule will be 

retained in the public comment file and 

will be considered as required under all 

applicable laws. All comments may be 

accessible under the Freedom of 

Information Act. 

This proposal, all comments received, 

and a summary of not more than 100 

words of the proposed rule pursuant to 

the Providing Accountability Through 

Transparency Act of 2023 are available 

at https://www.fdic.gov/resources/ 

regulations/federal-registerpublications/. 

FOR FURTHER INFORMATION CONTACT: 

Division of Resolutions and 

Receiverships: Shivali Nangia, Assistant 

Director, 972–761–2945, SNangia@

FDIC.gov; Cathy K. Davis, Chief, Claims, 

972–761–2336, CDavis@FDIC.gov. 

Division of Depositor and Consumer 

Protection: Luke H. Brown, Associate 

Director, Supervisory Policy, 202–898– 

3842, LuBrown@FDIC.gov; Meron 

Wondwosen, Assistant Director, 

Supervisory Policy, 202–898–7211, 

MeWondwosen@FDIC.gov; Edward J. 

Hof, Senior Policy Analyst, 202–898– 

7213, EdwHof@FDIC.gov. Legal 

Division: Vivek V. Khare, Senior 

Counsel, 202–898–6847, VKhare@

fdic.gov; James S. Watts, Counsel, 202– 

898–6678, jwatts@FDIC.gov. 

SUPPLEMENTARY INFORMATION: 

Introduction 

The business of deposit taking in the 

digital age has evolved, creating new 

opportunities for IDIs to gain access to 

deposits through third parties in 

increasingly complex relationships. 

This evolution has included the 

widespread use of digital channels, 

including websites and mobile 

applications, which created new 

opportunities and options to deliver 

financial products and services to 

consumers. However, it has also created 

risks for consumers, including 

confusion regarding the applicability 

and availability of deposit insurance to 

protect their money from loss. 

Recent events have underscored 

issues that can be associated with some 

IDI arrangements with third parties to 

deliver IDI deposit products and 

services. For example, the bankruptcy of 

Synapse Financial Technologies, Inc. 

(Synapse), a technology company that 

worked with several IDIs and numerous 

financial technology (fintech) 

companies, has affected the ability of 

consumers to access funds placed at 

IDIs for a number of months, resulting 

in significant and ongoing harm to those 

consumers. In many cases, it was 

advertised that the funds were FDICinsured, and consumers may have 

believed that their funds would remain 

safe and accessible due to 

representations made regarding 

placement of those funds in IDIs. 

Consumers have been unable to access 

their funds at IDIs for an extended 

period of time while the IDIs attempt to 

determine ownership of the funds 

deposited by fintechs. Since May 2024, 

the FDIC National Center for Consumer 

and Depositor Assistance has received 

more than a thousand inquiries, 

complaints, and concerns from 

consumers regarding the Synapse 

bankruptcy. Published reports further 

suggest that some of those consumers 

affected by the Synapse bankruptcy had 

placed the funds in accounts through a 

fintech that they used for day-to-day 

living expenses thereby intensifying the 

effect of their loss of access. 

In the wake of Synapse’s bankruptcy, 

including the fact that IDIs encountered 

significant difficulties in obtaining, 

reviewing, and reconciling Synapse’s 


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80136 Federal Register / Vol. 89, No. 191 / Wednesday, October 2, 2024 / Proposed Rules 

1See 12 CFR 330.5. 

2For example, the agencies recently issued a Joint 

Statement on Banks’ Arrangements with Third 

Parties to Deliver Bank Deposit Products and 

Services. See FIL–45–2024 (July 25, 2024). 

records, the FDIC believes these 

circumstances have raised concerns 

about the accuracy and integrity of those 

records. These circumstances also raise 

questions about the completeness, 

accuracy, and integrity of custodial 

deposit account records for other IDIs’ 

arrangements with third parties to 

deliver deposit products and services. 

Custodial deposit account records are 

critical when the FDIC makes deposit 

insurance determinations following the 

failure of an IDI that has custodial 

deposit account records. The FDIC 

generally relies upon a failed IDI’s 

records to determine deposit insurance 

coverage, but in certain circumstances, 

the FDIC’s regulations also provide for 

consideration of records of parties other 

than the failed IDI if such records are 

maintained in good faith and in the 

regular course of business.1 The events 

described above highlight substantial 

risks with respect to the FDIC fulfilling 

its statutory mandate to maintain public 

confidence in the banking system by 

ensuring the prompt and accurate 

payment of deposit insurance in the 

case of an IDI’s failure. Specifically, if 

an IDI fails, and it has an arrangement 

with a third party where custodial 

deposit account recordkeeping is 

inadequate or unreliable, such a 

situation would impede the FDIC’s 

ability to promptly make deposit 

insurance determinations for an IDI 

holding custodial deposit accounts, and 

if necessary, pay claims to depositors. 

The FDIC’s mission is rooted in 

maintaining public confidence in the 

banking system, which heavily relies on 

the prompt and accurate payment of 

insured deposits. Any inaccuracies or 

discrepancies in the relevant records 

can delay a deposit insurance 

determination, leaving depositors in a 

state of uncertainty during a critical 

time. 

In addition, recent events have 

exposed potential risks to current 

beneficial owners, including consumers, 

of deposits at IDIs, even in the absence 

of the failure of an IDI. These issues 

create uncertainty that could undermine 

the public confidence that underpins 

IDIs and our nation’s broader financial 

system. 

These events, along with the 

increased complexity of certain 

arrangements, demonstrate a need to 

strengthen IDIs’ recordkeeping practices 

with respect to custodial deposit 

accounts, and in particular, those with 

transactional features. The FDIC 

believes that custodial deposit accounts 

with transactional features present 

unique challenges in resolving a failed 

IDI because making a deposit insurance 

determination requires the FDIC to not 

only gather and process records of 

beneficial ownership maintained by 

parties other than the failed IDI, but also 

to reconcile those records with a 

significant amount of payment activity 

taking place with respect to the 

accounts. 

The FDIC neither prohibits nor 

discourages IDIs from providing banking 

services to customers of any specific 

class or type, as permitted by law or 

regulations. The FDIC notes that the 

Federal banking agencies have recently 

taken steps to address IDIs’ management 

of the risks involved in arrangements 

with non-bank third parties, including 

fintech companies,2 as well as steps to 

address consumer confusion relating to 

the nature and application of deposit 

insurance coverage. In addition, the 

Federal banking agencies have 

addressed supervisory concerns, 

including concerns relating to consumer 

protection, at specific IDIs through 

enforcement actions. However, the FDIC 

believes rulemaking is also warranted to 

promote the prompt payment of deposit 

insurance in the event of the failure of 

an IDI holding custodial deposit 

accounts with transactional features. 

The FDIC is accordingly seeking 

comment on all aspects of the proposed 

rule, including specific questions 

provided herein, that would strengthen 

IDIs’ recordkeeping for custodial deposit 

accounts with transactional features. 

The proposed rule is also expected to 

result in depositor and consumer 

protection benefits even in the absence 

of the failure of an IDI. 

Summary of Primary Provisions 

The proposed rule would establish 

new recordkeeping requirements at IDIs 

for ‘‘custodial deposit accounts with 

transactional features,’’ subject to a list 

of specific exemptions. IDIs holding 

deposits within the scope of the 

proposed rule would be required to 

maintain records identifying the 

beneficial owners of those deposits, the 

balance attributable to each beneficial 

owner, and the ownership category in 

which the deposited funds are held. The 

IDI could maintain those records itself 

or, if certain additional requirements are 

satisfied, the IDI could maintain the 

records through an arrangement with a 

third party (which could include a 

vendor, processor, software or service 

provider, or a similar entity). The 

proposed rule provides a specific 

electronic file format for records on 

beneficial owners and their interests in 

the deposited funds. This standardized 

format would enable the FDIC to more 

quickly gather and use these records if 

a deposit insurance determination 

becomes necessary. 

The proposed rule would provide that 

where IDIs choose to maintain the 

required records through a contractual 

relationship with a third party, 

additional requirements would need to 

be satisfied. These additional 

requirements are intended to promote 

the integrity of the records and ensure 

that the IDI has continued access to the 

records. Among other things, the IDI 

would be required to have direct, 

continuous, and unrestricted access to 

the records of the beneficial owners, 

including, but not limited to, in the 

event of the business interruption, 

insolvency, or bankruptcy of the third 

party. In addition, reconciliation of 

these records would be required, as 

would periodic validation of the third 

party’s records by a person independent 

of the third party. 

The proposal would require specific 

actions by IDIs to achieve and maintain 

compliance with the rule. IDIs that hold 

custodial deposit accounts with 

transactional features would be required 

to establish and maintain written 

policies and procedures to achieve 

compliance with the rule’s 

requirements. IDIs would be required to 

complete an annual certification of 

compliance, signed by an executive 

officer, stating that the IDI has 

implemented and tested the 

recordkeeping requirements. IDIs would 

further be required to complete a report 

annually that (1) describes any material 

changes to their information technology 

systems relevant to compliance with the 

rule; (2) lists the account holders that 

maintain custodial deposit accounts 

with transactional features, the total 

balance of those custodial deposit 

accounts, and the total number of 

beneficial owners; (3) sets forth the 

results of the institution’s testing of its 

recordkeeping requirements; and (4) 

provides the results of the required 

independent validation of any records 

maintained by third parties. 

I. Background and Need for 

Rulemaking 

FDIC, Its Mission, and Pass-Through 

Deposit Insurance 

The FDIC is an independent Federal 

agency, and its mission is to maintain 

stability and public confidence in the 

nation’s financial system by, among 

other things, insuring deposits at all 

IDIs. As of June 30, 2024, there are over 


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3FDIC deposit insurance also does not protect 

against losses due to theft or fraud, which are 

addressed by other laws. 

4The FDIC is statutorily required to aggregate, for 

purposes of the deposit insurance limit, deposits 

maintained by a depositor ‘‘either in the name of 

the depositor or in the name of any other 

person. . . .’’ 12 U.S.C. 1821(a)(1)(C). The FDIC’s 

pass-through insurance rules initially applied only 

to deposits maintained by specific types of nonbank entities, though this limitation was 

subsequently removed. 

5By statute, the FDIC is required to pay deposit 

insurance ‘‘as soon as possible’’ following the 

liquidation, closing, or winding up of any IDI. 12 

U.S.C. 1821(f)(1). 

6See FDIC National Survey of Unbanked and 

Underbanked Households (October 2022), available 

at https://www.fdic.gov/analysis/household-survey/ 

2021report.pdf. 

7FDIC, 2021 FDIC National Survey of Unbanked 

and Underbanked Households. 

8FDIC, 2021 FDIC National Survey of Unbanked 

and Underbanked Households. 

4,500 IDIs in the United States. Since 

1933, the FDIC has taken action in 

accordance with its mission to restore 

public confidence in the banking system 

in times of financial turmoil. The FDIC 

has proactively sought to protect 

depositors and promote public 

confidence in insured deposits. 

The FDIC only insures deposits of 

IDIs, and deposit insurance is only paid 

in the event of the failure of an IDI. 

Importantly, the FDIC’s deposit 

insurance coverage does not provide 

consumers and businesses with general 

protection against the default, 

insolvency, or bankruptcy of any nonbank entities with which IDIs might do 

business, even if a non-bank entity has 

a relationship with, or deposits funds at, 

an IDI.3

The FDIC has long recognized the 

significance of custodial deposit 

accounts in the banking system, and 

specifically accommodates these types 

of accounts in its deposit insurance 

regulations through the concept of passthrough deposit insurance. This 

concept, which dates back to the 1930s, 

provides a mechanism for recognizing 

the owners of deposited funds and 

insuring their interests in the deposit to 

the same extent as if the owners had 

deposited the funds directly at the bank, 

provided certain conditions are met.4

Under the pass-through insurance rules, 

the FDIC may rely on records of those 

other than a failed IDI to identify 

depositors and their insured deposits, if 

such records are maintained in good 

faith and in the regular course of 

business. If the regulatory pass-through 

insurance requirements are satisfied, 

each owner’s interest in the deposit at 

the IDI is separately insured up to the 

statutory deposit insurance limit, 

currently $250,000 for deposits held in 

each deposit ownership category. If the 

pass-through insurance requirements 

are not satisfied, the deposit is insured 

to the person named on the IDI’s records 

and aggregated with any other deposits 

that person holds at the same IDI in the 

same ownership category. The FDIC 

makes determinations with respect to 

pass-through deposit insurance coverage 

at the time an IDI fails.5

Custodial Deposit Accounts and 

Technology Developments 

Custodial deposit accounts have been 

a fixture of the U.S. banking system for 

decades. A ‘‘custodial deposit account’’ 

arrangement, for purposes of this 

proposal, is a relationship where one 

party is responsible for opening a 

deposit account at an IDI on behalf of 

others, who may own the funds but 

often lack a direct relationship with the 

bank. The term ‘‘custodial deposit 

account’’ may have different meanings 

in other banking contexts, and the FDIC 

does not intend to address or affect, 

through this rulemaking, any 

requirements that might apply in other 

contexts in which the term ‘‘custodial 

deposit account’’ is used. 

Coupled with technology innovations 

and advancements, custodial deposit 

account arrangements have transformed 

the industry in many respects over the 

years, resulting in new business models 

for providing banking and financial 

services. For example, companies have 

been formed to meet the desire of 

investors to deposit their money at IDIs 

paying the highest interest rates on 

deposits. Other firms have been formed 

to meet the need of organizations and 

individuals to divide large deposits 

exceeding the statutory deposit 

insurance limit across multiple IDIs for 

the purpose of ensuring that the total is 

fully insured by the FDIC. 

Custodial deposit accounts have also, 

in some cases, been utilized in the 

development of products intended to 

meet the needs of consumers. For 

example, prepaid cards and other 

similar products were developed to offer 

consumers new ways of accessing and 

spending money without maintaining a 

traditional deposit account at an IDI.6

Based on a national survey conducted 

by the FDIC in 2021, 6.9 percent of all 

households were using prepaid cards.7

The FDIC’s experience is that prepaid 

cards generally utilize custodial deposit 

accounts at IDIs to hold consumers’ 

funds until they are spent. 

More recently, this evolution of 

banking and financial services has 

increasingly included non-bank fintech 

companies offering consumers new 

options and alternatives for accessing 

banking products and services. 

Increasingly many consumers are 

choosing to open deposit accounts 

indirectly through fintech companies, 

typically online or through mobile apps. 

FDIC survey results indicate that a 

significant number of consumers use 

non-bank (e.g., fintech) online payment 

services to make purchases online and 

to send or receive money. Households 

also reported relying on this method to 

pay bills, make purchases in person, 

receive income or save or ‘‘keep money 

safe.’’ Nearly half of all households, or 

46.4 percent, were using non-bank 

online payment services at the time of 

the survey.8 These fintech companies’ 

accounts at IDIs frequently, though not 

always, depend upon custodial deposit 

accounts. 

Alternatively, some IDIs are entering 

into and expanding business 

arrangements with fintech companies to 

deliver the IDI’s deposit products and 

services. These arrangements can take 

many different forms, and they continue 

to evolve. For example, an IDI and a 

fintech company might enter into an 

arrangement where the fintech company 

offers the IDI’s deposit products and 

services to the fintech company’s 

customers. In other instances, fintech 

companies might simply deposit their 

customers’ funds at an IDI. In such 

cases, the fintech company may open a 

custodial deposit account at an IDI as an 

agent or custodian. Fintech companies 

have sometimes represented to their 

customers that the customers’ funds are 

FDIC-insured, or that they are insured 

by the FDIC on a ‘‘pass-through’’ basis. 

