By 
The Federal Deposit Insurance Corporation (FDIC) has introduced a proposed rule aimed at bolstering recordkeeping for bank deposits made by third-party, non-bank entities on behalf of consumers and businesses. This measure is designed to ensure that banks have clear records of the actual owners of these funds, enhancing both security and transparency.
On Tuesday, September 17, the FDIC’s board of directors approved the notice of proposed rulemaking, opening a 60-day window for public comment following its publication in the Federal Register. The proposed rule emerges in response to challenges highlighted by the Chapter 11 bankruptcy of Synapse Financial Technologies, which resulted in an extended effort to restore customer access to their funds.
FDIC Chairman Martin J. Gruenberg emphasized the importance of this step, stating, “The Notice of Proposed Rulemaking approved by the FDIC Board today is a crucial move to ensure that banks are aware of the true owners of deposits placed by third parties like Synapse. It also ensures that banks can provide depositors access to their funds, even if the third party defaults.”
Gruenberg added that the rule would not only improve the FDIC’s ability to make deposit insurance determinations and distribute insurance payouts in case of bank failures, but also strengthen compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
Under the proposed rule, FDIC-insured banks holding custodial accounts will be required to maintain accurate daily records of individual owners of funds within those accounts. This change would address a key issue, as currently, when non-bank companies deposit customers’ funds into a single custodial account, the banks often do not know the identity of the individual depositors.
Additionally, the proposed rule empowers the banks’ primary federal supervisors to assess and enforce compliance with these requirements, ensuring proper adherence to the guidelines.
In a June statement, the FDIC highlighted the importance of direct consumer relationships with insured institutions, stating, “The most reliable way for consumers to ensure the safety of their funds is by opening accounts directly with FDIC-insured banks and savings associations.”
This proposed rule seeks to further safeguard consumers’ financial security, promoting stronger oversight and accountability in the handling of custodial accounts.
Comments