Large-Bank Deposit Insurance Determination Modernization FAQs
Preparation Prior to FDIC On-Site Review
Who will be notifying my institution of an on-site review and how much advance notice is given?
The FDIC Large Bank Deposit Insurance Determination Modernization (LBDIDM) testing team routinely selects Covered Institutions for on-site compliance review. The LBDIDM testing team will work with the Covered Institution to determine the testing schedule that works best for both the FDIC and the Covered Institution.
Who will serve as the primary points of contact during the review?
The FDIC LBDIDM testing team will be the primary point of contact throughout the preparation, on-site visit, and post-visit activities. Please send an email to DRRLargeBnkDepRule@FDIC.gov if you have any questions regarding your FDIC contacts.
What is the purpose of the reconciliation that is performed?
We perform a three-way reconciliation between the deposit core system(s), the general ledger (GL), and the most recent Call Report. This reconciliation is performed as of the date of the most recently filed Call Report. It allows the FDIC to ensure that all deposit-housing system(s) at the bank comply with this regulation.
What do I need to do with the pre-test questionnaire?
The pre-test questionnaire collects preliminary information about a bank’s deposit system(s), including contact names, system platform(s), technology service provider (TSP) information, deposit account types, sweep account types, etc. Please answer all questions and return the completed form to the LBDIDM testing team at DRRLargeBnkDepRule@FDIC.gov. The completed pre-test questionnaire should be sent to the FDIC at least one month prior to the scheduled testing date. The pre-test questionnaire serves as a working document to help FDIC reviewers better understand Covered Institutions’ deposit systems. It is not an official regulatory submission.
Do I have to use the reconciliation template to provide reconciliation information?
Yes, please use the template for providing reconciliation information. The completed reconciliation template and supporting reports and documents should be sent to the FDIC at least one month prior to the scheduled testing date.
Does the reconciliation have to be the same as-of date as the separate test environment?
No. We would like to see the most recent quarter-end date for the core deposit system(s) trial balance reports and GL reports. The reconciliation should tie to the same quarter-end’s Call Report (section RC-O). The comparison is meant to ensure that all deposit sources making up the gross deposits balance on the Call Report have been accounted for. However, the data extract files can be created using a different as-of date. This is to accommodate often observed differences between data in test environment verses production environment. Sometimes, when a sampling method is used, it is impossible to reconcile test data extract files to production GL and the Call Report. In summary, all materials related to reconciliation should have the same as-of date. The test data extract files can have a different as-of date.
Should I contact our technology service provider?
Yes. It is important to let the TSP know of the testing, so that they are available to set up a test environment, place provisional holds, create data extract files, process FDIC files, and discuss or modify any programs as needed.
What kind of data would the FDIC like to use in our test environment?
The FDIC prefers to test with either production data in its entirety or a subset of production data loaded into the test environment. The FDIC prefers not to use made-up test accounts. There is no threshold as to the number of accounts, but it should be large enough to get an accurate depiction of the entire production environment (i.e., it should contain all applications and products). In addition, the test environment should contain all of the same systems and software specifications as the production environment. No activities in the test environment should affect the production systems.
How will we exchange files with the FDIC testing team?
The FDIC puts the utmost value on the security of your data. For that reason, we use a secure FTP server (GlobalScape EFT) that can be set up to facilitate the file exchange. To establish the session, we simply need the email address of the bank employee who will be responsible for transmitting the data. However, if you have a secure file transfer method that you would prefer, we can use that instead.
When do I need to complete the Self-Assessment test plan?
The bank should have completed the Self-Assessment test prior to submitting its Attestation Letter. Please have the Self-Assessment test package available for review on the first day of the FDIC testing team’s arrival at the bank.
What is the provisional hold memorandum?
The provisional hold memorandum specifies thresholds and percentages for various deposit account types and sweep investment vehicle products. It is used by the Covered Institution to calculate and place FDIC provisional holds. The bank can choose to prepare and use its own provisional hold memorandum for the on-site review testing. The bank-prepared provisional hold memorandum should be sent to the FDIC at least one month prior to the scheduled review date. The FDIC can provide a provisional hold memorandum upon request.
Does it matter what thresholds and hold percentages I select when preparing the provisional hold memorandum?
This is up to you. However, we need to see varying thresholds and hold percentages across each of the four domestic deposit account types. In addition, the threshold amounts should accurately reflect the data. For example, if your bank has very few DDA accounts with balances in excess of $250,000, it would be appropriate to lower the threshold amount to $50,000. The goal is to have enough accounts with balances above thresholds so that they are subject to the FDIC provisional holds and to have enough accounts with balances below thresholds so that they are not subject to the FDIC provisional hold.
What type of workspace will the FDIC testing team need?
The team will need its own workspace, with enough space to accommodate 4-5 people. Internet access outside of the bank’s network will be required during the testing team’s visit. This should be prepared prior to the testing team’s arrival. Either a wireless or hard-wired internet connection is acceptable.
What is the kick-off meeting and what do I need to prepare for it?
The kick-off meeting takes place the morning of the first day of the on-site review. This serves as a forum for the testing team to meet the necessary bank personnel and to discuss the activities, timeline, requirements, and expectations for the week. The Covered Institution should come ready to discuss its Self-Assessment test package, any issues that arose during preparation, reconciliation related items, and any other questions they might have about the process.
Who needs to attend the kick-off meeting?
