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Perspectives

FDIC Part 370 and 330 compliance

A key requirement of Federal Deposit Insurance Corporation (FDIC) Part 370 rule is for Covered Institutions (CIs) to maintain complete and accurate information needed to determine deposit insurance coverage for each deposit account. The FDIC provides insurance coverage up to $250,000 per depositor, per CI for each ‘account ownership category.’ Single accounts and joint accounts fall under different ownership categories (FDIC defines 16 distinct account ownership categories).

September 13, 2018 | Financial services

FDIC Part 330 rule states that for deposit accounts to be qualified as joint ownership accounts, among other requirements, the CI must have signed deposit signature cards for all co-owners. If signature of each co-owner is not available, the account is treated as a single ownership account (or joint account only between co-owners with signed signature cards available, in cases where more than two joint owners) and any balance in the joint account is aggregated with other ownership accounts belonging to the co-owner(s). This can potentially create a scenario where a part of the depositor’s balance may exceed the $250,000 coverage limit and become uninsured. Hence, in a situation where the FDIC needs to take over, a CI must be capable of verifying that for all joint deposit accounts a signed signature card exists for each co-owner.

For most banks, the process to confirm that signed deposit signature card exist for co-owners of joint accounts is a significant challenge for several reasons. For example, CIs may not have been focusing on mandatorily collecting signed deposit signature cards for all co-owners, or deposit accounts coming over through mergers and acquisitions (M&A) may have inadequate or missing signature cards. Compounding the complexity is historical M&A activity, with each transaction introducing additional signature card processes, formats, and inherently additional challenges to comply with the rule.

Since CIs will need to comply by April 1, 2020, it is important for them to quickly identify joint accounts with signature cards that either have missing signatures or missing signature cards from one or more account holders. A manual undertaking of this exercise is expected to be significantly burdensome as one can only imagine the quantum of manpower required to sift through millions of signature cards and match them to joint accounts to identify missing signature or signed signature cards.

Overwhelming as it is to begin with, the process of manually matching signature cards to joint accounts can become all the more challenging depending on size of CI, age of accounts and deposit products portfolio. To assist CIs in this daunting effort, Deloitte has developed an automated cognitive intelligence solution designed to efficiently and effectively extract relevent data from signature cards using Natural Language Processing (NLP) technology and detect those with missing signatures for one or more account holders as well as identify accounts missing signature cards. This solution can be leveraged by CIs to expedite their remediation efforts and comply with the FDIC 370 rule in a timely manner.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Contact us

Michael Quilatan
Managing director
Deloitte & Touche LLP

 

Olga Kasparova
Managing director
Deloitte & Touche LLP

 

John Corston
Independent senior advisor
Deloitte & Touche LLP

 

Pranav Shanghvi
Senior manager
Deloitte & Touche LLP

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