2024-22565. Recordkeeping for Custodial Accounts

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-Leach-Bliley 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

§ 375.1

Purposes.

§ 375.2

Definitions.

§ 375.3

Recordkeeping and internal control requirements. ( print page 80152)

§ 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 ( print page 80153) 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.
( print page 80154)
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.