Sec. 218.723 Exemptions for special
accounts, transferred accounts, foreign
branches and a de minimis number of
accounts.
(a) Short-term accounts. A bank may,
in determining its compliance with the
chiefly compensated test in
§___.721(a)(1) or §___.722(a)(2),
exclude any trust or fiduciary account
that had been open for a period of less
than 3 months during the relevant year.
(b) Accounts acquired as part of a
business combination or asset
acquisition. For purposes of
determining compliance with the
chiefly compensated test in
§___.721(a)(1) or §___.722(a)(2), any
trust or fiduciary account that a bank
acquired from another person as part of
a merger, consolidation, acquisition,
purchase of assets or similar transaction
may be excluded by the bank for 12
months after the date the bank acquired
the account from the other person.
(c) Non-shell foreign branches--(1)
Exemption. For purposes of determining
compliance with the chiefly
compensated test in §___.722(a)(2), a
bank may exclude the trust or fiduciary
accounts held at a non-shell foreign
branch of the bank if the bank has
reasonable cause to believe that trust or
fiduciary accounts of the foreign branch
held by or for the benefit of a U.S.
person as defined in 17 CFR 230.902(k)
constitute less than 10 percent of the
total number of trust or fiduciary
accounts of the foreign branch.
(2) Rules of construction. Solely for
purposes of this paragraph (c), a bank
will be deemed to have reasonable cause
to believe that a trust or fiduciary
account of a foreign branch of the bank
is not held by or for the benefit of a U.S.
person if
(i) The principal mailing address
maintained and used by the foreign
branch for the accountholder(s) and
beneficiary(ies) of the account is not in
the United States; or
(ii) The records of the foreign branch
indicate that the accountholder(s) and
beneficiary(ies) of the account is not a
U.S. person as defined in 17 CFR
230.902(k).
(3) Non-shell foreign branch. Solely
for purposes of this paragraph (c), a nonshell
foreign branch of a bank means a
branch of the bank
(i) That is located outside the United
States and provides banking services to
residents of the foreign jurisdiction in
which the branch is located; and
(ii) For which the decisions relating to
day-to-day operations and business of
the branch are made at that branch and
are not made by an office of the bank
located in the United States.
(d) Accounts transferred to a broker or
dealer or other unaffiliated entity.
Notwithstanding section 3(a)(4)(B)(ii)(I)
of the Act (15 U.S.C. 78c(a)(4)(B)(ii)(I))
and §___.721(a)(1) of this part, a bank
operating under §___.721(a)(1) shall
not be considered a broker for purposes
of section 3(a)(4) of the Act (15 U.S.C.
78c(a)(4)) solely because a trust or
fiduciary account does not meet the
chiefly compensated standard in
§___.721(a)(1) if, within 3 months of
the end of the year in which the account
fails to meet such standard, the bank
transfers the account or the securities
held by or on behalf of the account to
a broker or dealer registered under
section 15 of the Act (15 U.S.C. 78o) or
another entity that is not an affiliate of
the bank and is not required to be
registered as a broker or dealer.
(e) De minimis exclusion. A bank
may, in determining its compliance
with the chiefly compensated test in
§___.721(a)(1), exclude a trust or
fiduciary account if:
(1) The bank maintains records
demonstrating that the securities
transactions conducted by or on behalf
of the account were undertaken by the
bank in the exercise of its trust or
fiduciary responsibilities with respect to
the account;
(2) The total number of accounts
excluded by the bank under this
paragraph (d) does not exceed the lesser
of--
(i) 1 percent of the total number of
trust or fiduciary accounts held by the
bank, provided that if the number so
obtained is less than 1 the amount shall
be rounded up to 1; or
(ii) 500; and
(3) The bank did not rely on this
paragraph (e) with respect to such
account during the immediately
preceding year.
Amended effective 4/17/2008, 73 Federal Register 20779
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.
Print Friendly!
Email This Article!
Discuss NOW!
