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4000 - Advisory Opinions
Deposit Insurance for CDs Purchased in the Name of a National Bank
Acting as Nominee
FDIC--94--3
January 12, 1994
Christeena G. Naser, Attorney
This letter is in response to your letter of September 24, 1993
addressed to Claude Rollin and also Mr. *** letter of December 16, 1993
addressed to Roger Hood, both concerning insurance of accounts
established by nominees on behalf of customers. Please be advised that
neither letter was received until late December, presumably because of
an incorrect mailing address. For future reference, the address of
FDIC's main office is 550 17th Street, N.W., Washington, D.C. 20429.
Both letters inquired as to the deposit insurance for certificates
of deposit which are purchased in the name of a national bank acting as
nominee. You have indicated, however, that none of the account titles
reflect in any manner the capacity in which the bank is acting. As
discussed more fully below, if there is no indication of a fiduciary
relationship in the deposit account records of the insured institution
at which the funds are deposited, insurance will not flow through to
the actual owners of the funds.
The general rule governing accounts established in nominee name is
that deposit insurance flows through to the actual owners of the funds
so long as the disclosure and recordkeeping requirements set
forth in the enclosed FDIC regulations are
satisfied. 1
12 CFR 330.6. Please be advised, however, that FDIC regulations at 12
CFR 330.4(b)(1) state that no claim for insurance coverage based on a
fiduciary relationship (including nominee capacity) will be recognized
unless the relationship is evident from the deposit account records of
the institution in which the funds are deposited. "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 institution, including records maintained by computer,
which relate to the institution's deposit-taking function, but does not
mean account statements, deposit slips, items deposited or cancelled
checks. 12 CFR 330.1. In addition to this disclosure requirement, the
details of the fiduciary relationship as well as the interests of other
parties in the account must be ascertainable either from the
institution's depository account records or records maintained in the
regular course of business by the depositor or some entity that has
undertaken to maintain such records for the depositor.
12
{{8-31-94 p.4831}}CFR 330.4(b)(2). Finally, if multiple
fiduciary relationships are involved, the provisions of 12 CFR
330.4(b)(3) would also apply. Thus, in the case of both *** and *** ,
if the existence of the nominee relationship is not indicated anywhere
in the deposit account records of the institution holding the funds, it
would appear that deposit insurance would not flow through to the
actual owners of the certificates despite the fact that the nominee
maintains records of individual ownership.
You should also be aware that FDIC presumes that deposited funds are
actually owned in the manner indicated in deposit account records and
will not review other documents unless FDIC, in its sole discretion,
determines that the deposit account records are ambiguous or unclear.
12 CFR 330.4(a).
I hope the above has been responsive to your inquiry. However, if
you have further questions, please do not hesitate to telephone me at
(202) 898-3587.
1The general rules of aggregation would apply to funds held by
a nominee. Thus, for purposes of determining the $100,000 insurance
limit, an individual's ownership interest in the certificates of
deposit would be added to any other funds he/she holds in the same
right and capacity that are deposited in any branches of the same
bank. Go Back to Text
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