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It is my understanding that a church can open a NOW account. Can it also open an interest-bearing checking account? – IBA Compliance Connection

IBA Compliance Connection

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It is my understanding that a church can open a NOW account. Can it also open an interest-bearing checking account?

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Yes, a church may open an interest-bearing checking account. We are not aware of any ownership restrictions on interest-bearing checking accounts. Although the former Regulation Q prohibited the payment of interest on demand deposit accounts, this prohibition was repealed by the Dodd-Frank Act in 2011.

Also, you are correct that a nonprofit organization that is operated primarily for religious purposes — such as a church — may maintain a NOW account.

For resources related to our guidance, please see:

  • Final Rule, Interest on Deposits; Deposit Insurance Coverage, 76 Fed. Reg. 41392, 41392 (July 14, 2011) (“The FDIC is issuing a final rule amending its regulations to reflect section 627 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the DFA), repealing the prohibition against the payment of interest on demand deposit accounts effective July 21, 2011.”)
  • Regulation D, 12 CFR 204.130(c)(1) (“A nonprofit organization that is operated primarily for religious, philanthropic, charitable, educational, political or other similar purposes may maintain a NOW account.”)