Notice of the FDIC's Response to Exception Requests Pursuant to Recordkeeping for Timely Deposit Insurance Determination, 34194-34196 [2020-11987]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 85, Number 107 (Wednesday, June 3, 2020)]
[Notices]
[Pages 34194-34196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11987]


=======================================================================
-----------------------------------------------------------------------

FEDERAL DEPOSIT INSURANCE CORPORATION


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

AGENCY: Federal Deposit Insurance Corporation (FDIC).

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

-----------------------------------------------------------------------

SUMMARY: In accordance with its rule regarding recordkeeping for timely 
deposit insurance determination, the FDIC is providing notice to 
covered institutions that it has granted a time-limited exception 
concerning the information technology system requirements and general 
recordkeeping requirements for certain accounts that

[[Page 34195]]

require data cleanup, system updates, or customer outreach to make a 
deposit insurance determination and a time-limited exception from 
information technology system requirements and general recordkeeping 
requirements for certain internal (work-in-process) accounts that 
require an additional 24 hours (48 hours in total) post failure to 
obtain beneficial ownership information from internal business lines 
necessary to make a deposit insurance determination.

DATES: The FDIC's grants of exception relief were effective as of May 
28, 2020.

FOR FURTHER INFORMATION CONTACT:  Benjamin Schneider, Section Chief, 
Division of Complex Institution Supervision and Resolution; 
[email protected]; 917-320-2534.

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

    \1\ 12 CFR part 370.
---------------------------------------------------------------------------

    These grants of relief may be rescinded or modified upon material 
change of circumstances or conditions related to the subject accounts, 
or upon failure to satisfy conditions applicable to each. These grants 
of relief will be subject to ongoing FDIC review, analysis, and 
verification during the FDIC's routine part 370 compliance tests. The 
following exceptions were granted by the FDIC as of May 28, 2020.

I. Certain Deposit Accounts for Which the Covered Institution's 
Information Technology System Is Not Capable of Completing Deposit 
Insurance Calculation Process Because Additional Time Is Required for 
Data Clean Up, System Updates, and Customer Outreach

    The FDIC granted a time-limited exception from the information 
technology requirements set forth in section 370.3 and general 
recordkeeping requirements set forth in section 370.4(a) of the rule to 
allow a covered institution to perform data cleanup, system updates, or 
customer outreach for certain legacy deposit accounts (including a 
limited number of joint accounts, formal trust accounts, informal 
revocable trust accounts, accounts with limited instances of erroneous 
or missing data, and government accounts) so that the covered 
institution's deposit account records and part 370-compliant IT system 
capabilities can be used to calculate deposit insurance for those 
accounts. The covered institution did not collect, or have a mechanism 
to collect, such account information prior to the FDIC's adoption of 
part 370 and anticipates that it may not be able to collect such 
information before its compliance date.
    In connection with the FDIC's grant of relief, the covered 
institution has represented that it will confirm evidence of joint 
ownership for a limited number of joint accounts; review records and 
obtain the number of beneficiaries for informal revocable trusts 
accounts; classify formal trust accounts with the proper ownership, 
right and capacity code; review and update records for accounts with 
missing or incomplete information in limited instances; obtain official 
custodian information needed to calculate deposit insurance coverage 
for government deposit accounts; and perform system updates. The 
covered institution will also perform, when necessary, customer 
outreach to update deposit records for the subject accounts. As 
conditions of relief, the covered institution will ensure that holds 
can be placed on all deposit accounts subject to this time-limited 
exception in the event of its failure until sufficient information is 
obtained to enable calculation of deposit insurance coverage; submit a 
status report to the FDIC when deemed appropriate by the FDIC during 
the exception relief period; and immediately notify the FDIC of any 
change in relevant circumstances or conditions.

II. Certain Internal Accounts That Require an Additional 24 Hours Post 
Failure for the Covered Institution To Obtain Beneficial Ownership 
Information From Internal Business Lines Necessary To Make a Deposit 
Insurance Determination

    The FDIC granted a time-limited exception from the information 
technology requirements set forth in section 370.3 and general 
recordkeeping requirements set forth in section 370.4(a) of the rule 
for certain internal (work-in-process) accounts that will require an 
additional 24 hours (48 hours in total) post failure to obtain 
beneficial ownership information from internal business lines necessary 
to make a deposit insurance determination. The covered institution 
identified these internal accounts as accounts utilized for functions 
such as clearing, settlement, suspense, funding, transfers, 
escheatment, holding unclaimed property or seized assets, garnishment, 
work-in-process, or other functions where an institution acts as an 
intermediary to facilitate a transaction. Such accounts do not qualify 
for alternative recordkeeping and most transactions in the accounts 
settle more than 48 hours after initiation of the instruction.
    In connection with the FDIC's grant of relief, the covered 
institution described the internal (work-in-process) accounts in 
detail, including, account titling, the number of accounts, account 
balances, data and trends regarding transaction settlement cycles, 
business-as-usual processes in place, funds above and below $250,000, 
and zero-balance accounts. The covered institution has represented that 
it will maintain the capability to place holds on the deposit accounts 
subject to the exception in the event of its failure until a deposit 
insurance determination can be made; place all such accounts into the 
pending file of the covered institution's part 370 output files; 
document procedures and processes to upload the data into the covered 
institution's deposit insurance calculation engine; and certify that 
the covered institution can obtain information from internal business 
lines necessary to make a deposit insurance determination within 48 
hours after appointment of the FDIC as receiver. As conditions of 
relief, the covered institution will be capable of conducting a deposit 
insurance determination for

[[Page 34196]]

all subject internal accounts within 48 hours after appointment of the 
FDIC as receiver; provide annually, data regarding the number of and 
amount of deposits held in such covered internal accounts; provide a 
final copy of the documentation that describes the processes put in 
place to obtain beneficial ownership information necessary to make an 
insurance determination within 48 hours of failure for the internal 
accounts; make reasonable efforts, in the ordinary course of upgrading 
its information technology systems, to implement an information 
technology solution that would permit a deposit insurance determination 
for the excepted accounts within 24 hours; and immediately bring to the 
FDIC's attention any change of circumstances or conditions.

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on May 29, 2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020-11987 Filed 6-2-20; 8:45 am]
 BILLING CODE 6714-01-P