Key takeaways
- The FDIC proposed on October 2, 2024 a new 12 CFR part 375 requiring banks to keep beneficial ownership records for custodial deposit accounts with transactional features.
- Covered accounts hold commingled deposits for multiple beneficial owners who can direct payments from them, the typical structure of bank-fintech for-benefit-of accounts.
- Banks would reconcile balances against beneficial ownership records at least daily, and could use a fintech or other third party only with direct, continuous and unrestricted access to the records.
- An executive officer would certify compliance annually, with an annual report to the FDIC and the bank's primary federal regulator.
- The Fall 2025 Unified Agenda lists the rule as a long-term action with the final rule date to be determined; we found no final rule on the date checked.
What are the key facts on the FDIC recordkeeping proposal?
The proposal would make banks, not their fintech partners, answerable for knowing who owns the money in pooled custodial accounts.
| Item | Position |
|---|---|
| Rule | Proposed 12 CFR part 375, RIN 3064-AG07, 89 FR 80135 |
| Regulator | Federal Deposit Insurance Corporation (FDIC) |
| Applies to | FDIC-insured depository institutions holding custodial deposit accounts with transactional features |
| Status | Proposed; comment period ended January 16, 2025; final rule date to be determined |
| Last checked | October 11, 2026, against the Federal Register and the Unified Agenda |
Why did the FDIC propose the rule?
To let the FDIC determine deposit insurance and pay depositors quickly when pooled accounts are involved.
The FDIC's Unified Agenda entry describes the aim as strengthening insured banks' recordkeeping for custodial deposit accounts so the FDIC can make deposit insurance determinations and pay claims promptly if a bank holding such accounts fails. The problem is familiar from the Synapse collapse: when a fintech or middleware provider keeps the only record of who owns what inside a pooled account, end users can be cut off from their money if that record is unavailable or wrong, even though the bank itself holds the funds.
Which accounts would be covered?
Custodial accounts that pool several beneficial owners' deposits and let those owners direct payments.
Under the proposed rule, a custodial deposit account with transactional features is one established for the benefit of beneficial owners, holding commingled deposits of multiple beneficial owners, from which a beneficial owner can direct a transfer to another party, for example to make purchases or pay bills. That describes most for-benefit-of (FBO) accounts behind consumer payment apps, neobank programs and earned wage products. Our guide to FBO account reconciliation explains how those accounts work.
| Excluded from the proposal | Examples |
|---|---|
| Trust accounts holding only trust deposits | Accounts under 12 CFR 330.10 and 330.12 |
| Government depositor accounts | Public unit accounts |
| Broker-dealer and investment adviser accounts | Securities firm customer accounts |
| Attorney trust accounts | IOLTA accounts |
| Employee benefit and retirement plan accounts | Accounts under 12 CFR 330.14 |
| Real estate and mortgage servicing accounts | Brokers, title companies, qualified intermediaries, mortgage servicers |
| Deposit placement and reciprocal network accounts | Unless used for payment transactions |
| Security deposit accounts | Housing associations and leaseholds |
What records would banks have to keep?
The identity of each beneficial owner, the balance attributable to each, and the ownership category, kept in a standard electronic format that the FDIC can process quickly.
The proposal requires records in a standard electronic format, set out in an appendix, with one row per beneficial owner. The ownership category matters because deposit insurance is calculated per owner and per category, so a beneficial owner with funds in several fintech programs at the same bank may be insured in aggregate rather than separately.
What reconciliation would be required?
A reconciliation of the account balance to the beneficial ownership records at least at the close of business each day.
Banks would need internal controls to maintain accurate balances and to reconcile them against the beneficial ownership records no less frequently than at the close of business daily. Variances from unposted or timing items would be handled under standard banking practices. In practice, that means the bank, or a third party acting for it, compares the end-of-day balance of each custodial account with the sum of the beneficial owner balances in the records, and investigates any difference that is not an identified timing item.
Can a fintech keep the records instead of the bank?
Yes, but only if the bank keeps direct, continuous and unrestricted access and stays responsible.
| Condition for third-party recordkeeping | What it means |
|---|---|
| Direct, continuous and unrestricted access | The bank can reach the records at any time, including if the third party suffers a business interruption, insolvency or bankruptcy |
| Direct contract | A contract between the bank and the third party assigning roles, including daily reconciliation |
| Independent validation | Periodic validation by a party independent of the third party, with results given to the bank |
| Contingency planning | Backup and contingency plans for the records |
| No transfer of responsibility | The bank cannot shift its compliance responsibility by contract |
What would banks certify and report?
An annual certification of compliance by a senior executive, and an annual report, both to the FDIC and the primary federal regulator.
The certification would be signed by the chief executive officer, chief operating officer or highest-ranking official, and would state that the recordkeeping requirements were implemented and tested in the preceding 12 months and that the bank complies. The annual report would cover material changes to information technology systems, account holders with covered accounts with their total balances and number of beneficial owners, and the results of testing and independent validation. The first certification and report would be due within one year of the final rule's effective date, and regulators could require more frequent filings.
How does the proposal relate to pass-through insurance?
It would make the records that pass-through deposit insurance depends on accurate, complete and available to the bank.