Many custodial deposit account 

arrangements also increasingly rely on 

third parties that, depending on the 

context, might be referred to as, for 

example, ‘‘processors,’’ ‘‘middleware 

providers,’’ or ‘‘program managers,’’ to 

perform a range of critical functions. 

These third parties’ functions have 

included accepting deposits, 

maintaining a transaction system of 

record, processing payments, 

performing regulatory compliance 

functions, providing customer-facing 

technology applications, servicing 

accounts, and directly interacting with 

customers. In this context, a customer 

may be a consumer or a business. 

Relationships between IDIs and these 

third parties can be quite complex. 

While this complexity can contribute to 

the development of novel and 

innovative products, in the absence of 

reliable recordkeeping this complexity 

adds to the operational challenges faced 

by the FDIC in the event of an IDI’s 

failure, in particular when the FDIC is 

required to make deposit insurance 

determinations. Complex custodial 

deposit account arrangements also 


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9While many facts relevant to Synapse’s 

bankruptcy are disputed among the relevant parties, 

the events prompting the FDIC’s proposal are not. 10See FDIC Press Release 56–2022. 11 89 FR 3504, 3516 (Jan. 18, 2024). 

introduce significant potential for 

operational disruptions and other risks 

outside the context of an IDI’s failure, as 

demonstrated by recent events. 

Synapse Bankruptcy 

Synapse was a so-called ‘‘middleware 

provider’’ for numerous fintech 

companies, meaning that its software 

bridged the information technology 

systems of fintech companies and IDIs. 

More specifically, Synapse provided 

application programming interfaces 

(APIs) and technological infrastructure 

that allowed businesses to integrate 

banking services into their own 

applications. This also included 

opening and managing deposit 

accounts, issuing debit and credit cards, 

and facilitating payments for customers. 

Synapse enabled fintech companies to 

quickly develop products and services 

that used deposit accounts at IDIs to 

hold customers’ funds. Synapse had 

relationships with several IDIs. In these 

arrangements, fintech companies 

developed user interfaces and 

application logic, and importantly, 

maintained the ledgers of their 

customers, including the deposit 

amounts attributed to each individual 

customer. 

Synapse filed for bankruptcy 

protection in late April 2024. The 

bankruptcy of Synapse resulted in 

severe hardship for consumers that is 

deeply troubling to the FDIC.9 In early 

May 2024, one of the IDIs that partnered 

with Synapse froze deposits that had 

been placed at the IDI through 

relationships with Synapse and the 

fintech companies that Synapse 

serviced. The IDI stated at the time that 

it froze the accounts because Synapse 

denied the IDI access to an essential 

system through which the IDI accessed 

information on end users, deposits, and 

transactions. As a result, consumers 

who had deposited funds through these 

fintech companies that partnered with 

Synapse were unable to access their 

funds held at the IDI. 

The bankruptcy court appointed a 

trustee for Synapse on May 24, 2024, 

and both the bankruptcy court and the 

trustee have sought to facilitate the 

release of the fintech customers’ funds 

that are being held at the IDIs as quickly 

as possible. Court filings state that the 

trustee had difficulty obtaining access to 

Synapse’s data, due in part to Synapse’s 

termination of its employees, including 

employees who held credentials 

necessary to access systems and 

databases where the relevant records 

were stored. Court filings also state that 

even after obtaining access to Synapse’s 

data, the trustee and IDIs have 

experienced difficulties reviewing and 

reconciling this data against the IDIs’ 

data. In addition, the trustee has 

indicated that the deposits at the IDIs 

appear to be insufficient to cover the 

amounts owed by the fintech companies 

to their customers. The trustee sent a 

letter to Federal banking regulators on 

June 20, 2024, seeking assistance in 

communicating with end users whose 

funds are affected by the Synapse 

bankruptcy, and noting that the 

bankruptcy’s impact on end users of the 

fintechs has been devastating. 

FDIC and Other Regulators’ Responses 

Synapse’s bankruptcy illustrates a 

number of risks associated with these 

arrangements. While some of those 

issues fall outside the scope of this 

rulemaking, which is focused on 

strengthening IDIs’ recordkeeping with 

respect to certain custodial deposit 

accounts, a brief discussion on 

regulatory responses to date provides 

helpful context and may serve as a 

reminder of regulators’ broader efforts in 

this area. 

Following the freeze of deposits at an 

IDI in the aftermath of the Synapse 

bankruptcy, many consumers have 

contacted the FDIC to ask questions, 

raise concerns, or seek the return of 

their funds, as evidenced by the more 

than 1,000 consumer inquiries that were 

referred to the FDIC since May 2024. It 

is clear that some consumers 

misunderstood the nature of the 

relationships they entered into, the 

nature of deposit insurance, or both. 

Even prior to Synapse’s bankruptcy, 

the FDIC has observed instances where 

consumers have been unable to access 

funds in custodial deposit accounts at 

IDIs. For example, in 2022, Voyager 

Digital claimed to hold customers’ U.S. 

dollar funds at an IDI. Voyager falsely 

represented that customer funds held 

with Voyager were insured by the FDIC 

up to $250,000 in the event of Voyager’s 

failure, not just the failure of the IDI 

where Voyager deposited customer 

funds.10 When Voyager declared 

bankruptcy in July 2022, many 

customers were unable to access the 

funds in their accounts for a period of 

time. This led to significant uncertainty 

and frustration for consumers who were 

unable to access the deposited funds, 

and underscored the importance of clear 

and accurate disclosures to consumers 

regarding deposit insurance coverage. 

In recent years, the FDIC has observed 

an increasing number of instances 

where financial service providers, other 

entities, or individuals have engaged in 

false advertising or made 

misrepresentations about FDIC 

insurance coverage on the internet in 

violation of section 18(a)(4) of the 

Federal Deposit Insurance Act (FDI Act). 

For example, the FDIC has seen 

situations where companies in 

relationships with IDIs (e.g., for the 

placement of customer deposits) have 

made false statements on the 

companies’ websites stating or 

suggesting that the companies are FDICinsured and/or that their uninsured 

financial products are insured by the 

FDIC. In other instances, companies 

have misused the FDIC logo or failed to 

identify an IDI with which they have a 

relationship. These types of 

misrepresentations and omissions 

would be false and misleading and have 

potential to harm consumers. 

Consequently, the FDIC has 

proactively sought to protect depositors 

and consumers, promote public 

confidence in insured deposits, and 

prevent false and misleading 

representations about the manner and 

extent of FDIC deposit insurance. The 

FDIC has taken appropriate action when 

it becomes aware of prohibited conduct. 

For example, the FDIC has issued 

advisory letters pursuant to 12 CFR 

328.106 in situations where the FDIC 

had reason to believe that these non-IDI 

third parties may be misusing an FDICAssociated Image or FDIC-Associated 

Terms and/or making false or 

misleading representations regarding 

FDIC deposit insurance. In these 

actions, the FDIC requested appropriate 

corrective action to be taken so that 

consumers are not misled as to the nonIDI’s insured status, or the extent or 

manner of deposit insurance offered to 

them. 

The FDIC has taken other steps to 

address concerns that parties are 

misrepresenting the nature and extent of 

deposit insurance coverage. In 

December 2023, the FDIC issued a final 

rule on FDIC Official Signs and 

Advertising Requirements, False 

Advertising, Misrepresentation of 

Insured Status, and Misuse of the FDIC’s 

Name or Logo (FDIC Signs and 

Misrepresentation Rule).11 This rule 

requires, among other things, 

disclosures differentiating deposits and 

non-deposit products and clarifies the 

FDIC’s rules regarding 

misrepresentations of deposit insurance 

coverage to address specific scenarios 

where information provided to 

consumers may be misleading. For 

example, the rule clarifies that if a nonVerDate Sep<11>2014 17:17 Oct 01, 2024 Jkt 262001 PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 E:\FR\FM\02OCP1.SGM 02OCP1

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12For example, the FDIC has held seminars for 

bankers on the Sign and Misrepresentation Rule 

and has issued questions and answers relating to 

the rule online. See https://www.fdic.gov/resources/ 

deposit-insurance/questions-and-answers-relatedto-the-fdics-part-328-final-rule.html. 

13See press release, ‘‘FDIC Launches Public 

Campaign to Raise Awareness About Deposit 

Insurance’’ (Oct. 11, 2023). 

14See FIL–45–2024 (July 25, 2024). 

15 Id. 

bank makes a statement regarding 

deposit insurance coverage, it is a 

material omission by the non-bank to 

fail to clearly and conspicuously 

disclose that it is not an IDI, and that 

FDIC insurance only covers the failure 

of the IDI. The FDIC has continued to 

engage with IDIs and others to help 

them understand their obligations under 

the FDIC Signs and Misrepresentation 

Rule.12

The FDIC maintains public facing 

portals on its website where the public 

can submit questions or complaints to 

the FDIC about a number of topics. One 

portal, the FDIC Information and 

Support Center, allows the public to 

submit inquiries about deposit 

insurance coverage as well as 

complaints and inquiries about IDIs. A 

second portal, the FDIC Deposit 

Insurance Misrepresentation Form, 

provides an opportunity for the public 

to submit a complaint or concern 

regarding potential false statements 

about an entity or product claiming to 

be FDIC-insured or making false 

statements or casting doubt on whether 

FDIC insurance applies and is therefore 

paid in the event of an IDI failure. 

In addition to communicating with 

IDIs and third parties regarding their 

FDIC Signs and Misrepresentation Rule 

obligations, the FDIC also conducts 

public outreach and education 

initiatives to promote public awareness 

of deposit insurance, including the 

launch of a national campaign entitled 

‘‘Know Your Risk. Protect Your 

Money.’’ This consumer-focused 

campaign informs consumers on how 

deposit insurance protects their deposits 

in the event of an IDI’s failure and 

features a piggy bank known as ‘‘Penny 

the Pig,’’ aimed at reaching people who 

have lower confidence in the U.S. 

banking system, the unbanked, and 

consumers who use mobile payment 

systems, alternative banking services 

and financial products that may appear 

to be FDIC-insured, but are not.13

Another public education initiative is 

conducted through a publication 

entitled FDIC Consumer News, which is 

a series of monthly newsletters directed 

to the general public that provides 

practical guidance on how to become a 

smarter, safer user of financial services 

including helpful tips and commonsense strategies to protect consumer 

money. Through the various consumer 

news articles, the FDIC addresses 

consumer confusion related to digital 

banking, including regarding the 

emergence and use of third-party, nonbank apps. Some recent examples of the 

relevant articles include ‘‘Banking with 

Third Party Apps’’ (May 2024), which 

warns consumers of the risks in using 

non-bank companies for financial 

services; ‘‘Is My Money Insured by the 

FDIC?’’ (July 2023), which reminds 

consumers that FDIC deposit insurance 

does not apply if a non-bank company 

fails; ‘‘The Importance of Deposit 

Insurance and Understanding Your 

Coverage’’ (August 2022), which lists 

the top five things to know about 

deposit insurance coverage; ‘‘Banking 

with Apps’’ (November 2022), which 

provides an overview of the differences 

in deposit products offered by IDIs and 

non-bank companies; and ‘‘Is Digital 

Banking for Me?’’ (April 2020), which 

offers key considerations of using online 

and mobile banking technology. The 

FDIC will continue to consider further 

measures to address consumer 

confusion about deposit insurance 

coverage. 

In addition, the FDIC and the other 

Federal banking agencies have recently 

published a number of issuances to IDIs 

concerning the risks involved in 

arrangements with non-bank third 

parties, including fintech companies. As 

recently explained in the Federal 

banking agencies’ Joint Statement on 

Banks’ Arrangements with Third Parties 

to Deliver Bank Deposit Products and 

Services, ‘‘the agencies have observed 

an evolution and expansion of these 

arrangements to include more complex 

arrangements that involve the reliance 

on third parties to deliver deposit 

products and services.’’ 14 It also 

indicated that ‘‘[d]epending on the 

structure, third-party arrangements for 

the delivery of deposit products and 

services can involve elevated risk.’’ The 

Federal banking agencies also recently 

published a Request for Information 

soliciting input on the nature of bankfintech arrangements, effective risk 

management practices regarding bankfintech arrangements, and the 

implications of such arrangements, 

including whether enhancements to 

existing supervisory guidance might be 

helpful in addressing risk.15

An IDI’s use of a non-bank third party 

to perform activities related to its 

deposit-taking function does not 

diminish its responsibility to conduct 

those activities in a manner consistent 

with safe and sound practices and in 

compliance with applicable laws and 

regulations, including, but not limited 

to, those designed to protect consumers. 

As such, IDIs have also been subject to 

a number of consent orders and other 

actions by the Federal banking agencies 

related to these types of arrangements. 

Need for Rulemaking 

The FDIC neither prohibits nor 

discourages IDIs from providing banking 

services to customers of any specific 

class or type, as permitted by law or 

regulation. It has become apparent from 

the events described above that IDIs’ 

recordkeeping practices should be 

enhanced with respect to certain 

custodial deposit account arrangements. 

The FDIC believes it would be beneficial 

to address these issues in a consistent 

manner across the industry through 

rulemaking, rather than rely solely on 

the supervisory and enforcement 

processes. 

The events that occurred following 

Synapse’s bankruptcy demonstrate the 

importance of strong recordkeeping 

practices in certain custodial account 

relationships. The trustee and IDIs 

encountered significant difficulties in 

obtaining, reviewing, and reconciling 

Synapse’s records against the IDIs’ 

records. While none of the IDIs that had 

business arrangements with Synapse 

have failed, the difficulties encountered 

by the parties obtaining, reviewing, and 

reconciling Synapse’s records against 

the IDIs’ records would likely also have 

hindered the FDIC’s ability to make a 

prompt and accurate deposit insurance 

determination in the event one of the 

IDIs had failed. Depositors could have 

been affected by delays in obtaining 

their insured deposits, depending on the 

accuracy and completeness of account 

records and how long it would have 

taken to gather and review records. 

Looking beyond the case of Synapse, 

these types of arrangements between 

IDIs and fintechs are becoming more 

prevalent in the market, and the FDIC 

believes the increased complexity of 

certain custodial deposit account 

arrangements warrants strengthened 

recordkeeping to support a prompt 

payment of deposit insurance in the 

event of an IDI’s failure. Accurate and 

complete custodial deposit account 

records are absolutely critical in the 

event of an IDI’s failure to ensure that 

the FDIC is able to make prompt and 

accurate payment of deposit insurance 

for all insured depositors. Prompt 

payment of deposit insurance is 

especially important where custodial 

deposit account arrangements are used 

to support day-to-day financial needs. 

For example, many consumers are 

increasingly choosing to open deposit 


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16 In addition, fintechs allow consumers to pay 

merchants and transfer funds on their phones, often 

utilizing ‘‘digital wallets’’ that have credit and debit 

cards stored. With mobile technology, consumers 

can use a single device to pay for goods or initiate 

online payments faster and easier. 

17 12 U.S.C. 1819(a)(Tenth), 1820(g), and 

1821(d)(4)(B)(iv). 

18 12 U.S.C. 1821(f)(1). 

19 12 U.S.C. 1821(a)(1)(C) and (E). 

20See 12 CFR 330.5. 

21Use of standardized file formats may also have 

other benefits, such as simplifying the transition of 

recordkeeping if an IDI seeks to end a relationship 

with a third party. 

22 ‘‘Beneficial owner’’ as used in the proposed 

rule is intended to mirror the meaning of beneficial 

owner as currently used for deposit insurance 

coverage purposes under 12 CFR part 330.5. The 

proposed rule does not intend to incorporate the 

meaning of ‘‘beneficial owner’’ as that term may be 

used for purposes of other laws applicable to IDIs, 

such as the Bank Secrecy Act. The proposed rule’s 

definition of ‘‘beneficial owner’’ should not be 

confused with other definitions of the same term, 

including that associated with the Corporate 

Transparency Act or the Customer Due Diligence 

rule, which relate to beneficial owners of legal 

entities, rather than accounts. 

accounts through fintech companies, 

typically online or though mobile apps. 

