FDIC Proposed Rule Imposing Recordkeeping Requirements on Custodial Deposit Accounts:
FIBA’s Comments

Dear Members,

As we kick off 2025, FIBA is already hard at work tackling key regulatory developments to support the continued success of our industry.

Last week, we submitted a detailed letter to the Federal Deposit Insurance Corporation (FDIC) to comment on the FDIC’s proposed rulemaking (Proposed Rule) imposing recordkeeping and reporting requirements for certain custodial accounts with transactional features, which are commonly offered through fintech partnership arrangements. The Proposed Rule would likely impose unnecessary expense, uncertainty, and complexities on insured depository institutions without mitigating the specific risks the FDIC seeks to address in its proposal. FIBA urged the FDIC to reconsider or withdraw the proposal, recommended clarification of certain terms, and asked the FDIC to work with other federal banking agencies and policymakers to examine options under its existing regulatory authorities to impose the recordkeeping and other requirements contemplated in the Proposed Rule.

The Proposed Rule could significantly impact financial institutions, and in our letter, we outlined critical recommendations to address potential challenges, encouraging the FDIC to implement a practical framework to address concerns with custodial account recordkeeping. Among our recommendations, we suggested the FDIC clarify the meaning of “direct, continuous, and unrestricted access” to the records of beneficial owners and the requirement for reconciliation “no less frequently than as of the close of business daily[.]” We recommended removing the executive officer certification requirement in the Proposed Rule to streamline the annual reporting process. Finally, we urged the FDIC to consider enhancing 12 CFR Part 370 to strengthen recordkeeping for covered custodial accounts in lieu of adopting a final rule and/or coordinate with other policymakers to utilize existing regulatory tools and authorities, including the Bank Service Company Act, to enhance oversight of custodial account recordkeeping.

We thank Jera Bradshaw of Greenberg Traurig for her contribution and the LARA committee members for their continued efforts.

We remain committed to keeping you informed and advocating for the interests of our members. Thank you for your continued support, and we look forward to another year of progress and collaboration.