We have a charitable foundation customer that has opened dozens of accounts with our bank, each with a distinct name and purpose. The foundation opens these accounts for individuals and groups who want to fund a charitable purpose and acts as fiduciary for the accounts. Should each of these accounts be treated separately for FDIC insurance purposes, or should they be lumped together? The foundation’s EIN is listed for each of the accounts, and the FDIC’s Electronic Deposit Insurance Estimator (EDIE) lumps all of the accounts together.

We believe that these accounts could be insured separately as fiduciary accounts, provided that your bank’s account records expressly disclose the fiduciary relationship between the charitable foundation and the individuals and groups for which it holds accounts.

For purposes of FDIC deposit insurance, the charitable foundation will be considered an agent for each of these accounts (rather than the account owner) if your bank’s records reflect the agency nature of its relationship with the accountowners. The FDIC’s Guide to Deposit Insurance uses these account titles as examples of account records that reflect an agency relationship: “XYZ Company as Custodian, XYZ For the benefit of (FBO), [or] Jane Doe UTMA John Smith, Jr.”

Note that when examining fiduciary accounts, the FDIC may ask to review the agreement between the agent maintaining an account and the principal whose funds are held in the account. Your bank also may want to obtain these agreements to ensure that the accounts will qualify for separate deposit insurance.

Finally, note that the identities of the charitable foundation clients may be relevant to your CIP and CTR procedures and ongoing OFAC scrubs.

For resources related to our guidance, please see:

FDIC Deposit Insurance Coverage Rules 12 CFR 330.11(a) (“(a) Corporate accounts. . . . If a corporation maintains deposit accounts in a representative or fiduciary capacity, such accounts shall not be treated as the deposit accounts of the corporation but shall be treated as fiduciary accounts and insured in accordance with the provisions of § 330.7.”)

FDIC Deposit Insurance Coverage Rules 12 CFR 330.7(a) (“The FDIC will recognize a claim for insurance coverage based on a fiduciary relationship only if the relationship is expressly disclosed, by way of specific references, in the ‘deposit account records’ (as defined in § 330.1(e)) of the insured depository institution. Such relationships include, but are not limited to, relationships involving a trustee, agent, nominee, guardian, executor or custodian pursuant to which funds are deposited. The express indication that the account is held in a fiduciary capacity will not be necessary, however, in instances where the FDIC determines, in its sole discretion, that the titling of the deposit account and the underlying deposit account records sufficiently indicate the existence of a fiduciary relationship.”)

FDIC Deposit Insurance Coverage Rules, 12 CFR 330.1(e) (“Deposit account records means account ledgers, signature cards, certificates of deposit, passbooks, corporate resolutions authorizing accounts in the possession of the insured depository institution and other books and records of the insured depository institution, including records maintained by computer, which relate to the insured depository institution's deposit taking function, but does not mean account statements, deposit slips, items deposited or cancelled checks.”)

Financial Institution Employee’s Guide to Deposit Insurance (Fiduciary Accounts) (“Deposits held by a fiduciary on behalf of one or more principals are insured on a pass-through basis as the deposits of the principal (the actual owner) to the same extent as if the deposits were deposited directly by the principal, provided all of the following three requirements are met:

1. Funds must be in fact owned by the principal and not by the third party who set up the account (i.e., the fiduciary or custodian who is placing the funds). To confirm the actual ownership of the deposit funds, the FDIC may review:

a. The agreement between the third party establishing the account and the principal.

b. The applicable state law.

2. The IDI’s account records must indicate the agency nature of the account (e.g., XYZ Company as Custodian, XYZ For the benefit of (FBO), Jane Doe UTMA John Smith, Jr.).

3. The records of the IDI, the fiduciary or a third party must indicate both the identities of the principals as well as the ownership interest in the deposit.”)