From a consumer’s perspective, these 

fintechs offer financial services through 

such accounts that may resemble IDI 

deposit accounts, and consumers often 

rely on these accounts as substitutes for 

traditional demand deposit accounts. 

Specifically, consumers use these 

accounts to support the inflows and 

outflows of daily transactions and 

expenses, such as making purchases and 

sending or receiving money, including 

income.16 The transactional nature of 

these accounts, including high volumes 

of per customer transfers and digital 

payments, significantly increases the 

amount of activity compared to other 

types of custodial deposit accounts. 

A lack of accurate and complete 

custodial deposit account records, as 

described in this proposal, would 

adversely affect the FDIC’s ability to 

make a prompt and accurate deposit 

insurance determinations, and pay 

claims to depositors in the event of an 

IDI failure. In addition, these 

circumstances have exposed potential 

risks for current beneficial owners of 

deposits at IDIs, even in the absence of 

the failure of an IDI. These issues create 

uncertainty that undermines the 

confidence that underpins IDIs and our 

nation’s broader financial system. 

II. Legal Authority 

The FDIC is authorized to prescribe 

rules and regulations as it may deem 

necessary to carry out the provisions of 

the FDI Act.17 The FDIC has previously 

used this authority to issue regulations 

providing specificity on deposit 

insurance coverage, including defining 

the recognized ownership categories 

and how deposit insurance is 

calculated. Under the FDI Act, the FDIC 

is responsible for paying deposit 

insurance ‘‘as soon as possible’’ 

following the failure of an IDI.18 To pay 

deposit insurance, the FDIC uses a 

failed IDI’s records to aggregate the 

amounts of all deposits that are 

maintained by a depositor in the same 

right and capacity, and then applies the 

standard maximum deposit insurance 

amount of $250,000.19

The FDIC generally relies upon a 

failed IDI’s deposit account records to 

identify deposit owners and the right 

and capacity in which deposits are 

owned. In certain circumstances, if 

specific regulatory requirements are 

satisfied, the FDIC will consider the 

records of the depositor or another party 

when making a deposit insurance 

determination.20

III. The Proposed Rule 

Overview 

The proposed rule would establish 

new recordkeeping requirements for 

IDIs with custodial deposit accounts 

with transactional features, subject to a 

list of defined exemptions. If IDIs hold 

custodial deposit accounts with 

transactional features that are subject to 

the rule, they would be required to 

maintain records identifying the 

beneficial owners of those deposits, the 

balance attributable to each beneficial 

owner, and the ownership category in 

which the deposited funds are held. The 

IDI could maintain those records itself 

or, if certain additional requirements are 

satisfied, the IDI could maintain the 

records through an arrangement with a 

third party (which could include a 

vendor, processor, software or service 

provider, or a similar entity). The 

proposed rule provides a specific 

electronic file format for records on 

beneficial owners and their interests in 

the deposited funds. This standardized 

format would enable the FDIC to more 

quickly gather and use these records 

when a deposit insurance determination 

becomes necessary.21

For IDIs that choose to maintain the 

required records through a contractual 

relationship with a third party, certain 

additional requirements would need to 

be satisfied. These additional 

requirements are intended to promote 

the integrity of records and ensure that 

the IDI has continued access to the 

records. Among other things, the IDI 

would be required to have direct, 

continuous, and unrestricted access to 

the records of the beneficial owners, 

including in the event of the business 

interruption, insolvency, or bankruptcy 

of the third party. Reconciliation of 

these records would be required, as 

would periodic validation of the third 

party’s records by a person independent 

of the third party. 

The proposal also would require 

certain measures by IDIs to achieve and 

maintain compliance with the rule. IDIs 

that hold custodial deposit accounts 

with transactional features would be 

required to establish and maintain 

written policies and procedures to 

achieve compliance with the rule’s 

requirements. IDIs would be required to 

complete an annual certification of 

compliance, signed by the chief 

executive officer, chief operating officer, 

or the highest-ranking official of the 

institution, stating that the IDI has 

implemented and tested the 

recordkeeping requirements. IDIs would 

further be required to complete a report 

annually that (1) describes any material 

changes to their information technology 

systems relevant to compliance with the 

rule; (2) lists the account holders that 

maintain custodial deposit accounts 

with transactional features, the total 

balance of those custodial deposit 

accounts, and the total number of 

beneficial owners; (3) sets forth the 

results of the institution’s testing of its 

recordkeeping requirements; and (4) 

provides the results of the required 

independent validation of any records 

maintained by third parties. Both the 

compliance certification and report 

would be submitted to the FDIC and the 

IDI’s primary Federal regulator. 

Custodial Deposit Accounts With 

Transactional Features 

The proposed rule’s requirements 

would apply to IDIs that hold ‘‘custodial 

deposit accounts with transactional 

features,’’ other than custodial deposit 

accounts specifically exempted by the 

rule as described below. The term 

‘‘custodial deposit accounts with 

transactional features’’ would be 

defined as a deposit account that meets 

three requirements: (1) the account is 

established for the benefit of beneficial 

owner(s); (2) the account holds 

commingled deposits of multiple 

beneficial owners; and (3) a beneficial 

owner may authorize or direct a transfer 

through the account holder from the 

account to a party other than the 

account holder or beneficial owner. 

‘‘Beneficial owner’’ is defined as ‘‘a 

person or entity that owns, under 

applicable law, the funds in a custodial 

deposit account.’’ 22

The proposal distinguishes a 

‘‘beneficial owner’’ from an ‘‘account 

holder,’’ with ‘‘account holder’’ defined 


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23The proposal defines ‘‘deposit’’ by reference to 

section 3(l) of the FDI Act, 12 U.S.C. 1813(l). 

24The proposed rule’s definition is not limited to 

situations where the transfer takes place directly 

from the custodial account. If, for example, funds 

are routinely accomplished by transferring funds 

from the custodial account to another account, and 

the transfers to third parties are made from the 

second account, the FDIC believes the first account 

would fall within the proposed rule’s scope. 

as ‘‘the person or entity who opens or 

establishes a custodial deposit account 

with transactional features with an 

insured depository institution.’’ This 

definition does not require that the 

‘‘account holder’’ is the titled owner of 

the account. For example, some 

businesses establish accounts at IDIs for 

the benefit of their customers, but the 

account is titled in the name of the IDI 

itself for benefit of the business’s 

customers. In such instances, the FDIC 

would interpret the ‘‘account holder’’ 

under the proposed rule to be the 

business that contracted with the IDI to 

establish the custodial deposit account. 

The proposed rule’s scope is limited 

to custodial deposit accounts with 

transactional features that hold deposits, 

meaning that other types of custodial 

accounts, such as those holding nondeposit securities, would be excluded.23

The proposed rule would apply to 

custodial deposit accounts with 

transactional features, regardless of the 

date a particular custodial deposit 

account was established. Custodial 

deposit accounts with transactional 

features already in existence would be 

subject to the proposed rule’s 

requirements. 

As noted above, the definition of 

‘‘custodial deposit account with 

transactional features’’ includes, as one 

of its criteria, that a beneficial owner 

may authorize or direct a transfer 

through the account holder from the 

account to a party other than the 

account holder or beneficial owner. By 

including this prong, the FDIC intends 

to apply the proposed recordkeeping 

requirements only to custodial deposit 

accounts that are established and used 

in a manner that allows beneficial 

owners to direct a transfer of funds from 

the account to another party—for 

example, to make purchases or pay bills. 

The FDIC believes that, in some 

custodial deposit account arrangements, 

IDIs allow the account holder to submit 

payment instructions from beneficial 

owners to the IDI in order to make funds 

transfers. Such custodial deposit 

accounts would fall within the scope of 

the proposed rule and would be subject 

to its recordkeeping requirements.24 If, 

on the other hand, the IDI only returns 

the funds held in the custodial deposit 

account to the account holder or 

beneficial owner, the account activity 

would not be ‘‘transactional’’ in the 

sense that term is used under the 

proposed rule. 

Exemptions 

Where the FDIC believes its policy 

objectives would not be advanced by the 

additional recordkeeping requirements, 

the proposal would expressly exempt 

certain custodial deposit accounts from 

the new recordkeeping requirements 

even if they have transaction features. 

The proposal would accomplish this 

through a list of specific exemptions. As 

discussed below, given the FDIC’s 

experience in managing these 

relationships, additional recordkeeping 

requirements for a number of custodial 

deposit accounts would not be required 

even if they have transactional features. 

The proposed rule exempts from its 

scope custodial deposit accounts that 

hold only trust deposits, as described in 

the FDIC’s deposit insurance regulations 

for trust accounts set forth at 12 CFR 

330.10 and 330.12. These custodial 

deposit accounts are established in 

many cases by a trustee that already has 

a duty under State law to maintain 

records regarding the beneficial owners 

of the funds. 

The proposal exempts from its 

recordkeeping requirements custodial 

deposit accounts established at an IDI 

by government depositors. There are a 

variety of circumstances in which 

government depositors establish deposit 

accounts that hold funds for others, 

such as accounts maintained for the 

payment of government benefits. In 

these cases, the FDIC believes that the 

safeguards and controls imposed by 

statute and regulation will generally be 

sufficient to ensure that accurate records 

are available on a regular basis, 

including in the event of an IDI’s failure. 

The proposal also would exempt 

custodial deposit accounts established 

by brokers or dealers under the 

Securities and Exchange Act of 1934, 

and investment advisers under the 

Investment Advisers Act of 1940. These 

entities are already subject to 

recordkeeping requirements under 

Federal and State laws in addition to 

regulatory supervision, and the FDIC 

believes these measures should 

generally mitigate the issues addressed 

through this proposal. 

The proposed rule exempts custodial 

deposit accounts established by 

attorneys or law firms on behalf of 

clients, commonly known as interest on 

lawyers trust accounts (IOLTA 

accounts). The FDIC recognizes that 

attorneys and law firms maintaining 

IOLTA accounts are subject to 

independent recordkeeping 

requirements under State law, and 

IOLTA accounts generally would not be 

used for the sort of day-to-day 

transactions that introduce significant 

complexity into a potential deposit 

insurance determination in the event of 

an IDI’s failure. 

The proposal exempts custodial 

deposit accounts maintained in 

connection with employee benefit plans 

and retirement plans, as described in 12 

CFR 330.14. These accounts could be 

maintained in the name of a trustee or 

plan administrator and used for defined 

benefit plans, defined contribution 

plans, and other employee benefit plans. 

The FDIC believes that these accounts 

are subject to independent 

recordkeeping requirements under 

Federal and State laws, and the 

accounts are not used for transactions in 

a manner that would add to the 

complexity of a potential deposit 

insurance determination. 

The proposal would exempt accounts 

maintained by real estate brokers, real 

estate agents, title companies, and 

qualified intermediaries under the 

Internal Revenue Code. The FDIC 

believes these accounts generally hold 

an owner’s funds for a limited period of 

time for the purposes of completing a 

specific real estate transaction. 

Historically, these types of accounts 

have not presented significant difficulty 

to the FDIC in making deposit insurance 

determinations in the event of an IDI’s 

failure. 

The proposal exempts custodial 

deposit accounts maintained by a 

mortgage servicer in a custodial or other 

fiduciary capacity. Mortgage servicers 

are subject to recordkeeping 

requirements by other laws and 

regulations, and funds are transferred 

from these deposit accounts on 

predictable dates corresponding to 

contractual deadlines. For this reason, 

the FDIC believes that the additional 

recordkeeping requirements imposed by 

the proposed rule are unnecessary to 

achieve its policy objectives. 

The proposal exempts custodial 

deposit accounts where Federal or State 

law prohibits the disclosure of the 

identities of the beneficial owners of the 

deposits. The FDIC believes that such 

cases will be relatively rare but does not 

intend to impose any recordkeeping 

requirements through this proposal that 

directly conflict with other legal 

requirements. 

The proposal exempts from its scope 

accounts maintained pursuant to an 

agreement to allocate or distribute 

deposits among participating IDIs in a 

network for purposes other than 

payment transactions of customers of 

the IDI or participating IDIs. Such 


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25Under appendix A to 12 CFR part 364, an IDI 

should have internal controls appropriate to its size 

and the nature, scope, and risk of its activities. 

networks are often referred to as deposit 

placement networks or reciprocal 

networks and are often administered by 

a firm that coordinates the depositing of 

funds across a group of institutions to 

ensure that no owner’s funds at an 

individual IDI exceed the deposit 

insurance limit. If the network only 

allows clients to deposit and retrieve 

their funds from the network of IDIs, its 

activity should not present difficulty in 

making a deposit insurance 

determination. However, if the network 

purpose is to enable clients to make 

payment transactions using funds in the 

custodial deposit account at the network 

IDI(s), such as making purchases 

through a card network or transferring 

funds to another individual, then the 

custodial deposit accounts would not 

qualify for the exemption, and therefore 

would fall within the scope of the 

proposed rule. 

Finally, the proposal would exempt 

accounts holding security deposits tied 

to property owners for a 

homeownership, condominium, or other 

similar housing association governed by 

State law, and accounts holding security 

deposits tied to residential or 

commercial leasehold interests. The 

FDIC believes such entities are generally 

subject to other recordkeeping 

requirements that would ensure that 

beneficial owners’ interests are available 

if necessary. Moreover, although such 

custodial deposit accounts may exhibit 

some degree of transactional activity, 

this is expected to be relatively limited 

in nature and unlikely to present 

significant difficulty in making a 

deposit insurance determination. 

Recordkeeping Requirements and Data 

Formatting 

In general, the proposed rule would 

require IDIs that hold any custodial 

deposit accounts with transactional 

features subject to the rule to maintain 

records establishing the beneficial 

owners of those deposit accounts. These 

records would establish, for each 

custodial deposit account, the beneficial 

owners of the custodial deposit account, 

the balance attributable to each 

beneficial owner, and the ownership 

category in which the beneficial owner 

holds the deposited funds. 

The proposed rule would provide a 

specific electronic file format for 

maintenance of records on beneficial 

owners and their interests in the 

deposited funds. This electronic file 

format is described in appendix A to the 

proposed rule, which provides, for each 

of the required fields: (1) the field’s 

name; (2) a description of its contents; 

(3) the data format for the field; and (4) 

whether a null value is permitted for the 

field in the file. IDIs’ records would be 

required to include the information set 

forth in these fields for each beneficial 

owner of the deposits in the custodial 

deposit account, with one row in the file 

per beneficial owner. The specified data 

file format would be required regardless 

of whether the IDI maintains the 

necessary records itself or maintains 

those records through an arrangement 

with a third party. The FDIC believes 

these records of beneficial ownership 

would be useful to the IDI in the event 

of a disruption affecting the account 

holder, as they would enable the IDI to 

determine the identity of the owners of 

the funds it is holding on deposit. 

Importantly, these records would also 

be useful to the FDIC in the event of the 

IDI’s failure, as they would enable a 

prompt payment of deposit insurance. 

Internal Controls 

The proposed rule would require IDIs 

to maintain appropriate internal 

controls that include (1) maintaining 

accurate deposit account balances, 

including the respective individual 

beneficial ownership interests 

associated with the custodial deposit 

account, and (2) conducting 

reconciliations against the beneficial 

ownership records no less frequently 

than at the close of business daily, with 

the understanding that reconciling 

variances due to unposted transactions 

and timing of transactions occurs and 

should be addressed based on standard 

banking practices, which are sufficient 

to manage and resolve such variances. 

