[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47213-47214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16899]


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FEDERAL DEPOSIT INSURANCE CORPORATION


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

AGENCY: Federal Deposit Insurance Corporation (FDIC).

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

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SUMMARY: In accordance with its rule regarding recordkeeping for timely 
deposit insurance determination, the FDIC is providing notice to 
covered institutions that it has granted a time-limited exception of up 
to 18 months concerning the information technology system requirements 
and general recordkeeping requirements for certain deposit accounts for 
sole proprietorships that the covered institution's information 
technology systems misclassify with an incorrect ownership right and 
capacity code and a time-limited exception of up to 12 months 
concerning the information technology system requirements and general 
recordkeeping requirements for limited number of joint deposit accounts 
that the covered institution has not confirmed are ``qualifying joint 
accounts'' for deposit insurance purposes.

DATES: The FDIC's grants of exception relief were effective as of July 
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 granted two time-limited exception 
requests to a covered institution pursuant to the FDIC's rule entitled 
``Recordkeeping for Timely Deposit Insurance Determination,'' codified 
at 12 CFR part 370 (part 370).\1\ Part 370 generally requires covered 
institutions to implement the information technology system and 
recordkeeping capabilities needed to quickly calculate the amount of 
deposit insurance coverage available for each deposit account in the 
event of failure. Pursuant to 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.
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    \1\ 12 CFR part 370.
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    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 
FDIC presumes each covered institution is meeting all the requirements 
set forth in the Rule unless relief has otherwise been granted. The 
following exceptions were granted by the FDIC as of July 28, 2020.

I. Certain Deposit Accounts for Sole Proprietorships That the Covered 
Institution's Information Technology Systems Misclassify With an 
Incorrect Ownership, Right and Capacity Code

    The FDIC granted a time-limited exception of up to 18 months 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 system updates and 
remediation efforts to ensure certain sole proprietorship deposit 
accounts are correctly classified by its part 370 information 
technology system. The covered institution identified that the subject 
accounts were opened in a manner such that its information technology 
systems identified the accounts as being held under the BUS ownership 
right and capacity code. As a result, the institution must update its 
information technology systems to ensure the appropriate ownership 
right and capacity code of SGL is applied to the subject accounts.
    In connection with the FDIC's grant of relief, the covered 
institution has represented that it will both perform information 
technology system updates and update policies to ensure current and 
future accounts for sole proprietorships are assigned the appropriate 
SGL ownership right and capacity code. 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 failure until 
a deposit insurance determination can be made and place all such 
accounts into the pending file of its part 370 output files during the 
relief period. As conditions of relief, the covered institution must 
submit a status report to [email protected] at the midpoint of the 
exception relief period and immediately bring to the FDIC's attention 
any change of circumstances or conditions.

II. A Limited Number of Joint Accounts for Which the Covered 
Institution Has Not Confirmed ``Qualifying Joint Account'' Status for 
Deposit Insurance Purposes Pursuant to 12 CFR Section 330.9

    The FDIC granted a time-limited exception of up to 12 months 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 a limited number of joint accounts that a covered institution 
has not confirmed are ``qualifying joint accounts'' entitled to 
separate deposit insurance coverage pursuant to 12 CFR 330.9(c).\2\ The

[[Page 47214]]

covered institution represented that it performed extensive review of 
joint account records to verify satisfaction of the signature-card 
requirement set forth in 12 CFR 330.9(c)(1)(ii). For the population of 
joint accounts without signature cards signed by each joint account 
owner, the covered institution conducted a multi-tiered remediation 
effort to determine whether an alternative method could be used to 
satisfy the signature-card requirement pursuant to 12 CFR 
330.9(c)(4).\3\
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    \2\ Pursuant to 12 CFR 330.9(c)(1), the following requirements 
must be met for a joint account to be a ``qualifying joint account'' 
entitled to separate deposit insurance coverage: (i) All co-owners 
of the funds in the account are ``natural persons'' (as defined in 
Sec.  330.1(l)); (ii) each co-owner has personally signed, which may 
include signing electronically, a deposit account signature card, or 
the alternative method provided in paragraph (c)(4) of this section 
is satisfied; and (iii) each co-owner possesses withdrawal rights on 
the same basis.
    \3\ Pursuant to 12 CFR 330.9(c)(4), the signature-card 
requirement also may be satisfied by information contained in the 
deposit account records establishing co-ownership of the deposit 
account, such as evidence that the institution has issued a 
mechanism for accessing the account to each co-owner or evidence of 
usage of the deposit account by each co-owner.
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    Remediation included the utilization of software to digitally scan 
signature cards and development of a various technical solutions to 
review usage of joint deposit accounts by each co-owner.\4\
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    \4\ The covered institution provided a summary of 13 unique 
analyses performed to confirm ownership of joint accounts. Such 
analysis included the manual or systematic review of issued debit 
cards, issued checks, web banking ids, ACH transactions, safety 
deposit box records, or bank maintained call logs evidencing 
ownership of a joint account.
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    The covered institution represented that it could not verify 
whether a limited number of joint accounts (the ``subject accounts'') 
were ``qualifying joint accounts'' because it could not locate signed 
signature cards nor could it confirm that the signature-card 
requirement is satisfied via an alternative method. The FDIC granted 
this covered institution a time-limited exception to continue 
remediation efforts to verify the signature-card requirement is 
satisfied.
    In connection with the FDIC's grant of relief, the covered 
institution has represented that it will place the subject accounts 
into the pending file of its part 370 output files and that access to 
all subject accounts can be restricted in the event of the covered 
institution's failure until qualifying joint account status is 
confirmed. As conditions of relief, the covered institution must: 
Within 30 days from the receipt of notification of the grant of relief, 
submit a plan to [email protected] detailing remediation efforts to meet 
the signature-card requirements of 12 CFR 330.9, such as outreach, 
manual review, disclosures, or digital analysis for the subject 
accounts; submit a status report to [email protected] by the midpoint of 
the exception relief period; and immediately bring to the FDIC's 
attention any change of circumstances or conditions.

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on July 29, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
[FR Doc. 2020-16899 Filed 8-3-20; 8:45 am]
BILLING CODE 6714-01-P