Forty-five more days are now available for commenting on the proposed deposit insurance recordkeeping rule for banks’ third-party (custodial) accounts, the federal insurer of bank deposits said Monday.
With the addition of 45 days, the comment period now extends to Jan. 16. The rule had been issued two months ago with a 60-day comment period, closing Dec. 2.
The proposal was issued by the Federal Deposit Insurance Corp. (FDIC) in September. Unanimously approved by the FDIC Board, the proposal is meant to strengthen recordkeeping for custodial deposit accounts with transactional features and preserve beneficial owners’ and depositors’ entitlement to the protections afforded by federal deposit insurance, the agency said.
In issuing the proposal, the FDIC pointed specifically to the bankruptcy of Synapse Financial Technologies, Inc. – a technology company that worked with several insured depository institutions (IDIs) and numerous financial technology, or fintech, companies – which it said has affected the ability of consumers to access funds placed at IDIs for a number of months.
The FDIC in September noted IDIs’ “significant difficulties” in obtaining, reviewing, and reconciling Synapse’s records, which has raised concerns about the accuracy and integrity of those records. Similar concern extends to “the completeness, accuracy, and integrity of custodial deposit account records for other IDIs’ arrangements with third parties.”
The proposed rule, according to FDIC, would only apply to IDIs offering custodial accounts with transactional features “and that are not specifically exempted” as provided in the proposal.