Reconciliations compare multiple data 

elements and, if differences are 

identified, actions are taken to bring the 

data elements into agreement. The 

reconciliation requirement is intended 

to address the completeness and 

accuracy of transaction processing. 

Appropriate internal controls should be 

designed to consider multi-layer 

relationships, where applicable, and the 

associated risks these relationships may 

present related to recordkeeping. For 

example, such controls may be 

appropriate where an account holder, 

such as an intermediary, collects and 

places deposits on behalf of other firms, 

which themselves collect deposits from 

individual depositors. The internal 

control requirements of the proposed 

rule are intended to enable the IDI to be 

able to accurately determine individual 

beneficial ownership interests for 

deposits held in custodial deposit 

accounts, and would expedite a deposit 

insurance determination in the event of 

the IDI’s failure.25

Recordkeeping by Third Parties 

The FDIC recognizes that many IDIs, 

including community banks, regularly 

employ third parties such as vendors 

and technology service providers to 

assist them in carrying out a variety of 

banking functions. While the proposed 

rule generally would require that IDIs 

maintain records of beneficial 

ownership for custodial deposit 

accounts, it also would permit those 

records to be maintained by the IDI 

through a third party if certain 

requirements are satisfied. The rule 

mentions, as examples of third parties, 

vendors, software providers, and service 

providers, and other similar entities that 

regularly process deposit transaction 

data, but does not limit third parties to 

these categories of entities. Third parties 

also could include the account holder, 

for example, if the account holder 

regularly maintains beneficial 

ownership records. 

The IDI would be required to have 

direct, continuous, and unrestricted 

access to records maintained by the 

third party in the standardized file 

format described in appendix A to the 

proposed rule, including access in the 

event of a business interruption, 

insolvency, or bankruptcy of the third 

party. This could be accomplished, for 

example, by the IDI and the third party 

implementing capabilities to enable 

secure real-time exchange of data, where 

authorized IDI personnel can access the 

records at any time. 

The IDI also would be required to 

have continuity plans in place, 

including backup recordkeeping for the 

required beneficial ownership records 

and technical capabilities to ensure 

compliance with the proposal’s 

requirements. When developing a 

contingency plan, an IDI may consider 

elements such as (1) storing copies of 

prior daily or weekly account balances 

and beneficial ownership balances 

internally at the IDI, or at another 

location independent of the third party; 

(2) establishing legal authority and 

technological capability for the IDI to 

access daily transaction records 

associated with the custodial deposit 

account directly from payment 

networks, processors, or service 

providers used by the third party; and 

(3) maintaining at the IDI sufficient 

trained staff, technical systems, and 

other resources to process transaction 

records necessary for the IDI to 


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26For more discussion regarding risk 

management and contingency planning in the 

context of third-party relationships, see FDIC FIL– 

29–2023 ‘‘Interagency Guidance on Third-Party 

Relationships: Risk Management’’ (June 6, 2023). 

reconcile and establish accurate records 

for ownership interests in the custodial 

deposit account, in the event the third 

party is disrupted. Like other risk 

management practices, contingency 

plans for different IDIs would vary 

according to the scope and complexity 

of the businesses and the nature of the 

third-party relationships.26

In addition, records of beneficial 

ownership maintained by a third party 

could only be used to satisfy the 

proposed rule’s requirements if the IDI 

implements appropriate internal 

controls to (1) accurately determine the 

respective beneficial ownership 

interests associated with the custodial 

deposit account with transactional 

features, and (2) conduct reconciliations 

against the beneficial ownership records 

no less frequently than as of the close 

of business daily, with the 

understanding that reconciling 

variances due to unposted transactions 

and timing of transactions occurs and 

should be addressed based on standard 

banking practices, which are sufficient 

to manage and resolve such variances. 

Appropriate internal controls should be 

designed to consider multi-layer 

relationships, where applicable, and the 

associated risks these relationships may 

present related to recordkeeping. For 

example, such controls may be 

appropriate where an account holder, 

such as an intermediary, collects and 

places deposits on behalf of other firms, 

which themselves collect deposits from 

individual depositors. This requirement 

is intended to address the completeness 

and accuracy of transaction processing 

data maintained by the third party. 

Contractual Requirements 

Where records are maintained by a 

third party, the IDI would be required to 

have a direct contractual relationship 

with the third party that includes 

certain risk mitigation measures. For 

example, the contract between the IDI 

and the third party would need to 

clearly define roles and responsibilities 

for recordkeeping, including assigning 

to the IDI rights of the third party that 

are necessary to access data held by 

other parties. The contract would need 

to include an explicit provision 

requiring the third party to implement 

appropriate internal controls to be able 

to accurately determine the beneficial 

ownership interests represented in the 

custodial deposit account and to 

conduct reconciliations against the 

beneficial ownership records no less 

frequently than as of the close of 

business daily, with the understanding 

that reconciling variances due to 

unposted transactions and timing of 

transactions occurs and should be 

addressed based on standard banking 

practices, which are sufficient to 

manage and resolve such variances. 

Appropriate internal controls should be 

designed to consider multi-layer 

relationships, where applicable, and the 

associated risks these relationships may 

present related to recordkeeping. For 

example, such controls may be 

appropriate where an account holder, 

such as an intermediary, collects and 

places deposits on behalf of other firms, 

which themselves collect deposits from 

individual depositors. 

In addition, the contract would need 

to provide for periodic validations, by a 

person independent of the third party, 

to verify that the third party is 

maintaining accurate and complete 

records and that reconciliations are 

being performed consistent with the 

proposed rule’s recordkeeping 

requirement for beneficial ownership 

interests. If the validation is performed 

by a party other than the IDI, the results 

must be provided to the IDI. The 

proposed rule’s approach of requiring 

an independent, unbiased opinion or 

assessment and validation of a third 

party’s system of internal controls, 

operations, and compliance risk 

management framework for maintaining 

accurate and complete records is 

intended to proactively identify and 

address weaknesses. The independent 

validation could be performed by the 

IDI itself. The validation activities 

should be commensurate with the size, 

complexity, and risk profile of the third 

party. 

An IDI would not be permitted, 

through any contract or agreement, to 

shift its responsibility for ensuring that 

the requirements of the proposed rule 

are satisfied. The proposed rule also 

would not limit, in any way, an IDI’s 

ability to include further risk mitigation 

measures in contracts with third parties, 

and IDIs would be encouraged to 

include additional measures as they 

deem appropriate. 

Effect on Other Recordkeeping 

Requirements 

The proposed rule would not 

supersede or modify any requirements 

imposed by statute or regulation. For 

example, where IDIs are required to 

gather and maintain specific 

information about their customers under 

the Bank Secrecy Act and its 

implementing regulations, satisfying the 

proposed rule’s recordkeeping 

requirements would not necessarily 

satisfy the IDI’s obligation under the 

Bank Secrecy Act. Similarly, the fact 

that a custodial deposit account with 

transactional features qualifies for an 

exemption from the proposed rule’s 

recordkeeping requirements would not 

exempt the account or the IDI from any 

other recordkeeping requirements 

imposed by law or regulation. Nothing 

in the proposed rule would prohibit or 

limit additional recordkeeping or 

reconciliation efforts by IDIs with 

respect to particular custodial deposit 

accounts with transactional features, 

and IDIs would be encouraged to 

consider such measures as they deem 

appropriate. 

Compliance Measures 

An IDI that holds custodial deposit 

accounts within the scope of the 

proposed rule would be required to 

establish and maintain written policies 

and procedures to achieve compliance 

with the proposed rule’s requirements. 

To the extent an IDI maintains the 

relevant records through a third party, 

these policies and procedures would 

also need to address achieving 

compliance with the requirements 

specific to maintaining records through 

a third party. The policies and 

procedures requirement is intended to 

promote an appropriate level of due 

diligence on the part of IDIs that 

maintain custodial deposit accounts 

with transactional features within the 

scope of the rule. 

The proposed rule would enhance 

compliance by implementing an annual 

certification and reporting process for 

IDIs holding custodial deposit accounts 

with transactional features that are 

subject to the rule’s requirements. The 

chief executive officer, chief operating 

officer, or the highest ranking official of 

an IDI would be required to annually 

certify that the IDI (1) implemented the 

proposed recordkeeping requirements 

for the covered custodian accounts; (2) 

tested the implementation of the 

recordkeeping requirements within the 

preceding 12 months; and (3) is in 

compliance with all requirements of the 

proposed rule at the time of the annual 

certification. The certification would be 

required regardless of whether the 

records are maintained by the IDI itself 

or through a third party. The 

certification would be required within 1 

year of the effective date of the final rule 

and annually thereafter, and submitted 

to both the FDIC and the IDI’s primary 

Federal regulator. 

In addition to the annual certification 

of compliance, an IDI would be required 

to prepare an annual report containing 

(1) a description of any material changes 

to the IDI’s information technology 


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27Call Report for the period ending March 31, 

2024. 

28Exemptions are listed at proposed 12 CFR 

375.3(e). 

systems since the prior annual report 

that are relevant to the requirements of 

the proposed rule; (2) a list of the 

account holders that maintain custodial 

deposit accounts with transactional 

features subject to the rule, as well as 

the total balance of those custodial 

deposit accounts, and the total number 

of beneficial owners; (3) the results of 

the IDI’s testing of its implementation of 

the recordkeeping requirements; and (4) 

the results of any independent 

validation of records maintained by 

third parties as required by the 

proposed rule and discussed above. The 

report would be required within 1 year 

of the effective date of the final rule and 

annually thereafter, and submitted to 

both the FDIC and the IDI’s primary 

Federal regulator. 

If an IDI experiences a significant 

change in its deposit-taking operations, 

or the FDIC or the IDI’s primary Federal 

regulator identifies aspects of the 

institution’s operations that pose 

elevated risks of compliance with 

proposed 12 CFR part 375, the proposed 

rule provides that the FDIC or the IDI’s 

primary Federal regulator may require 

that the IDI file the certification and 

report required by this section more 

frequently than annually, as requested. 

Violations and Enforcement 

As discussed above, the proposed rule 

would impose recordkeeping 

requirements with respect to certain 

custodial deposit accounts at IDIs. If an 

IDI does not satisfy the proposed rule’s 

requirements, the violation could be 

addressed through the supervisory 

process, including examinations and in 

appropriate cases, through enforcement 

actions. In addition, certain 

circumstances may implicate 

misrepresentations of deposit insurance, 

which are covered under section 

18(a)(4) of the FDI Act. The FDIC carries 

out its enforcement authorities 

primarily through section 8 of the FDI 

Act, which may include cease-anddesist orders and civil money penalties. 

Relation to Existing Recordkeeping and 

Data Standard Requirements 

The FDIC has previously issued 

regulations that include recordkeeping 

and data standard requirements to 

support timely determinations of 

deposit insurance coverage at IDIs. For 

example, § 360.9 of the FDIC’s 

regulations includes data standards that 

apply to IDIs with at least 250,000 

deposit accounts or $20 billion in assets. 

In addition, 12 CFR part 370 of the 

FDIC’s regulations requires IDIs with 

more than 2 million deposit accounts to 

implement certain recordkeeping 

capabilities to calculate deposit 

insurance coverage in the event of the 

IDI’s failure. These requirements are 

generally intended to address scenarios 

where the size of an IDI hinders the 

FDIC’s ability to make a timely 

determination of deposit insurance. 

The proposed rule, by contrast, is 

intended to address the difficulties that 

a particular set of deposit accounts— 

custodial deposit accounts with 

transactional features—present for the 

FDIC in making a deposit insurance 

determination, regardless of the size of 

the IDI holding the deposits. As noted 

above, custodial deposit accounts with 

transactional features present 

difficulties in making a timely and 

accurate deposit insurance 

determination due to their nature and 

usage. The FDIC believes many IDIs that 

fall below the size thresholds for § 360.9 

and 12 CFR part 370 hold custodial 

deposit accounts with transactional 

features that would complicate a deposit 

insurance determination. Moreover, to 

the extent that recordkeeping on 

beneficial owners is performed by third 

parties rather than IDIs, the proposed 

rule includes measures intended to 

address the integrity and availability of 

third parties’ records. Institutions 

subject to 12 CFR part 370 are not 

necessarily required to maintain records 

on the beneficial owners of deposits, 

and 12 CFR part 370 specifically 

contemplates that the FDIC may need to 

reach out in the event of the IDI’s failure 

to obtain these records from third 

parties. As explained above, however, 

the FDIC believes that for custodial 

deposit accounts with transactional 

features it is critical that the IDI either 

maintain the records of beneficial 

owners of deposits or have continuous 

access to those records. In these 

respects, the proposed rule 

complements the requirements of 

§ 360.9 and 12 CFR part 370 in 

promoting a timely deposit insurance 

determination by the FDIC. While the 

problems that the proposed rule is 

intended to address differ from those 

addressed by 12 CFR part 370, the FDIC 

nevertheless acknowledges that in a 

narrow set of circumstances, the 

benefits of 12 CFR part 370 may 

coincide with those of the proposed 

rule. With that in mind, the FDIC will 

continue to consider whether any 

amendments or modifications to 12 CFR 

part 370 are warranted. 

IV. Expected Effects 

The FDIC has considered the expected 

effects of the proposed rule on IDIs, 

consumers, the banking industry, and 

the U.S. economy. The proposed rule, if 

promulgated, would require IDIs with 

custodial deposit accounts that have 

transactional features to maintain 

records for such accounts in a format 

prescribed by the FDIC. This 

requirement would likely impose costs 

on all IDIs and particularly IDIs that 

hold, or plan to hold, significant 

amounts of insured deposits in these 

custodial deposit accounts. These costs 

may be shared with the account holders 

and beneficial owners of the custodial 

deposit accounts. The proposed rule 

would pose several benefits including 

(1) prompt and accurate determination 

of beneficial owners’ deposit insurance 

coverage in the event of a failure of an 

IDI with custodial deposit accounts 

covered by the proposal, and (2) prompt 

determination of beneficial ownership 

in the event of a failure of an account 

holder. These outcomes would reduce 

the likelihood of a disruption to 

beneficial owners’ access to their funds 

in the event of an IDI’s or account 

holder’s failure, reduce operational risk 

for IDIs, increase the stability of funds 

in custodial deposit accounts, and 

support consumer confidence in the 

banking system and financial services 

industry. Additionally, the FDIC 

believes the proposal could indirectly 

support growth in IDIs’ partnering with 

non-bank companies to offer financial 

products through the proposal’s 

standardization of enhanced 

recordkeeping and positive effect on 

consumer confidence. 

Scope 

The baseline for this analysis includes 

all statutes, regulations, and guidance 

applicable to IDIs, as well as all open 

and operating IDIs, as of March 31, 

2024. The FDIC insures 4,577 IDIs as of 

March 31, 2024.27 The proposed rule 

would apply to all IDIs with custodial 

deposit accounts that are not explicitly 

exempt from the rule.28 The FDIC does 

not have the data available to estimate 

the number of IDIs that currently have 

or would potentially have custodial 

deposit accounts subject to the rule. 

However, as discussed in section I of 

this document, custodial deposit 

accounts have been a fixture of the U.S. 

banking system for decades and used 

widely throughout the industry; 

therefore, the FDIC believes that all IDIs 

would, at a minimum, review the nature 

of their relationships with non-bank 

companies to determine whether these 

non-bank companies have custodial 

deposit accounts at the IDI that fall 

under the scope of the proposed rule. In 

addition, the proposed rule would 


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29Over 2,000 IDIs report a non-zero amount of 

brokered deposits and reciprocal deposits from Call 

Reports for the period ending March 31, 2024. Over 

600 IDIs report a positive number of non-managed 

custody and safekeeping accounts from Call Report 

Schedule RC–T, Fiduciary and Related Services, 

line item 11 for the period ending December 31, 

2023. Not all institutions are required to report 

fiduciary and related assets held in custody and 

safekeeping accounts in this line item, and some are 

required to report for the December reporting period 

only. Only accounts for which the IDI serves as the 

fiduciary are generally reported in this item. 

