FDIC TE - Liquidity: Determine Compliance With FDIC
Rules And Regulations (Part 337, etc.): Qs & As
How does Part 337.6 define a Deposit Broker? Correct Answer - P: Place
Deposits for third parties
F: Facilitate deposit placements
S: Sells interests in deposits
A: Arranges accounts for prearranged loans
"Deposit brokers PFSA: Place, Facilitate, Sell, and Arrange"
Deposit Broker Exemptions (Part 337.6) Correct Answer - Third parties
that have exclusive deposit relationships with only one institution and defines
relevant terms, including
- "placing,"
- "facilitating,"
- "engaged in the business of placing deposits,"
- "engaged in the business of facilitating the placement of deposits," and
- "engaged in the business."
The rule excludes an entity with a "primary purpose exception" from the
deposit broker definition
The term "deposit broker" DOES NOT include Correct Answer - I:
Insured Depository Institution: The institution itself placing deposits with its
own accounts
T: Trust Department: Trust departments placing deposits if the trust was not
established to place funds primarily with insured institutions
P: Pension or Employee Benefit Trustee: Trustees of pension or employee
benefit plans
I: Investment Advisor or Plan Administrator: Plan administers or advisors
managing funds for employee plans
P: Primary Purpose Exception: Agents or trustees whose primary purpose is
not the placement of funds with institutions
E: Employee: Employees placing deposits with their own employing
institution
T: Testamentary Account Trustee: Trustees of accounts created by wills
(testamentary accounts)
, A: Additional Regulatory Exception: Non-discretionary custodial services for
depositors, designated by the FDIC
P: Irrevocable Trust Trustee: Trustees of irrevocable trusts not created
primarily for placing funds
Follow the IT-PIPE TAP rules to understand who is not a deposit broker.
What is the Primary Purpose Exception (PPE)? Correct Answer - PPE
applies when the primary purpose of an agent's or nominee's business us NOT
the placement of funds with insured depository institutions
Examples of Entities Qualifying for PPE Correct Answer - Wealth
Managers or Investment Advisors: Firms managing client investments and
only occasionally placing deposits as part of a broader service
Payment Processors: Companies managing client funds for processing
payments, not primarily for deposit placement
Loan Servicers: Entities collecting and holding funds temporarily in
connection with servicing loans.
Why is PPE Critical? Correct Answer - Entities classified as deposit
brokers face stricter regulations
PPE allows entities to avoid these limitations if their business activities qualify
Some types of business relationships automatically qualify for the PPE but still
require written notice. These include: Correct Answer - The "25 percent
test," where less than 25 percent of the total assets that the agent or nominee
has under administration for its customers is placed at depository
institutions; and
"Enabling transactions," where 100 percent of funds that the agent or
nominee places, or assists in placing, at depository institutions are placed into
transactional accounts that do not pay any fees, interest, or other
remuneration to the underlying depositor. (Non-interest-bearing
transactional accounts with no fees or remuneration to depositors)
Filers that submit a notice under the "25 percent" test must provide
_________updates Correct Answer - quarterly
Filers that submit a notice under the "enabling transactions" test must
provide an _________ certification. Correct Answer - annual
Rules And Regulations (Part 337, etc.): Qs & As
How does Part 337.6 define a Deposit Broker? Correct Answer - P: Place
Deposits for third parties
F: Facilitate deposit placements
S: Sells interests in deposits
A: Arranges accounts for prearranged loans
"Deposit brokers PFSA: Place, Facilitate, Sell, and Arrange"
Deposit Broker Exemptions (Part 337.6) Correct Answer - Third parties
that have exclusive deposit relationships with only one institution and defines
relevant terms, including
- "placing,"
- "facilitating,"
- "engaged in the business of placing deposits,"
- "engaged in the business of facilitating the placement of deposits," and
- "engaged in the business."
The rule excludes an entity with a "primary purpose exception" from the
deposit broker definition
The term "deposit broker" DOES NOT include Correct Answer - I:
Insured Depository Institution: The institution itself placing deposits with its
own accounts
T: Trust Department: Trust departments placing deposits if the trust was not
established to place funds primarily with insured institutions
P: Pension or Employee Benefit Trustee: Trustees of pension or employee
benefit plans
I: Investment Advisor or Plan Administrator: Plan administers or advisors
managing funds for employee plans
P: Primary Purpose Exception: Agents or trustees whose primary purpose is
not the placement of funds with institutions
E: Employee: Employees placing deposits with their own employing
institution
T: Testamentary Account Trustee: Trustees of accounts created by wills
(testamentary accounts)
, A: Additional Regulatory Exception: Non-discretionary custodial services for
depositors, designated by the FDIC
P: Irrevocable Trust Trustee: Trustees of irrevocable trusts not created
primarily for placing funds
Follow the IT-PIPE TAP rules to understand who is not a deposit broker.
What is the Primary Purpose Exception (PPE)? Correct Answer - PPE
applies when the primary purpose of an agent's or nominee's business us NOT
the placement of funds with insured depository institutions
Examples of Entities Qualifying for PPE Correct Answer - Wealth
Managers or Investment Advisors: Firms managing client investments and
only occasionally placing deposits as part of a broader service
Payment Processors: Companies managing client funds for processing
payments, not primarily for deposit placement
Loan Servicers: Entities collecting and holding funds temporarily in
connection with servicing loans.
Why is PPE Critical? Correct Answer - Entities classified as deposit
brokers face stricter regulations
PPE allows entities to avoid these limitations if their business activities qualify
Some types of business relationships automatically qualify for the PPE but still
require written notice. These include: Correct Answer - The "25 percent
test," where less than 25 percent of the total assets that the agent or nominee
has under administration for its customers is placed at depository
institutions; and
"Enabling transactions," where 100 percent of funds that the agent or
nominee places, or assists in placing, at depository institutions are placed into
transactional accounts that do not pay any fees, interest, or other
remuneration to the underlying depositor. (Non-interest-bearing
transactional accounts with no fees or remuneration to depositors)
Filers that submit a notice under the "25 percent" test must provide
_________updates Correct Answer - quarterly
Filers that submit a notice under the "enabling transactions" test must
provide an _________ certification. Correct Answer - annual
