Letter to FDIC on Part 370 Compliance Challenges and Requested Relief

Mr. John P. Conneely
Director, Division of Complex Institution Supervision and Resolution
Federal Deposit Insurance Corporation 550 17th Street NW
Washington, D.C. 20429

Dear Mr. Conneely:

On behalf of American Bankers Association (ABA) members subject to 12 CFR §370 (covered institutions), we appreciate this opportunity to share some of their experiences with compliance. All of these institutions have worked diligently to implement this regulation since before the FDIC published the final rule in the Federal Register. Nonetheless, all covered institutions continue to encounter major challenges in obtaining complete information from deposit owners that fail to respond to inquiries in timely manner or at all. We raise two particular challenges and urge actions the FDIC can take to support compliance with the rule:

• Covered institutions cannot commit to making final deposit insurance determinations in a short timeframe for deposit accounts commonly called work-in-process (WiP) or suspense accounts for which account information is held by third parties.
• All covered institutions have accounts for which information needed to make deposit insurance determinations cannot be obtained despite reasonable attempts to obtain it from account holders.

The FDIC should understand that covered institutions are now required to have information in account records that was not previously required, such as identification of “official custodians” for government accounts, unique identifiers for grantors of trusts, and verification of owners of “qualified joint accounts.” In addition, for some account types ownership details are not available on any given day, and obtaining them always requires time for research or outreach to other parties. All covered institutions have undertaken concerted efforts to fill in missing and newly required account information. Nonetheless, no matter what they do, they must necessarily rely on the individuals that have the information to provide it and all of the covered institutions suffer cases where these individuals have not been forthcoming. In short, filling in missing account information for some accounts is outside the control of the covered institutions.

Several covered institutions have submitted applications for exceptions under 12 CFR §370.8(d) for these cases, which the FDIC has granted with limited timeframes and, in some cases, no further extensions. However, the allowances require remediation within no more than a few years. Given the impossibility of obtaining complete information at any given time, the institutions believe they will not be able to resolve the issues over any period. Thus, the institutions must repeatedly apply to the FDIC for extensions of relief, an unnecessarily burdensome process for both the subject banks and the FDIC.

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