30Shevlin, Ron. ‘‘What’s going on in Banking 

2023,’’ Cornerstone Advisors, https://

www.crnrstone.com/whats-going-on-in-banking2023, as accessed August 1, 2024. 

31 1,100 IDIs ≈ 24 percent * 4577 IDIs. 32 Ibid, page 41. 

33These labor cost estimates are assumed to cover 

the labor costs for both the IDI and its partner nonbank entities. The FDIC does not have the data to 

estimate the proportion of labor costs borne by the 

IDI or its partner non-bank entity(ies). 34Compensation rates for the applicable labor 

categories range from $39 per hour for clerical 

workers to $181 per hour for lawyers, based on the 

75th percentile hourly wages reported by the 

Bureau of Labor Statistics and adjusted for nonwage compensation and inflation to March 2024. 

Source: Bureau of Labor Statistics: ‘‘National 

Industry-Specific Occupational Employment and 

Wage Estimates: Industry: Credit Intermediation 

and Related Activities (5221 And 5223 only)’’ (May 

2023), Employer Cost of Employee Compensation 

(March 2023), and Employment Cost Index (March 

2023 and March 2024). 

35Proposed 12 CFR 375.3(c) would allow IDIs to 

arrange for a third party to assist the IDI in its 

recordkeeping, as long as this arrangement meets 

additional requirements to ensure that the IDI is 

able to comply with the proposed rule. The FDIC 

acknowledges that the cost of such an arrangement 

would vary across IDIs and may depend on the size, 

scope, and complexity of the IDI’s custodial 

accounts as well as the capability and efficiency of 

the third party’s information management system. 

For purposes of this analysis, the FDIC assumes that 

the IDI would form such an arrangement if it were 

more cost effective. 

change the costs and benefits of 

accepting and maintaining custodial 

deposit account relationships with nonbank companies, which may affect the 

number of IDIs entering into such 

relationships in future periods. 

IDIs with custodial deposit accounts 

covered by the proposed rule would be 

required to maintain records of 

beneficial ownership for each custodial 

deposit account. The FDIC does not 

have the data to accurately estimate the 

number of these IDIs. To assess the 

number of IDIs potentially affected the 

FDIC identified the number of IDIs who 

reported positive or non-zero values for 

non-managed custody and safekeeping 

accounts or brokered deposits, 

excluding brokered reciprocal 

deposits.29 The FDIC acknowledges that 

deposits obtained through third-party 

partnerships may or may not be 

reported in these items. According to a 

2023 analyst report, as many as 24 

percent of IDIs during the fourth quarter 

of 2022 indicated that they are either 

currently in a partnership with one or 

more non-bank companies, or may 

potentially form such a partnership in 

the near future, that could involve 

custodial deposit accounts covered by 

the proposal.30 The FDIC acknowledges 

that the prevalence of IDI-non-bank 

company partnerships that involve 

custodial deposit accounts subject to the 

proposed rule may be higher or lower 

than this information indicates. 

However, the FDIC believes that the 

information on the prevalence of IDInon-bank company partnerships, 

coupled with the data on the volume of 

relevant deposit types, implies a range 

that likely captures the volume of 

covered IDIs. For purposes of this 

analysis, the FDIC estimates that 

between 600 and 1,100 IDIs (or between 

13 and 24 percent of the current 

population of 4,577 IDIs) would have 

custodial deposit accounts covered by 

the proposed rule and therefore would 

be directly and immediately affected.31

The FDIC notes that the number of 

affected IDIs may be reduced by the ten 

account driven exemptions included in 

the proposed rule. The FDIC does not 

have data to estimate how many IDIs 

would be excluded due to these 

exemptions. 

As previously discussed, the 

proposed rule may affect account 

holders or other non-bank entities, who 

may have to keep records or provide 

information to partner IDIs. In 

particular, these non-bank entities may 

have to provide information on 

beneficial owners and their interests in 

the deposited funds held in custodial 

deposit accounts. Further, to the extent 

that covered IDIs elect to comply with 

the proposed rule by maintaining the 

records through a contractual 

relationship with a third party, nonbank entities may be required to keep 

additional records to ensure that the IDI 

has continued access to the records. The 

FDIC does not have data on the exact 

number of non-bank entities that would 

be affected. Some data suggest that most 

IDIs partner with two fintechs.32

In addition, the proposed rule would 

impact consumers whose deposits are 

held in custodial deposit accounts that 

are not exempt from the proposed rule. 

The remainder of the Expected Effects 

section of this document discusses the 

proposed rule’s effects on covered IDIs, 

consumers, and non-bank entities. 

Costs 

As mentioned above, the FDIC 

estimates that between 600 and 1,100 

IDIs would be directly and immediately 

affected by the proposed rule, if it were 

adopted. Specifically, IDIs with 

custodial deposit accounts that are not 

exempt from the proposed rule would 

be required, themselves or through a 

third party, to maintain records of 

beneficial ownership in the data format 

and layout specified in 12 CFR part 375, 

appendices A and B, for each custodial 

deposit account. In addition, these IDIs 

would be required to reconcile records 

for their custodial deposit accounts as of 

the end of each day in order to 

determine the respective individual 

beneficial ownership interests 

associated with the custodial deposit 

account and the reconciliation of such 

interests to the funds on deposit in the 

custodial deposit account. The FDIC 

believes it is likely that many IDIs 

currently engage in some form of 

reconciliation and maintain certain 

amounts of records in order to maintain 

custodial accounts. However, the FDIC 

believes it is unlikely that IDIs currently 

have all the records necessary to meet 

all the proposed rule’s requirements. As 

such, IDIs would have to arrange to have 

the data transmitted to them from 

account holders and develop a 

recordkeeping system for maintaining 

those data. These arrangements may 

include revisions to IDIs’ existing 

platform or core processing systems, as 

well as the development of data 

interface systems. Further, the proposed 

rule would require covered entities to 

incur costs associated with conducting, 

testing, and validating the daily 

reconciliation of records at the IDI. The 

FDIC also recognizes that the costs of 

these actions will vary by IDI based on 

the size, scope, and complexity of the 

IDI’s custodial deposit accounts, as well 

as the capability and efficiency of the 

IDI’s current system for managing 

deposit account data. The FDIC does not 

have data on the costs of these actions. 

For purposes of this analysis, the FDIC 

assumes that it would take IDIs and 

partner non-bank entities approximately 

2,200 hours, on average, per IDI to set 

up, and approximately 1,100 hours, on 

average, per IDI per year to maintain, 

such a system.33 At an assumed labor 

compensation rate of $100 per hour,34

the FDIC estimates that these tasks 

would cost each IDI, on average, 

approximately $220,000 for the first 

year and $110,000 for each subsequent 

year after the proposed rule is enacted. 

The proposed rule would allow IDIs to 

arrange to have the data maintained 

through a third party—this analysis 

assumes that each IDI would choose the 

latter if it were more cost effective.35 For 

purposes of estimating the total cost to 

the industry, this analysis assumes all 

affected IDIs would incur the estimated 

average cost of developing an internal 

recordkeeping system. Assuming up to 


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36Proposed 12 CFR 375.4. 37See 12 U.S.C. 1821(f). 

1,100 IDIs are affected, the FDIC 

estimates that the proposed rule would 

impose a cost upwards of approximately 

$250 million on affected IDIs and their 

partner non-bank entities in the first 

year that the proposed rule is enacted 

and approximately $120 million in each 

subsequent year thereafter. These 

estimates may be lower if IDIs’ existing 

systems are capable of maintaining 

beneficial ownership information as 

well as conducting daily reconciliations, 

as outlined in the proposed rule. Not 

every IDI will incur the same 

compliance costs. IDIs which do not 

currently retain beneficial ownership 

information nor reconcile their accounts 

or those with greater complexity in their 

business lines, accounts and operations 

would be expected to incur aboveaverage compliance costs. 

IDIs affected by the proposed rule 

would also be required to establish and 

maintain written policies and 

procedures to achieve compliance with 

the proposed rule. These IDIs would 

also be required to, on an annual basis, 

test the recordkeeping system required 

by the proposed rule, independently 

validate certain records maintained by 

third parties, document these actions in 

a report, and include in its records a 

certification of compliance with the 

proposed rule.36 Non-bank entities that 

partner with affected IDIs may incur 

costs associated with IDIs’ compliance 

with the aforementioned requirements. 

The FDIC lacks the data necessary to 

quantify these costs, however it believes 

they would be modest compared to the 

costs of implementing and maintaining 

the recordkeeping system described 

above. 

The proposed rule would also likely 

result in added costs, other than those 

described above, on custodial deposit 

account holders. Such non-bank 

companies may need to revise their 

internal systems, policies, or 

procedures, and potentially adjust their 

business arrangements with covered 

IDIs, in order to accommodate the 

proposed rule’s requirements on 

covered IDIs. The FDIC does not believe 

that the proposed rule would impose 

material data collection costs on these 

non-banks, because the data required by 

the proposed rule would likely already 

be collected and maintained by the 

account holder in the ordinary course of 

business. As discussed above, the 

account holder or non-bank entity may 

share in the costs of developing and 

maintaining the systems required for the 

transmission of data. The FDIC does not 

have the data necessary to quantify this 

cost, but believes that these costs would 

be modest, given that the IDI and 

account holder would likely already 

have systems in place for the account 

holder to access its custodial deposit 

accounts. 

As discussed in the previous Scope 

section of this document, the costs of 

the proposed rule may affect IDIs’ and 

non-bank entities’ decisions to enter 

into or maintain custodial deposit 

account relationships covered by the 

rule. Further, the proposed rule may 

increase or decrease the count or dollar 

volume of covered custodial deposit 

accounts held by IDIs. The FDIC does 

not have data to estimate the effects of 

the rule on the volume and usage of 

covered custodial deposit accounts. 

To the extent that IDIs and non-bank 

entities pass the costs of complying with 

these requirements onto their customers 

through lower interest rates or higher 

fees, consumers could also bear some 

costs. 

Benefits 

A direct benefit of the proposed rule 

would be a reduction in the likelihood 

and duration of a disruption to 

consumers’ access of their funds held in 

covered custodial deposit accounts, 

whether such disruption is because of 

an IDI failure, or failure or operational 

disruption experienced by an account 

holder. The proposal would benefit 

customers by requiring that records be 

maintained in a standard format 

identifying customers and their balances 

and by requiring reconciliation between 

the records of IDIs and their associated 

non-bank entities. The required records 

and reconciliation would allow 

customers to have uninterrupted or 

near-uninterrupted access to their 

underlying funds in the event of an IDI 

failure, or failure or operational 

disruption of an associated non-bank 

entity. As discussed in the context of 

the Synapse bankruptcy, there can be 

significant differences in information on 

beneficial owners and their interests in 

the deposited funds held in custodial 

deposit accounts at an IDI between the 

IDI and its partner non-bank entity. 

These differences can result in 

disruption to customers’ access to funds 

in the event of a failure of the IDI or 

non-bank entity. Nearly half of all 

households use a fintech product with 

bank account-like features; therefore, as 

illustrated by the failure of Synapse, the 

potential benefits of avoiding consumer 

harm associated with disrupted access 

to funds, in concert with the frequent 

usage of such custodial deposit accounts 

at IDIs, are likely to be substantial. 

Another direct benefit of the proposed 

rule would be prompt and accurate 

determination of beneficial owners’ 

deposit insurance coverage in the event 

of a failure of an IDI with custodial 

deposit accounts covered by the 

proposal. As discussed above, records of 

custodial deposit account balances at 

IDIs can differ substantially from those 

at their partner non-bank entities. In the 

event of a failure of an IDI, such 

substantial differences can result in 

delays in determining the insured status 

of depositors as well as losses to the 

Deposit Insurance Fund (DIF). The 

increased accuracy of data on custodial 

deposit accounts provided by the 

proposed rule would prevent or mitigate 

such losses in the event of a failure of 

an IDI. The detailed account 

information would also facilitate the 

FDIC’s resolution of the failed IDI, 

reduce the cost of the failure of the IDI, 

and ensure prompt determination of 

insured status, allowing the FDIC to 

meet its statutory mandate under the 

FDI Act to provide beneficial owners 

their insured deposits ‘‘as soon as 

possible’’ and at the lowest resolution 

cost.37

The FDIC believes one of the indirect 

benefits of the proposed rule would be 

to reduce operational risk to IDIs and 

account holders. The proposed rule’s 

requirement of daily reconciliation of 

records at the IDI would prevent or 

mitigate discrepancies in beneficial 

owners’ account balances between the 

IDI and the account holder. In cases 

where the account holder has multiple 

partner IDIs, the daily reconciliation 

would also prevent or mitigate 

inaccurate recordkeeping at the account 

holder from spreading to IDIs—a 

mismatch in account balances between 

the account holder and a partner IDI 

could be resolved before the underlying 

issue causes mismatches at other of the 

account holder’s partner IDIs. 

The reduction in operational risk at 

affected IDIs and their partner non-bank 

entities could be partially offset by an 

increase in operational risk due to the 

additional operations required to 

comply with the proposed rule. 

The FDIC believes the proposed rule 

would reduce the reputational risk to 

covered IDIs and non-bank entities. A 

(temporary) loss of access to their funds 

could conceivably reduce confidence 

among depositors of an IDI affected by 

a bankruptcy of a non-bank entity for 

which it provides custodial deposit 

accounts or operational disruption. By 

preventing or mitigating such 

disruptions, the proposed rule would 

bolster consumer confidence in nonbank companies providing such services 

and their partner IDIs. This bolstered 

confidence could increase the potential 


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customer base of certain affected nonbank companies, as well as the amount 

of funds consumers feel comfortable 

depositing with IDIs through such 

entities. Finally, to the extent that an IDI 

affected by the bankruptcy or 

operational disruption of a non-bank 

company cannot determine beneficial 

ownership in a timely manner, it might 

reduce confidence among owners of all 

deposit classes at the IDI. This loss in 

confidence could lead to the rapid 

withdrawal of demand deposits or 

short-term funding. The proposed rule 

would reduce the likelihood, and 

mitigate the effects, of such a crisis of 

confidence by providing consumers 

continued access to their funds. While 

the FDIC does not have the data to 

quantify these benefits, they could 

potentially be material for covered IDIs 

and account holders. 

The FDIC believes another indirect 

benefit of the proposal would result 

from the proposed rule’s 

standardization of enhanced 

recordkeeping requirements for 

custodial deposit accounts. This benefit 

could affect both IDIs with covered 

custodial deposit accounts and IDIs that 

may wish to form partnerships with 

non-bank companies where such 

partnerships may lead to the creation of 

custodial deposit accounts. Adoption of 

standardized recordkeeping would 

reduce the IDI’s costs of partnering with 

additional non-banks, and vice versa, 

since such a partnership would not 

require the development of a bespoke 

information management system for 

affected custodial deposit accounts. 

Once the IDI implements the deposit 

information management system 

required by the proposed rule, that 

system could potentially be used to 

manage custodial deposit accounts from 

multiple account holders, thereby 

reducing the average cost for the IDI. 

Distributional Effects 

Under the proposed rule, all IDIs that 

hold or plan to hold custodial deposit 

accounts with transactional features will 

be subject to the proposed requirements. 