Because of the topics discussed, it would be helpful to have all involved bank personnel on hand for this meeting. This includes those involved in the preparation of the Self-Assessment plan (i.e., the programmer, project manager, etc.) in addition to the accounting/finance personnel responsible for the reconciliation.
What documentation will be needed for the reconciliation portion of the testing?
The Covered Institution staff should prepare a trial balance summary report (which documents the system balances, general ledger, and the Call Report), all with the same as-of date, preferably the latest quarter-end. In addition, the bank staff should prepare the reconciliation between each of the aforementioned sources by using the FDIC provided template. Again, all materials for reconciliation should have the same as-of date. You may choose a different date for test data extract files.
When do the data extract files need to be ready?
Prior to the on-site review date, the Covered Institution should start the process of calculating and placing provisional holds and should generate the standardized data extract files. The FDIC testing team expects to receive the data extract files (Deposit, Hold (with FDIC provisional hold), Sweep, Customer, and Join) at the end of the on-site kick-off meeting.
Are separate files for each system/sub-system acceptable?
Yes. The FDIC can accept separate files from each system(s). All bank data extract files will be loaded together and will create a consolidated set of FDIC files (two Non-Monetary Transaction files, Credit file, and Debit file) for the bank to process. The Covered Institution needs to be able to separate records for each system(s)/sub-system and process them accordingly. It is important to identify files from different systems/sub-systems by incorporating system identifiers in the file names and using one of the account identifier fields in each record.
What type of field delimiter is required for the extract files?
The regulation allows the use of tab or pipe (|) as delimiters. It is vital that the same delimiter is used consistently in all data extract files.
Do we need to prepare a control report?
Yes, a control report showing total number of accounts and summarized dollar amounts on your system in comparison to what is reported in the data extract files are important. The data extract file should be a true representation of all accounts on your system.
What delimiter will the Non-Monetary Transaction file and the Debit/Credit file use?
The FDIC will provide these files in pipe-delimited format with header and trailer records.
Do we need to supply a data dictionary?
Yes. The FDIC will require a data dictionary, which shows the mapping of each field provided.
Do we need to supply account type categorization information?
Yes. This information is critical for the FDIC on-site review. Please provide the exact logic of how you use Deposit file data field(s) to categorize an account into one of the four domestic deposit account types (consumer DDA, NOW, MMDA; consumer other; non-consumer DDA, NOW, MMDA; and non-consumer other). It is vital to use data field(s) reported in the Deposit data extract file to categorize accounts.
Do we have to use the FDIC’s code values?
It is strongly recommended that the Covered Institution use FDIC suggested values.
What to do with foreign branch deposits?
A foreign branch deposit is a deposit obligation carried on the books and records of a foreign branch of a domestic insured depository institution which is either dually payable or not payable in the United States. In either case, the deposit obligation is not an “insured deposit.” A Covered Institution is required to report foreign branch deposits in the Deposit file, data field 12. DP_Dep_Type, designated with the value “F”.
What to do with deposits denominated in foreign currencies?
A deposit denominated in a foreign currency can be a domestic deposit or a foreign branch deposit depending on the payability status. According to 12 CFR 330.3(c) of the FDIC’s Rules and Regulations, “[d]eposit insurance for such deposits shall be determined and paid in the amount of United States dollars that is equivalent in value to the amount of the deposit denominated in the foreign currency as of close of business on the date of default of the insured depository institution.” You should use an exchange rate published by a reputable source; convert foreign currencies into US dollars and report them in the Deposit file; and report foreign currency type in 13. DP_Currency_Type using the 3-digit ISO 4217 currency code. You will need to use the same exchange rate to convert US dollars in the FDIC Non-Monetary Transaction files, Credit file, and Debit file before processing these files.
What is the order of processing the incoming FDIC files?
- Non-Monetary Transaction file to remove the FDIC holds.
- Non-Monetary Transaction file to add the FDIC holds.
- Credit file to post credits to accounts.
- Debit file to post debits to accounts.
How does the FDIC validate successful processing of the incoming FDIC files?
The FDIC will select certain accounts and request screen shots which show the available balance both before and after processing, in addition to a maintenance file (showing removal or addition of holds) and a transaction file (showing credit and debit transactions). The “before” screen prints should contain account current balance, holds, and available balance. The “after” screen prints should contain account current balance, new holds (if any), available balance, a transaction showing that the old FDIC provisional hold was removed, and a transaction showing that the account was debited and credited.
What happens in the exit meeting?
This meeting is held at the conclusion of the week’s testing activities and serves to wrap-up the on-site testing visit. The testing team will discuss their findings and any additional tasks that need to be completed as well as an acceptable timeline to accomplish those tasks. This is also the proper time for the Covered Institution staff to raise any questions they might have.
What happens to the files provided after the review is complete?
All raw data files and intermediate data files for validation will be securely deleted from the FDIC testing team’s computers upon completion of the review.
What if additional files need to be transmitted after the testing team has left the Covered Institution’s site?
The FDIC will arrange for a secure file exchange session, which will allow for secure file transmission. It is acceptable if the Covered Institution prefers to use a different secure file transmission method that meets security standards for both the bank and the FDIC.
Who will serve as the primary FDIC contacts on follow-up items after the testing team has left the bank site?
The same FDIC contacts that were on-site will continue to be your primary point of contact for any supplemental communication after the on-site review is complete.
When can I expect to receive the Covered Institution’s certificate after the testing is complete?
A signed copy of the certificate will be scanned and emailed to you after successful completion of the testing. Should you need a hard copy mailed to your Covered Institution, please make that request when receiving the emailed certificate.