Under existing FDIC rules, deposit insurance can pass through a custodial account to each beneficial owner, but only if the custodial relationship is disclosed in the bank's account records and each owner's interest can be established from records kept in good faith in the regular course of business. When those records sit only with a fintech or middleware provider, and are incomplete or unavailable, the FDIC may not be able to identify owners quickly after a bank failure. The proposal addresses that by requiring the bank to hold, or have unrestricted access to, owner-level records in a standard format, reconciled every day.
What would it mean for fintech programs?
More data sharing with the bank, more formal reconciliation and more scrutiny of ledger providers.
A fintech that keeps its customer ledger in-house would need to give its partner bank a continuous feed or access to owner-level balances, in the bank's required format, and support a reconciliation the bank can rely on every business day. Programs that run through a middleware provider would need a direct contract between the bank and that provider, independent validation of the provider's records, and contingency plans if the provider fails. Even before any final rule, many banks have written similar terms into program agreements, so fintechs that build to the proposal reduce friction with their bank partners.
The cost of not doing so falls on end users. If owner records cannot be produced quickly when a bank or a middleware provider fails, customers may wait weeks or months to reach money that was never lost, simply because no one can prove who owns it. Daily reconciliation at owner level is what turns a pooled balance into money that can be returned.
What is the status of the rule?
It remains a proposal, listed as a long-term action with no final rule date.
The FDIC published the proposal on October 2, 2024 with comments due on December 2, 2024, then extended the comment period to January 16, 2025. The Fall 2025 Unified Agenda lists RIN 3064-AG07 under long-term actions, with the final rule date to be determined. We found no final rule in the Federal Register on the date checked. Banks and fintechs that build to the proposal now will be ready if it is finalized, and will already meet the standard bank partners increasingly expect in program agreements.
What does the daily reconciliation look like?
It compares the bank's balance for each custodial account with the sum of beneficial owner balances.
Worked example. A bank holds one FBO account for a consumer payments app with 214,600 end users. At close of business the comparison shows the following.
| Line | US$ |
|---|---|
| Bank ledger balance of the FBO account | 48,720,415.32 |
| Sum of 214,600 beneficial owner balances in the program records | 48,693,108.77 |
| Card settlements posted by the bank, not yet allocated to owners | 21,840.00 |
| ACH returns received, not yet reversed in owner records | 5,466.55 |
| Unexplained difference | 0.00 |
The two timing items, US$21,840.00 and US$5,466.55, account for the full US$27,306.55 gap, so the reconciliation closes. If an unexplained difference remained, it would mean the records could not support an accurate deposit insurance determination for every owner on that day, which is exactly what the proposal is designed to prevent.
What should banks and fintechs do now?
These steps align a program with the proposal before any final rule, and most are good practice regardless of the outcome.
- Inventory every custodial account with transactional features and confirm whether an exclusion applies.
- Hold owner-level records with identity, balance and ownership category, in a format the bank can read.
- Reconcile account balances to owner records every business day and log timing items.
- Give the bank direct, continuous and unrestricted access to records held by the fintech or middleware.
- Arrange independent validation of third-party records and share the results with the bank.
- Document backup and contingency plans for the records.
- Prepare the evidence a senior executive would need to certify compliance each year.
How does Safeheld help?
Safeheld reconciles bank ledgers to program records for each custodial account every day, and raises any unexplained difference as a break for investigation.
See daily reconciliation and internal deposit reconciliation.
Frequently asked questions
What is the FDIC custodial account recordkeeping rule?
A proposed rule, at 12 CFR part 375, that would require insured banks to keep beneficial ownership records for custodial deposit accounts with transactional features and reconcile them daily.
Is the FDIC recordkeeping rule final?
No. The Fall 2025 Unified Agenda lists it as a long-term action with the final rule date to be determined, and we found no final rule on the date checked.
Which accounts does the proposal cover?
Custodial accounts established for beneficial owners, holding commingled deposits of multiple owners, from which owners can direct transfers to other parties, such as many fintech FBO accounts.
How often would banks reconcile custodial accounts?
No less frequently than at the close of business each day, under the proposal.
Can a fintech hold the beneficial ownership records?
Yes, if the bank has direct, continuous and unrestricted access to them, a direct contract, independent validation and contingency plans, and the bank remains responsible for compliance.
Who certifies compliance under the proposal?
The bank's chief executive officer, chief operating officer or highest-ranking official, annually, to the FDIC and the bank's primary federal regulator.
Does the proposal change deposit insurance coverage?
It does not change coverage limits. It requires records that let the FDIC apply existing pass-through rules quickly, by identifying each beneficial owner, balance and ownership category.
Which accounts are excluded?
Among others, trust accounts holding only trust deposits, government accounts, broker-dealer and investment adviser accounts, IOLTA accounts, benefit plan accounts, real estate and mortgage servicing accounts, and security deposit accounts.
References
- FDIC, Recordkeeping for Custodial Accounts, proposed rule, 89 FR 80135 (October 2, 2024)
- FDIC, Recordkeeping for Custodial Accounts; extension of comment period, 89 FR 91586 (November 20, 2024)
- Unified Agenda, RIN 3064-AG07 (Fall 2025)
- FDIC Board, Notice of proposed rulemaking on custodial deposit accounts (RIN 3064-AG07)
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For banks and fintech programs it reconciles custodial account balances to beneficial owner records every day and keeps the evidence behind each result. To discuss your custodial account operations, contact us at safeheld.com/contact.
This article is general information on US deposit insurance rules and is not legal or regulatory advice.