To the extent that smaller IDIs are more 

likely to have accounts subject to the 

proposed rule, or have larger volumes of 

transactions move through such 

accounts relative to their assets, smaller 

IDIs will bear higher costs as a share of 

their assets than larger IDIs. In addition, 

smaller IDIs’ existing recordkeeping 

systems may be less sophisticated than 

the systems at larger IDIs. Thus, the 

fixed costs of setting up new internal 

recordkeeping systems or enhancing 

existing systems in order to comply 

with the proposed rule may also be 

higher as a share of their assets for 

smaller IDIs. To the extent that these 

smaller IDIs are more likely to contract 

with third-party service providers to 

manage their deposit information 

system and/or general ledgers, these 

smaller IDIs would be more likely to 

increase the scope of their existing 

contracts, rather than build a system 

from scratch, to comply with the 

proposed rule. For these reasons, the 

FDIC expects smaller IDIs would more 

likely opt for third-party arrangements 

and pass those costs onto their account 

holders. 

While smaller IDIs may bear a higher 

burden, relative to their assets, to 

comply with the proposed rule, they 

would also receive a disproportionately 

higher share of the benefits. Smaller 

IDIs, with their smaller capital or 

liquidity reserves, would not have as 

much capacity as larger IDIs to 

withstand the operational stress or 

reputational damage caused by an event 

such as the Synapse failure, as well as 

the deposit flight that may follow. As 

such, a mitigation or prevention of such 

an event would greatly benefit those 

smaller IDIs. 

Summary 

The FDIC does not have sufficient 

information available to quantify the 

potential benefits of the proposed rule 

because the benefits depend on the 

probability, breadth, and severity of 

future failures of an IDI or account 

holder. The FDIC also lacks sufficient 

data on the number of IDIs and nonbank entities affected, the scope of 

custodial deposit accounts covered, and 

the current capabilities of affected IDI’s 

data information management systems 

to accurately estimate the costs of the 

proposed rule. These data limitations 

notwithstanding, the discussion above 

describes the clear, material, and 

prudential benefits that the prevention 

or mitigation of an event similar to the 

recent failure of Synapse would provide 

to IDIs that partner with fintechs and 

other third parties, as well as the 

financial industry as a whole. 

V. Alternatives 

The FDIC considered three 

alternatives to the proposed rule. First, 

the FDIC considered the status quo 

alternative. Second, the FDIC 

considered issuing a proposal in which 

certain custodial deposit accounts 

would be covered based on whether 

activity in the account met or exceeded 

certain thresholds, such as transaction 

volume. Third, the FDIC considered a 

proposal covering all custodial deposit 

accounts. However, the FDIC believes 

the proposed rule is preferable to each 

of the alternatives for the reasons 

discussed below. 

One alternative the FDIC considered 

was the status quo. However, as 

discussed above, the recent bankruptcy 

of Synapse left many businesses and 

customers without access to millions of 

dollars of their funds. Such disruptions 

caused some customers of Synapse’s 

fintech partners to question the insured 

status of their funds that were 

advertised as FDIC-insured. Some of the 

effects of this event have yet to be 

resolved, even months after Synapse’s 

bankruptcy. The disruption of account 

access in the aftermath of Synapse’s 

bankruptcy has shown that IDIs 

currently do not have the necessary data 

to provide access to funds in the status 

quo. The FDIC believes that the 

proposed rule would provide data to 

enable IDIs to provide ready access to 

funds. In addition, the proposed rule’s 

recordkeeping requirements would 

enhance the FDIC’s ability to achieve its 

statutory obligation to pay deposit 

insurance as soon as possible in the 

event an IDI fails by having information 

about the beneficial owners of custodial 

deposit accounts in the banks’ records. 

The second alternative the FDIC 

considered was to propose 

recordkeeping requirements be applied 

only to those custodial deposit accounts 

where the transaction volume and/or 

dollar volume of activity over a certain 

period met particular thresholds. 

However, the FDIC believes that, by 

using thresholds, the FDIC could 

potentially treat otherwise similarly 

situated depositors differently in the 

event of an IDI failure if one depositor’s 

funds were in a custodial deposit 

account that did not meet the thresholds 

to be covered by the proposal while 

another’s did meet the thresholds. For 

example, some financial technology 

products or intermediaries working on 

behalf of financial technology 

companies may deposit end-user funds 

across multiple custodial deposit 

accounts at a single IDI, while others 

may deposit funds from multiple endusers into a single custodial deposit 

account, and others may spread funds 

across more than one IDI. The FDIC felt 

that the straightforward approach, as 

provided in the proposed rule, would be 

to apply the requirements to all 

custodial deposit accounts, and exempt 

accounts that are not necessary to 

further the policy objectives of the 

proposed rule. 

Finally, the FDIC considered an 

alternative with fewer exemptions that 

would have applied, if adopted, to many 

arrangements involving custodial 

deposit accounts. Although this 

alternative would have had exemptions 


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for accounts established by or on behalf 

of brokers, dealers, and investment 

advisers as defined in the Securities and 

Exchange Act of 1934 and the 

Investment Advisers Act of 1940, the 

FDIC nevertheless believed the 

alternative could result in large costs for 

non-bank entities with certain sweep 

deposit, reciprocal deposit, and 

brokered deposit arrangements. The 

FDIC believes that these arrangements 

are dissimilar to the custodial deposit 

account arrangements involved the 

Synapse bankruptcy and would not 

pose the same heightened risk. The 

FDIC believes that the set of exemptions 

provided in the proposed rule would 

allow the FDIC to achieve its policy 

objectives, as discussed above, with less 

burden on IDIs and nonbank financial 

entities. 

VI. Request for Comment 

The FDIC invites comments on all 

aspects of this proposal. In particular, 

the FDIC requests comment on the 

following: 

Custodial Deposit Accounts With 

Transactional Features 

• The proposed definition of 

‘‘custodial deposit account with 

transactional features’’ generally relies 

on three elements: (1) the account is 

established for the benefit of beneficial 

owners; (2) the account contains 

commingled deposits of multiple 

beneficial owners; and (3) the beneficial 

owners may authorize or direct a 

transfer from the custodial deposit 

account to a party other than the 

account holder or beneficial owner. The 

FDIC believes this definition would 

include the types of custodial deposit 

accounts that would present significant 

complexity in a deposit insurance 

determination. Should the FDIC 

consider alternative approaches to 

defining the ‘‘custodial deposit accounts 

with transactional features’’ that would 

generally be subject to the proposed 

rule? 

• Should the rule’s recordkeeping 

requirements instead apply to all 

custodial deposit accounts, not only to 

those with ‘‘transactional features’’ as 

described in the proposed rule? Why 

and what would be the benefits or 

challenges of applying the requirements 

to all custodial deposit accounts? 

• Are there any other types of deposit 

accounts that should be included in the 

scope of the proposed rule? If so, why 

should they be addressed by the 

proposal? 

• Are custodial deposit account 

arrangements becoming more complex 

in the industry to the point where it 

would not be clear who is an account 

holder in the case of an IDI’s failure? If 

so, how can the proposal better add 

clarity to support the FDIC’s policy 

objectives? 

• Should there be a minimum 

threshold for applying the requirements 

of the rule? If so, what metric, and what 

threshold? For example, should an IDI 

only be subject to the rule if its number 

of unique beneficial owners with 

custodial deposit accounts with 

transaction features exceeds a certain 

threshold? If so, what should the 

minimum threshold be and why? 

Exemptions 

• Are there other categories of 

custodial deposit accounts with 

transactional features that should be 

expressly exempted from the proposed 

rule’s recordkeeping requirements? If so, 

why should they be exempt, and what 

factors would tend to ensure that 

complete and accurate records of the 

beneficial owners of the deposits are 

readily available for the FDIC in the 

event of the failure of an IDI holding 

such custodial deposit accounts? 

• The proposal would exempt 

custodial deposit accounts established 

by or on behalf of one or more brokers 

or dealers under the Securities and 

Exchange Act of 1934, and investment 

advisers under the Investment Advisers 

Act of 1940. Although these entities are 

already subject to recordkeeping 

requirements under Federal and State 

laws in addition to regulatory 

supervision, given the risks described in 

this proposal, should these entities 

entirely be exempted from the 

proposal’s requirements? Are there 

circumstances where some brokers or 

dealers or related accounts should not 

be exempted from the proposal to 

ensure that the proposal’s policy 

objectives are being satisfied? If so, why 

and how should this exemption be 

revised? 

• Are there other categories of 

custodial deposit accounts with 

transactional features that should be 

revised or narrowed? If so, why and 

how should the exemption(s) be 

revised? 

Recordkeeping Requirements 

• What feedback or additional 

considerations should be included in 

the proposed rule in the situation where 

an IDI maintains records of beneficial 

ownership itself? 

• Should the FDIC consider any 

additional measures where an IDI 

intends to rely on a third party for 

keeping the records required by the 

proposed rule? Should the rule 

specifically address scenarios where a 

third party is subject to examination 

under the Bank Service Company Act? 

• What additional detail might be 

useful to IDIs in understanding the 

provisions of the proposed rule 

addressing reconciliations? 

• What are obstacles that would 

prevent an IDI from being able to 

reconcile records daily as required by 

the proposed rule? Could those 

obstacles be addressed? If not, are there 

alternative measures that could be used 

to satisfy the FDIC’s policy objectives of 

ensuring that IDIs have access to 

complete and accurate records of 

beneficial ownership of deposits on a 

daily basis? 

• Are there any challenges to an IDI’s 

abilities to align its internal records 

with those of the non-bank third party 

which whom the IDI has a business 

relationship? How have IDIs addressed 

these challenges? 

• Are there legal or other obstacles 

the FDIC should be aware of with 

respect to meeting the proposed 

contractual requirements, where an IDI 

intends to rely on one or more third 

parties to maintain the records required 

by the rule? 

• Should the rule specify a set of 

elements that would be required, at a 

minimum, as part of a contingency plan 

to address disruptions with respect to a 

third party that maintains records for 

custodial deposit accounts? 

• Are there aspects of 12 CFR part 

370 or § 360.9 that the FDIC should give 

additional consideration to for purposes 

of this rulemaking? 

Compliance Provisions 

• The proposed rule would require 

IDIs to maintain written policies and 

procedures to achieve compliance. Are 

there any additional or specific criteria, 

factors, or situations that these policies 

and procedures should be required to 

address? 

• The chief executive officer, chief 

operating officer, or the highest ranking 

official of an insured depository 

institution holding custodial deposit 

accounts with transactional features that 

are not specifically exempt from the 

proposal would be required to sign a 

certification attesting to the accuracy of 

the certification. Has the proposal 

identified the appropriate level of the 

official at an insured depository 

institution who should sign the 

certification? If not, which official(s) 

should sign a certification for the 

purposes of achieving the stated goals of 

the proposal? 

• Should the compliance report and 

certification address any additional 

items, beyond those enumerated in the 

proposed rule? 


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38 5 U.S.C. 601 et seq. 

39The SBA defines a small banking organization 

as having $850 million or less in assets, where an 

organization’s ‘‘assets are determined by averaging 

the assets reported on its four quarterly financial 

statements for the preceding year.’’ See 13 CFR 

121.201 (as amended by 87 FR 69118, effective 

December 19, 2022). In its determination, the ‘‘SBA 

counts the receipts, employees, or other measure of 

size of the concern whose size is at issue and all 

of its domestic and foreign affiliates.’’ See 13 CFR 

121.103. Following these regulations, the FDIC uses 

an insured depository institution’s affiliated and 

acquired assets, averaged over the preceding four 

quarters, to determine whether the insured 

depository institution is ‘‘small’’ for the purposes of 

the RFA. 

40 12 U.S.C. 1821(a)(1)(C) and (E). 

41 12 U.S.C. 1819(a)(Tenth), 1820(g), and 

1821(d)(4)(B)(iv). 

42Call Report for the period ending March 31, 

2024. 

43Exemptions are listed at proposed 12 CFR 

375.3(e). 

44These estimates may undercount the number of 

small entities affected, given that entities with less 

than $10 billion in assets are more likely to partner 

with fintechs than entities with more than $10 

billion. 

• Given the proposal’s annual 

certification and reporting requirements, 

please provide any feedback on what 

the potential format, structure, or 

content of materials should be for the 

purposes of complying with these 

requirements. 

• What system, process or mechanism 

should be used to transmit such 

information to the FDIC and the 

appropriate federal banking agency? 

• Given the recordkeeping, internal 

control, and compliance requirements 

addressed in the proposal, how long 

would it take to revise systems, 

processes, and contracts for the 

purposes of complying with a rule? 

What would be a reasonable amount of 

time to achieve compliance with the 

rule, and why? 

Expected Effects 

• Would the proposed rule have any 

costs, benefits, or other effects that the 

FDIC has not identified? 

Alternatives 

• Are there other recordkeeping 

requirements or approaches that are not 

reflected in the proposal that could be 

considered in ensuring the accuracy and 

availability of beneficial ownership 

records with respect to custodial deposit 

accounts with transactional features? 

VII. Administrative Law Matters 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency, in 

connection with a proposed rule, to 

prepare and make available for public 

comment an initial regulatory flexibility 

analysis that describes the impact of the 

proposed rule on small entities.38

However, an initial regulatory flexibility 

analysis is not required if the agency 

certifies that the proposed rule will not, 

if promulgated, have a significant 

economic impact on a substantial 

number of small entities. The Small 

Business Administration (SBA) has 

defined ‘‘small entities’’ to include 

banking organizations with total assets 

of less than or equal to $850 million.39

Generally, the FDIC considers a 

significant economic impact to be a 

quantified effect in excess of 5 percent 

of total annual salaries and benefits or 

2.5 percent of total noninterest 

expenses. The FDIC believes that effects 

in excess of one or more of these 

thresholds typically represent 

significant economic impacts for FDICinsured institutions. 

For the reasons described below, the 

FDIC believes that the proposed rule 

would, if promulgated, have a 

significant effect on the substantial 

number of FDIC-insured institutions 

that are small entities under the RFA 

(small IDIs). As such, the FDIC has 

prepared and is making available for 

public comment the following initial 

regulatory flexibility analysis. 

(1) A description of the reasons why 

action by the agency is being 

considered. 

As discussed in detail in section I of 

this document, Background and Need 

for Rulemaking, the recent events 

surrounding the bankruptcy of Synapse 

raised questions about the 

completeness, accuracy, and integrity of 

custodial deposit account records 

underlying arrangements with third 

parties at certain IDI. These events 

highlight substantial risks with respect 

to the prompt access to customers funds 

held in custodial deposit accounts. 

These issues create uncertainty that 

undermines the public confidence that 

underpins banks and our nation’s 

broader financial system. 

(2) A succinct statement of the 

objectives of, and legal basis for, the 

proposed rule. 

As discussed in detail in section III of 

this document, The Proposed Rule, the 

FDIC is proposing requirements that 

would strengthen IDIs’ recordkeeping 

for custodial deposit accounts with 

transactional features and preserve 

beneficial owners’ and depositors’ 

entitlement to the protections afforded 

by Federal deposit insurance. The 

proposed rule is authorized by the FDI 

Act, which requires the FDIC to 

determine the net amount due to any 

depositor in the event of the failure of 

an IDI 40 and authorizes the FDIC to 

prescribe rules and regulations as it may 

deem necessary to carry out these 

responsibilities.41

(3) A description of and, where 

feasible, an estimate of the number of 

small entities to which the proposed 

rule will apply. 

The FDIC insures 4,577 IDIs as of 

March 31, 2024,42 and the proposed rule 

would apply to all IDIs with custodial 

deposit accounts that are not explicitly 

exempt from the rule.43 Of these 4,577 

IDIs, the FDIC estimates that 3,259 (71 

percent of) IDIs are small IDIs. The FDIC 

does not have the data available to 

estimate the number of small IDIs that 

currently have or would potentially 

have custodial deposit accounts subject 

to the rule. As discussed in detail in 

section IV of this document, Expected 

Effects, the FDIC estimates, based on 

Call Report data and analyst reports, 

that between 600 and 1,100 IDIs would 

be immediately and directly affected by 

the proposed rule. Applying the 71 

percent proportion of small IDIs in the 

population of all IDIs, the FDIC 

estimates that between 426 and 781 

small IDIs would be immediately and 

directly affected by the proposed rule.44

(4) A description of the projected 

reporting, recordkeeping and other 

compliance requirements of the 

proposed rule, including an estimate of 

the classes of small entities which will 

be subject to the requirement and the 

type of professional skills necessary for 

preparation of the report or record. 

