In order to comply with FDIC Part 370, covered institutions will have to implement a change program that encompasses the people, processes, and technology necessary to implement FDIC-required calculations and reports.
Once an organization has determined that it is able to meet the requirements of Part 370, it must go about designing their interfaces with the FDIC. This will include both the data interface files required by the FDIC in the event of a failure, as well as the annual certification and deposit insurance coverage reports signifying ongoing rule compliance.
The interface files are:
- Customer file: Used by the FDIC to identify a bank’s customers, with one record per customer
- Account file: Includes all account information pertinent to the FDIC’s calculations including ownership rights and capacities, balances, and insured and uninsured amounts, linkable to a unique customer
- Account Participant file: Used by the FDIC to identify all the participants for a given account, including custodians, beneficiaries, bondholders, mortgagors, or benefit plan participants
- Pending file: used by the FDIC in case an account is subject to alternative recordkeeping requirements to determine how to contact the account owner or agent
In order to produce these files in compliance with Part 370, the bank will have to ensure that its data is maintained in accordance with FDIC requirements. This applies to not only how customer and account data are structured, but also how calculations on insured and uninsured amounts are carried out.
In order to demonstrate to the FDIC that an institution can produce the four key files in a timely and accurate manner, it will be required to submit an annual certification. This certification must confirm the company’s IT system compliance with all provisions of Part 370, including things like treatment of accounts with transactional features. This report must be signed by the company’s CEO or COO, and it must be produced annually.
Lastly, the company must produce an annual deposit insurance coverage summary report. The purpose of this report is for the FDIC to evaluate deposit insurance risk and coverage required by the bank’s customers should the bank fail. This report must include information about accounts, customers, insured and uninsured amounts, and accounts subject to alternative recordkeeping, as well as any material changes to the company’s IT system since the prior report.
Designing these output files, reports, and processes will be a multi-functional exercise. Business stakeholders will have to design the reports, likely with input from FDIC liaisons, as there is no standard format offered by the FDIC. Technology will have to build the reports and the output files and produce metrics that signify compliance. Operations will need to have a provable process established for generating and transmitting the files in the event of a failure. All of these moving parts will have to be signed off by legal, compliance, and risk. Needless to say, this project must have the backing of senior management and authority to make cross-functional decisions, as well as the flexibility to accommodate possible changes from the FDIC.
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