FDIC Releases New FAQs, Designated Exception on Brokered Deposits

The FDIC this week released three new frequently asked questions on its brokered deposits rule, which took effect in April 2021. The new FAQs cover under what circumstances third parties can qualify for the exception for third-party administrators of health savings accounts; filing deadlines and penalties for filers who rely on the “primary purpose” exception for instances where an agent has less than 25% of the total “assets under administration” for its customers; and filing deadlines and penalties for the annual certification under the “enabling transaction” test.

The agency also identified an additional business relationship that meets its primary purpose exception to the deposit broker definition. “It is the FDIC’s view that the agent or nominee’s primary purpose in placing deposits at [insured depository institutions]is to provide non-discretionary custodial services on behalf of the depositor or depositor’s agent,” the agency said in a notice it has submitted for publication in the Federal Register. “Therefore, such entities will be deemed to meet the primary purpose exception. . . . Entities that meet the criteria described in this Notice will be permitted to rely upon the exception without the submission of an application or notice.” The exception does not apply to custodial agents that “play any role” in determining at which banks to place customer funds, including as an example agents that create or use algorithms to make fund placement determinations.