As discussed in section IV of this 

document, Expected Effects, IDIs with 

custodial deposit accounts that are not 

exempt from the proposed rule would 

be required, themselves or through a 

third party, to maintain records of 

beneficial ownership in the data format 

and layout specified in proposed 12 

CFR part 375, appendices A and B, for 

each custodial deposit account. In 

addition, these IDIs would be required 

to reconcile records for their custodial 

deposit accounts as of the end of each 

day in order to determine the respective 

individual beneficial ownership 

interests associated with the custodial 

deposit account and the reconciliation 

of such interests to the funds on deposit 

in the custodial deposit account. The 

FDIC believes it is unlikely that IDIs 

currently have these records. As such, 

IDIs would have to arrange to have the 

data transmitted to them from account 

holders and develop a recordkeeping 

system for maintaining those data. 

These arrangements may include 

revisions to IDIs’ existing platform or 

core processing systems, as well as the 

development of data interface systems. 


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45Compensation rates for the applicable labor 

categories range from $39 per hour for clerical 

workers to $181 per hour for lawyers, based on the 

75th percentile hourly wages reported by the 

Bureau of Labor Statistics and adjusted for nonwage compensation and inflation to March 2024. 

Source: Bureau of Labor Statistics: ‘‘National 

Industry-Specific Occupational Employment and 

Wage Estimates: Industry: Credit Intermediation 

and Related Activities (5221 And 5223 only)’’ (May 

2023), Employer Cost of Employee Compensation 

(March 2023), and Employment Cost Index (March 

2023 and March 2024). 

46 44 U.S.C. 3501–3521. 

Further, the proposed rule would 

require covered entities to incur costs 

associated with conducting, testing, and 

validating the daily reconciliation of 

records at the IDI. The FDIC also 

recognizes that the costs of these actions 

would vary by IDI based on the size, 

scope, and complexity of the IDI’s 

custodial deposit accounts, as well as 

the capability and efficiency of the IDI’s 

current system for managing deposit 

account data. The FDIC does not have 

data on the costs of these actions. For 

purposes of this analysis, the FDIC 

assumes that it would take IDIs and 

partner non-bank entities approximately 

2,200 hours, on average, per IDI to set 

up, and approximately 1,100 hours, on 

average, per IDI per year to maintain 

such a system. The FDIC believes that 

actions required by small IDIs to comply 

with the proposed rule, described 

above, would require the skills of 

compliance officers, information 

technology specialists, clerical workers, 

lawyers, and executives and managers. 

At an assumed labor compensation rate 

of $100 per hour,45 the FDIC estimates 

that these tasks would cost each IDI, on 

average, approximately $220,000 for the 

first year and $110,000 for each 

subsequent year after the proposed rule 

is enacted. Although these costs may 

vary across small IDIs affected by the 

rule, an estimated increase in labor costs 

of $220,000 would be in excess of 5 

percent of total annual salaries and 

benefits for approximately 61 percent of 

the 3,259 small IDIs. Given the estimate 

that between 426 and 781 small IDIs 

would be directly and immediately 

affected by the proposed rule, the FDIC 

estimates that the proposed rule would 

have significant effects on 61 percent of 

these affected small IDIs, or between 

261 (8 percent) and 478 (15 percent) of 

all 3,259 small IDIs. The FDIC believes 

these numbers are substantial. 

As discussed in section IV of this 

document, Expected Effects, small IDIs 

affected by the proposed rule would 

also be required to establish and 

maintain written policies and 

procedures to achieve compliance with 

the proposed rule. These IDIs would 

also be required to, on an annual basis, 

test the recordkeeping system required 

by the proposed rule, independently 

validate certain records maintained by 

third parties, document these actions in 

a report, and include in its records a 

certification of compliance with the 

proposed rule. 

(5) An identification, to the extent 

practicable, of all relevant Federal rules 

which may duplicate, overlap or 

conflict with the proposed rule. 

The FDIC has not identified any likely 

duplication, overlap, and/or potential 

conflict with this proposed rule and any 

other Federal rule. 

(6) A description of any significant 

alternatives to the proposed rule which 

accomplish the stated objectives of 

applicable statutes and which minimize 

any significant economic impact of the 

proposed rule on small entities. 

The FDIC considered several 

alternatives to the proposed rule, 

including keeping the status quo, 

adding minimum transaction volume 

thresholds, and allowing fewer 

custodial deposit accounts to be 

exempted from the proposed 

requirements. As discussed in detail in 

the Alternatives section of this 

document, the FDIC believes that the 

requirements in the proposed rule 

would, with minimal economic impact, 

best accomplish the stated objective of 

strengthening IDIs’ recordkeeping for 

custodial deposit accounts with 

transactional features and preserve 

beneficial owners’ and depositors’ 

entitlement to the protections afforded 

by Federal deposit insurance. 

The FDIC invites comments on all 

aspects of the supporting information 

provided in this RFA section. The FDIC 

is particularly interested in comments 

on any significant effects on small 

entities that the agency has not 

identified. 

Paperwork Reduction Act 

Certain provisions of the proposed 

rule contain ‘‘collections of 

information’’ within the meaning of the 

Paperwork Reduction Act of 1995 

(PRA).46 In accordance with the 

requirements of the PRA, the FDIC may 

not conduct or sponsor, and the 

respondent is not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. The FDIC plans to request a 

new OMB control number associated 

with this rulemaking. 

The proposed rule would establish 

new recordkeeping requirements at IDIs 

for ‘‘custodial deposit accounts with 

transactional features,’’ subject to a list 

of specific exemptions. IDIs holding 

deposits within the scope of the 

proposed rule would be required to 

maintain records identifying the 

beneficial owners of those deposits, the 

balance attributable to each beneficial 

owner, and the ownership category in 

which the deposited funds are held. The 

IDI could maintain those records itself 

or, if certain additional requirements are 

satisfied, the IDI could maintain the 

records through an arrangement with a 

third party (which could include a 

vendor, processor, software or service 

provider, or a similar entity). The 

proposed rule provides a specific 

electronic file format for records on 

beneficial owners and their interests in 

the deposited funds. 

The proposed rule would provide that 

where IDIs choose to maintain the 

required records through a contractual 

relationship with a third party, 

additional requirements would need to 

be satisfied. In addition, reconciliation 

of these records would be required, as 

would periodic validation of the third 

party’s records by a person independent 

of the third party. 

The proposal would require specific 

actions by IDIs to achieve and maintain 

compliance with the rule. IDIs that hold 

custodial deposit accounts with 

transactional features would be required 

to establish and maintain written 

policies and procedures to achieve 

compliance with the rule’s 

requirements. IDIs would further be 

required to complete a report annually 

that (1) describes any material changes 

to their information technology systems 

relevant to compliance with the rule; (2) 

lists the account holders that maintain 

custodial deposit accounts with 

transactional features, the total balance 

of those custodial deposit accounts, and 

the total number of beneficial owners; 

(3) sets forth the results of the 

institution’s testing of its recordkeeping 

requirements; and (4) provides the 

results of the required independent 

validation of any records maintained by 

third parties. IDIs would be required to 

complete an annual certification of 

compliance, signed by the chief 

executive officer, chief operating officer, 

or the highest-ranking official of the IDI, 

stating that the IDI has implemented 

and tested the recordkeeping 

requirements. 

Current Actions: The FDIC’s proposal 

contains recordkeeping and reporting 

burden categorized as follows: 

Information Collection. 

Title: Recordkeeping for Custodial 

Deposit Accounts. 

OMB Number: 3064–NEW. 


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47 12 U.S.C. 4802(a). 

48 12 U.S.C. 4802(b). 

49Public Law 106–102, 113 Stat. 1338, 1471 (Nov. 

12, 1999). 

Affected Public: Businesses or other 

for-profit, all IDIs. 

TABLE 1—SUMMARY OF ESTIMATED ANNUAL BURDEN

[OMB No. 3064–NEW] 

Information collection (IC) 

(obligation to respond) 

Type of burden 

(frequency of response) 

Number of 

respondents 

Number of 

responses per 

respondent 

Average time 

per response 

(HH:MM) 

Annual 

burden 

(hours) 

1. Recordkeeping Requirements for Custodial Deposit Accounts 12 CFR Part 375 Implementation 

(Mandatory).

Recordkeeping (Annual) .... 1,100 .33 900:00 326,700 

2. Recordkeeping Requirements for Custodial Deposit Accounts 12 CFR Part 375 Ongoing (Mandatory).Recordkeeping (Annual) .... 1,100 .67 500:00 368,500 

3. Filing Annually 12 CFR 375.4(b) and (c) Ongoing (Mandatory).Reporting (Annual) ............. 1,100 1 50:00 55,000 

Total Annual Burden (Hours) ........................... ............................................. ...................... .......................... ........................ 750,200 

Source: FDIC. 

Note: The estimated annual IC time burden is the product, rounded to the nearest hour, of the estimated annual number of responses and the 

estimated time per response for a given IC. The estimated annual number of responses is the product, rounded to the nearest whole number, of 

the estimated annual number of respondents and the estimated annual number of responses per respondent. This methodology ensures the estimated annual burdens in the table are consistent with the values recorded in OMB’s consolidated information system. 

Comments are invited on the 

following: 

(a) Whether the collection of 

information is necessary for the proper 

performance of the FDIC’s functions, 

including whether the information has 

practical utility; 

(b) The accuracy of the estimate of the 

burden of the information collection, 

including the validity of the 

methodology and assumptions used; 

(c) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(d) Ways to minimize the burden of 

the information collection on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology; 

and 

(e) Estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to provide information. 

All comments will become a matter of 

public record. Comments on the 

collection of information should be sent 

to the address listed in the ADDRESSES

section of this document. Written 

comments and recommendations for 

this information collection also should 

be sent within 30 days of publication of 

this document to www.reginfo.gov/ 

public/do/PRAMain. Find this 

particular information collection by 

selecting ‘‘Currently under 30-day 

Review—Open for Public Comments’’ or 

by using the search function. 

Riegle Community Development and 

Regulatory Improvement Act 

Section 302 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (RCDRIA) 

requires that the Federal banking 

agencies, including the FDIC, in 

determining the effective date and 

administrative compliance requirements 

of new regulations that impose 

additional reporting, disclosure, or other 

requirements on IDIs, consider, 

consistent with principles of safety and 

soundness and the public interest, any 

administrative burdens that such 

regulations would place on depository 

institutions, including small depository 

institutions, and customers of 

depository institutions, as well as the 

benefits of such regulations.47 Subject to 

certain exceptions, new regulations and 

amendments to regulations prescribed 

by a Federal banking agency which 

impose additional reporting, 

disclosures, or other new requirements 

on insured depository institutions shall 

take effect on the first day of a calendar 

quarter which begins on or after the date 

on which the regulations are published 

in final form.48 The requirements of 

RCDRIA will be considered as part of 

the overall rulemaking process, and the 

FDIC invites comments that will further 

inform its consideration of RCDRIA. 

Plain Language 

Section 722 of the Gramm-LeachBliley Act 49 requires the Federal 

banking agencies to use plain language 

in all proposed and final rulemakings 

published in the Federal Register after 

January 1, 2000. The FDIC sought to 

present the proposed rule in a simple 

and straightforward manner. The FDIC 

invites your comments on how to make 

this proposal easier to understand. For 

example: 

• Has the FDIC organized the material 

to suit your needs? If not, how could the 

material be better organized? 

• Are the requirements in the 

proposed regulation clearly stated? If 

not, how could the regulation be stated 

more clearly? 

• Does the proposed regulation 

contain language or jargon that is 

unclear? If so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? 

List of Subjects in 12 CFR Part 375 

Reporting and recordkeeping 

requirements, Custodial deposit 

accounts. 

Authority and Issuance 

For the reasons stated in the 

preamble, the Board of Directors of the 

Federal Deposit Insurance Corporation 

proposes to add part 375 to title 12 of 

the Code of Federal Regulations as 

follows: 

■ 1. Add part 375 to read as follows: 

PART 375—REQUIREMENTS FOR 

ACCURATE CUSTODIAL DEPOSIT 

ACCOUNTS WITH TRANSACTIONAL 

FEATURES AND PROMPT PAYMENT 

OF DEPOSIT INSURANCE TO 

DEPOSITORS 

Sec. 

§ 375.1 Purposes. 

§ 375.2 Definitions. 

§ 375.3 Recordkeeping and internal control 

requirements. 


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§ 375.4 Compliance. 

§ 375.5 Enforcement. 

Appendix A to Part 375—Data Format and 

Structure. 

Appendix B to Part 375—Ownership Right 

and Capacity Codes.Inserting required 

closing tag for E. 

Authority: 12 U.S.C. 1819(a)(Eighth); 

1819(a)(Tenth); 1820(g); 1821(f)(1); 1831g(a). 

§ 375.1 Purposes. 

Unless otherwise provided in this 

part, an insured depository institution 

that has custodial deposit accounts with 

transactional features is required to 

maintain records of beneficial 

ownership in a prescribed format to 

preserve beneficial owners’ and 

depositors’ entitlement to the 

protections afforded by Federal deposit 

insurance. Doing so will facilitate a 

prompt and accurate determination of 

deposit insurance coverage to support 

the FDIC achieving its statutory 

obligation to pay deposit insurance ‘‘as 

soon as possible’’ in the event of the 

insured depository institution’s failure 

to benefit depositors. 

§ 375.2 Definitions. 

For purposes of this part: 

Account holder means the person or 

entity who opens or establishes a 

custodial deposit account with 

transactional features with an insured 

depository institution. 

Appropriate Federal banking agency 

has the same meaning as provided 

under section 3(q) of the Federal 

Deposit Insurance Act (12 U.S.C. 

1813(q)). 

Beneficial owner means a person or 

entity that owns, under applicable law, 

an interest in the deposit held in a 

custodial deposit account. 

Custodial deposit account with 

transactional features means a deposit 

account: 

(1) Established for the benefit of 

beneficial owners; 

(2) In which the deposits of multiple 

beneficial owners are commingled; and 

(3) Through which beneficial owner(s) 

may authorize or direct a transfer 

through the account holder from the 

custodial deposit account to a party 

other than the account holder or 

beneficial owner. 

Deposit has the same meaning as 

provided under section 3(l) of the 

Federal Deposit Insurance Act (12 

U.S.C. 1813(l)). 

Insured depository institution has the 

same meaning as provided under 

section 3(c) of the Federal Deposit 

Insurance Act (12 U.S.C. 1813(c)(2)). 

§ 375.3 Recordkeeping and internal 

control requirements. 

(a) Recordkeeping. Records of 

beneficial ownership for each custodial 

deposit account with transactional 

features must be maintained in the data 

format and layout specified in appendix 

A to this part, either: 

(1) By the insured depository 

institution; or 

(2) Through a third party, including 

but not limited to any vendor, software 

provider, service provider, or similar 

entity in the business of maintaining or 

processing deposit transaction data, in 

the manner described in paragraph (c) of 

this section. 

(b) Internal controls. An insured 

depository institution that maintains 

records under paragraph (a)(1) of this 

section is required to implement 

internal controls appropriate to its size 

and the nature, scope, and risk of its 

activities that include: 

(1) Maintaining accurate balances of 

custodial deposit accounts with 

transactional features at the beneficial 

ownership level; and 

(2) Conducting reconciliations against 

the beneficial ownership records no less 

frequently than at the close of business 

daily. 

