Since the ownership of the funds might change on a daily basis, it would be up to the customer to produce those records to the FDIC to prove coverage if the bank fails. You just need to make sure you have the accounts set up correctly on your systems, i.e., XYZ Company as Custodian, etc.
FDIC "Pass-Through" Coverage
I am researching how to determine which Fiduciary/Agency accounts meet the pass-through account FDIC coverage requirements. I would like to know what is customary to request from these potential clients, since FDIC requires that certain conditions are met, for example, deposit terms for accounts opened at the financial institution must match the terms the third party agent promised the customer and how the third-party fiduciary disclosed fees and other terms of the relationship to their clients, Custodian maintains name and ownership interest of each depositor and funds are not co mingled, applicable state law, etc. Do financial institutions require additional documentation or an account holder's certification to verify pass-through eligibility? Any information that can assist me in determining how to identify and verify FDIC pass-through coverage would be greatly appreciated.
First published on 05/12/2019