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Financial Services Law Insights and Observations

FDIC updates brokered deposit FAQs

Bank Regulatory Agency Rule-Making & Guidance FDIC Brokered Deposits

On December 29, the FDIC released an update to the Questions and Answers Related to the Brokered Deposits Rule. The FDIC clarified in a new FAQ that, with respect to third-party administrators of health savings accounts (HSAs) that hire third parties, “the HSA exception applies when: ‘[t]he agent or nominee places, or assists in placing, customer funds into deposit accounts for the primary purpose of paying for or reimbursing qualified medical expenses under section 223 of the Internal Revenue Code.’” Therefore, a third party that is an agent or nominee of a customer may qualify for the HSA exception where the third party’s primary purpose is to help place customer funds into HSAs to facilitate the payment for or reimbursement of qualified medical expenses. The updated FAQs also explained that entities relying upon the “25 percent test” to calculate their percentage of total assets under administration at IDIs for reporting purposes must submit a notice and provide quarterly reporting to the FDIC that “include[s] calculations based upon the average daily balance of funds placed at IDIs over the course of each reporting quarter.” Non-compliance with the reporting requirement may lead to revocation of the primary purpose exception and removal from the FDIC’s public register of entities that rely on the primary purpose exception on the FDIC’s webpage. An annual certification is required within 30 days of the anniversary date of the original filing.