(c) Records maintained through a 

third party. An insured depository 

institution that arranges for a third 

party, including but not limited to any 

vendor, software provider, service 

provider, or similar entity in the 

business of maintaining or processing 

deposit transaction data, to assist the 

insured depository institution in 

meeting the requirements in paragraph 

(a) of this section must: 

(1) Have direct, continuous, and 

unrestricted access to the records in the 

data format specified in appendix A to 

this part, maintained by the third party, 

including in the event of business 

interruption, insolvency, or bankruptcy 

of the third party; 

(2) Have continuity plans, including 

backup recordkeeping, and technical 

capabilities to ensure compliance with 

this section; 

(3) Implement appropriate internal 

controls to: 

(i) Accurately determine the 

respective beneficial ownership 

interests associated with custodial 

deposit accounts with transactional 

features; and 

(ii) Conduct reconciliations against 

the beneficial ownership records no less 

frequently than as of the close of 

business daily; and 

(4) Have a contractual arrangement 

with the third party that: 

(i) Clearly defines roles and 

responsibilities for recordkeeping, 

including assigning to the institution 

the rights of the third party to access 

data held by other parties; 

(ii) Requires the third party to 

implement appropriate internal controls 

as required under paragraph (c)(3) of 

this section; 

(iii) Requires a periodic, but no less 

than annual, validation by a person 

independent of the third party to assess 

and verify that the third party is 

maintaining accurate and complete 

records consistent with the provisions 

in paragraphs (a)(2), (b), and (c)(3) of 

this section, with the results of the 

independent validation provided to the 

insured depository institution; and 

(iv) Does not relieve the insured 

depository institution of its 

responsibility under this part. 

(d) Exemptions. The following 

custodial deposit accounts with 

transactional features are exempt from 

the recordkeeping requirements in this 

section: 

(1) Accounts only holding trust 

deposits, as described in 12 CFR 330.10 

or 12 CFR 330.12; 

(2) Accounts established by a 

Government depositor; 

(3) Accounts established by or on 

behalf of one or more brokers, as 

defined in section 3(4) of the Securities 

and Exchange Act of 1934; dealers, as 

defined in section 3(5) of the Securities 

and Exchange Act of 1934; or 

investment advisers, as defined in 

section 202 of the Investment Advisers 

Act of 1940; 

(4) Accounts established by an 

attorney or law firm on behalf of clients, 

commonly known as an Interest on 

Lawyers Trust Accounts, or functionally 

equivalent accounts; 

(5) Accounts held in connection with 

an employee benefit plan or retirement 

plan described in 12 CFR 330.14; 

(6) Accounts maintained by real estate 

brokers, real estate agents, title 

companies, or qualified intermediaries 

under the Internal Revenue Code of 

1986, in which funds from multiple 

clients are deposited and held in 

connection with a real estate 

transaction; 

(7) Accounts maintained by a 

mortgage servicer in a custodial or other 

fiduciary capacity; 

(8) Accounts where Federal or State 

law prohibits the disclosure of the 

identities of the beneficial owners of the 

deposits; 

(9) Accounts maintained pursuant to 

an agreement to allocate or distribute 

deposits among participating insured 

depository institutions in a network for 

purposes other than payment 

transactions of customers of the insured 

depository institution or participating 

insured depository institutions; and 

(10) Accounts exclusively holding 

security deposits tied to property 


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owners for a homeownership, 

condominium, or other similar housing 

association governed by State law, or 

holding security deposits tied to 

residential or commercial leasehold 

interests. 

§ 375.4 Compliance. 

(a) Policies and procedures. An 

insured depository institution holding 

custodial deposit accounts with 

transactional features that are not 

specifically exempt from the 

requirements of this part must establish 

and maintain written policies and 

procedures to achieve compliance with 

this part. 

(b) Certification. An insured 

depository institution holding custodial 

deposit accounts with transactional 

features that are not specifically exempt 

from the requirements of this part must, 

within 1 year of the effective date of this 

part and annually thereafter complete a 

certification that includes: 

(1) Confirmation that the insured 

depository institution has implemented 

the recordkeeping requirements 

described in this part, and tested its 

implementation of such requirements 

during the preceding 12 months; 

(2) Confirmation that the insured 

depository institution is in compliance 

with this part; and 

(3) The signature of the chief 

executive officer, chief operating officer, 

or the highest-ranking official of the 

institution attesting to the accuracy of 

the certification, made after due inquiry. 

(4) The insured depository institution 

must file this certification with the 

appropriate FDIC Regional or Area 

Office and the appropriate Federal 

banking agency. 

(c) Report. An insured depository 

institution holding custodial deposit 

accounts with transactional features that 

are not specifically exempt from the 

requirements of this part must, within 1 

year of the effective date of this part and 

annually thereafter, generate a report 

that contains the following: 

(1) A description of any material 

changes to the institution’s information 

technology systems since the prior 

annual report that are relevant to 

compliance with this part; 

(2) A list of the account holders that 

maintain custodial deposit accounts 

with transactional features that are not 

exempt from the recordkeeping 

requirements of the rule, the total 

balance of those custodial deposit 

accounts, and the total number of 

beneficial owners; 

(3) Results of the institution’s periodic 

testing of its compliance with the 

recordkeeping requirements set forth in 

this part; and 

(4) Results of the independent 

validation of any records maintained by 

third parties required by paragraph 

(c)(4)(iii) of this section. 

(5) The insured depository institution 

shall file this report with the 

appropriate FDIC Regional or Area 

Office and the appropriate Federal 

banking agency. 

(d) Frequency of certification and 

report. If an insured depository 

institution experiences a significant 

change in its deposit-taking operations, 

or the FDIC or the appropriate Federal 

banking agency identifies aspects of the 

institution’s operations that pose 

elevated risks of compliance with this 

part, the FDIC or the appropriate 

Federal banking agency may require that 

the institution update and file the 

certification and report more frequently 

than annually, as requested. 

§ 375.5 Enforcement. 

Notwithstanding existing regulations, 

violating the requirements set forth in 

this part constitutes a violation of a 

regulation and may subject the insured 

depository institution to enforcement 

actions under section 8 of the Federal 

Deposit Insurance Act (12 U.S.C. 1818). 

Appendix A to Part 375—Data Format 

and Structure 

This appendix provides the pipe-delimited 

data file format for electronic file records of 

the beneficial owners for each custodial 

deposit account, as required by § 375.3(a). 

Field name Description Format Null value 

allowed? 

Account Number ......... Account number at Insured Depository Institution .............................................................. Variable Character [50] ............. No. 

Account Holder ............ Full name of person(s) or entity who opened or established the custodial deposit account with the insured depository institution.Variable Character [100] ........... No. 

Beneficial Owner Account Number.Custodian assigned account number for the beneficial owner .......................................... Variable Character [50] ............. No. 

First Name 1 ............... First name of beneficial owner 1 as it appears on the custodian’s records ...................... Variable Character [50] ............. No. 

Middle Name 1 ............ Middle Name of beneficial owner 1 as it appears on the custodian’s records .................. Variable Character [50] ............. Yes. 

Last Name 1 ................ Last Name of beneficial owner 1 as it appears on the custodian’s records ...................... Variable Character [50] ............. No. 

Name Suffix 1 ............. Name suffix following a beneficial owner 1’s surname adding distinction in generational 

sequence as it appears on the custodian’s records.

Variable Character [50] ............. Yes. 

Entity Name ................. The registered name of the entity as it appears on the custodian’s records. This field 

can be null where the beneficial owner is an individual.

Variable Character [100] ........... Yes. 

Tax ID 1 ...................... Beneficial owner 1 taxpayer identification number ............................................................. Numeric [9] ............................... No. 

Tax ID Code 1 ............. Beneficial owner 1 code indicates corporate ‘‘T’’ (EIN), personal tax identification number ‘‘S’’ (SSN, ITIN), or other ‘‘O’’ (foreign identification number).Character [1] ............................. No. 

Alternate Identifier 1 .... If account was opened without a United States issued tax identification number, provide 

alternative government issued identification number.

Variable [20] .............................. Yes. 

First Name 2 ............... First name of beneficial owner 2 (if any) as it appears on the custodian’s records .......... Variable Character [50] ............. Yes. 

Middle Name 2 ............ Middle Name of beneficial owner 2 (if any) as it appears on the custodian’s records ...... Variable Character [50] ............. Yes. 

Last Name 2 ................ Last Name of beneficial owner 2 (if any) as it appears on the custodian’s records .......... Variable Character [50] ............. Yes. 

Name Suffix 2 ............. Name suffix following a beneficial owner 2 (if any)’s surname adding distinction in 

generational sequence as it appears on the custodian’s records.

Variable Character [50] ............. Yes. 

Tax ID 2 ...................... Beneficial owner 2 (if any) taxpayer identification number ................................................. Numeric [9] ............................... Yes. 

Tax ID Code 2 ............. Beneficial owner 2 (if any) code indicates corporate ‘‘T’’ (EIN), personal tax identification number ‘‘S’’ (SSN, ITIN), or other ‘‘O’’ (foreign identification number).Character [1] ............................. Yes. 

Alternate Identifier 2 .... If beneficial owner 2 does not have a United States issued tax identification number, 

provide alternative government issued identification number.

Variable [20] .............................. Yes. 

Name 3 ........................ Where more than 2 beneficial owners are present, additional beneficial owners will be 

reflected in this field with tab spacing between the first, middle, last name, and suffix 

(if any), followed by a semicolon between each additional beneficial owner. There will 

be no tab spacing preceding the first character in the first name and the last character in the last name or suffix (whichever is last identified).

Variable Character [255] ........... Yes. 

Street Address 1 ......... Street address line 1 is beneficial owner address of record .............................................. Variable Character [100] ........... Yes. 

Street Address 2 ......... Street address line 2 is beneficial owner address of record, if available ........................... Variable Character [100] ........... Yes. 

Street Address 3 ......... Street address line 3 is beneficial owner address of record, if available ........................... Variable Character [100] ........... Yes. 

City .............................. City associated with the street address .............................................................................. Variable Character [50] ............. Yes. 

State ............................ State associated with the street address ............................................................................ Variable Character [2] ............... Yes. 


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Field name Description Format Null value 

allowed? 

Zip ............................... Zip associated with the street address ............................................................................... Variable Character [10] ............. Yes. 

Country ........................ Country associated with the street address ....................................................................... Variable Character [50] ............. Yes. 

IRA Indicator ............... If IRA, value must be ‘‘Y’’ ................................................................................................... Character [1] ............................. Yes. 

Current Balance .......... Current balance of the beneficiary account as of the close of business on the effective 

date of the file.

Decimal [14,2] ........................... No. 

Accrued Interest .......... The amount of interest that has been earned but not yet paid to the beneficiary account 

as of the date of the file.

Decimal [14,2] ........................... No. 

Ownership right and 

capacity.

Ownership right and capacity as set forth in appendix B to this part ................................ Character [4] ............................. No. 

Appendix B to Part 375—Ownership 

Right and Capacity Codes 

Code Description 

SGL ............................... Single Account (12 CFR 330.6): An account owned by one person with no testamentary or ‘‘payable-on-death’’ beneficiaries. It includes individual accounts, sole proprietorship accounts, single-name accounts containing community property funds, and accounts of a decedent 

and accounts held by executors or administrators of a decedent’s estate. 

JNT ................................ Joint Account (12 CFR 330.9): An account owned by two or more persons with no testamentary or ‘‘payable-on-death’’ beneficiaries (other 

than surviving co-owners) An account does not qualify as a joint account unless: (1) all co-owners are living persons; (2) each co-owner 

has personally signed a deposit account signature card (except that the signature requirement does not apply to certificates of deposit, 

to any deposit obligation evidenced by a negotiable instrument, or to any account maintained on behalf of the co-owners by an agent or 

custodian); and (3) each co-owner possesses withdrawal rights on the same basis. 

TST ................................ Trust Account (12 CFR 330.10): An account held in connection with an informal revocable trust, a formal revocable trust, or an irrevocable 

trust. 

CRA ............................... Certain Other Retirement Accounts (12 CFR 330.14 (b) through (c)) to the extent that participants under such plan have the right to direct 

the investment of assets held in individual accounts maintained on their behalf by the plan, including an individual retirement account described in section 408(a) of the Internal Revenue Code (26 U.S.C. 408(a)), an account of a deferred compensation plan described in 

section 457 of the Internal Revenue Code (26 U.S.C. 457), an account of an individual account plan as defined in section 3(34) of the 

Employee Retirement Income Security Act (29 U.S.C. 1002), a plan described in section 401(d) of the Internal Revenue Code (26 

U.S.C. 401(d)). 

EBP ............................... Employee Benefit Plan Account (12 CFR 330.14): An account of an employee benefit plan as defined in section 3(3) of the Employee Retirement Income Security Act (29 U.S.C. 1002), including any plan described in section 401(d) of the Internal Revenue Code (26 U.S.C. 

401(d)), but not including any account classified as a Certain Retirement Account. 

BUS ............................... Business/Organization Account (12 CFR 330.11): An account of an organization engaged in an ‘‘independent activity’’ (as defined in 12 

CFR 330.1(g)), but not an account of a sole proprietorship. 

This category includes: 

a. Corporation Account: An account owned by a corporation. 

b. Partnership Account: An account owned by a partnership. 

c. Unincorporated Association Account: An account owned by an unincorporated association (i.e., an account owned by an association of two or more persons formed for some religious, educational, charitable, social, or other noncommercial purpose). 

GOV1–GOV2–GOV3 .... Government Account (12 CFR 330.15): An account of a governmental entity. 

GOV1 ............................ All time and savings deposit accounts of the United States and all time and savings deposit accounts of a State, county, municipality, or 

political subdivision depositing funds in an insured depository institution in the State comprising the public unit or wherein the public unit 

is located (including any insured depository institution having a branch in said State). 

GOV2 ............................ All demand deposit accounts of the United States and all demand deposit accounts of a State, county, municipality, or political subdivision 

depositing funds in an insured depository institution in the State comprising the public unit or wherein the public unit is located (including 

any insured depository institution having a branch in said State). 

GOV3 ............................ All deposits, regardless of whether they are time, savings or demand deposit accounts of a State, county, municipality or political subdivision depositing funds in an insured depository institution outside of the state comprising the public unit or wherein the public unit is located. 

MSA ............................... Mortgage Servicing Account (12 CFR 330.7(d)): An account held by a mortgage servicer, funded by payments by mortgagors of principal 

and interest. 

PBA ............................... Public Bond Accounts (12 CFR 330.15(c)): An account consisting of funds held by an officer, agent or employee of a public unit for the 

purpose of discharging a debt owed to the holders of notes or bonds issued by the public unit. 

DIT ................................. IDI as trustee of irrevocable trust accounts (12 CFR 330.12): ‘‘Trust funds’’ (as defined in 12 CFR 330.1(q)) account held by an insured 

depository institution as trustee of an irrevocable trust. 

ANC ............................... Annuity Contract Accounts (12 CFR 330.8): Funds held by an insurance company or other corporation in a deposit account for the sole 

purpose of funding life insurance or annuity contracts and any benefits incidental to such contracts. 

BIA ................................. Custodian accounts for American Indians (12 CFR 330.7(e)): Funds deposited by the Bureau of Indian Affairs of the United States Department of the Interior (the BIA) on behalf of American Indians pursuant to 25 U.S.C. 162(a), or by any other disbursing agent of the United 

States on behalf of American Indians pursuant to similar authority, in an insured depository institution. 

Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on September 

17, 2024. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2024–22565 Filed 10–1–24; 8:45 am] 

BILLING CODE 6714–01–P 


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