FDIC Part 370 Rule Extension
The FDIC has approved an amendment that, among other things, allows affected institutions an optional one-year extension of the rule's original compliance deadline of April 1, 2020.
Lately my clients lately have been asking "Does it make sense for us to extend our project?"
The short answer is "it depends." You need to take into consideration how far along you are with your compliance effort. I have outlined some of the key aspects of the optional extension below. We will post about other aspects of the FDIC Part 370 amendment in subsequent articles.
- Institutions that were affected by Part 370 as of April 1, 2017 have the option to extend their April 1, 2020 compliance date by up to one year
- Institutions covered by Part 370 after April 1, 2017 must comply three years after the date that they became covered
- Notification of extension prior to the April 1, 2020 compliance date is required and must state the total number and dollar amount of deposits for accounts in which the covered institution expected its IT system would not be able to calculate deposit insurance coverage as of the original April 1, 2020 compliance date
- The elective extension is not automatic, however a notification rather than request will be sufficient to reduce burden on institutions and the FDIC
- The FDIC retains the ability to accelerate Part 370 implementation for a particular covered institution under certain circumstances
- Allows affected institutions to focus their efforts on Part 370 compliance rather than on seeking exceptions
- Allows the FDIC to appropriately stage its compliance testing program using the required information from the notification
- Improved and enhanced deposit records
- Fewer items in the pending file
- Notification rather than request of extension reduces overall burden
- Reduction in potential miscalculations
- Enhancements to front-end account opening systems
Maximizing the Extension During the Early Days
For those early in the process of solution implementation, the proposed extension provides a much appreciated cushion. This time can be leveraged to solidify your compliance roadmap and make sure you are on the right path rather than rushing and making mistakes that lead to non-compliance.
Given the complex nature of this regulation, it is critical that you get this strategy right the first time if you are still early in the process (check out our webinar replay for help with this).
Requesting an Extension While Staying the Course
Some of our clients have been working on this regulation for multiple years, and we are advising them to stay the course so they can move on to the next project. For those in this camp, the extra time will allow you to perform more thorough internal testing, give intersecting resources breathing room, and provide more “total slack."
Extending or shelving your data cleanup and development project may result in additional costs from the ramping-up and ramping-down of resources. Development efforts usually get into a rhythm and disrupting that rhythm can be costly.
Finally, there could be potential incentives to finish early such as leniency in correcting non-compliant aspects of your effort.
Before you go, I’m curious…what is your strategy on handling the extension? Email me at firstname.lastname@example.org so we can learn from each other.
Fintria is a RegTech solutions provider based out of the Washington D.C. area. With our combined 50+ years of FDIC DRR experience, our team has closed hundreds of banks and helped build the original FDIC insurance engine; there isn't a Part 370 question that we can't answer. We leveraged this experience over two years to build our proven Part 370 product, RCS 370, which is currently live at the nation's largest institutions.
RCS 370 is an end-to-end solution that identifies data deficiencies and produces a complete dataset, contains an Insurance Engine that incorporates hundreds of rules for thousands of insurance scenarios and complies with ITFG 2.1, and produces all required deliverables for the FDIC.
Based on the incredible feedback we've received from affected institutions, the FDIC, and trade organizations, we highly recommend spending 30 minutes to watch the Part 370: A 10-Step Roadmap to Compliance Webinar replay.
Additionally, feel free to reach out if you have questions or need help with the following:
- Project Plan Creation: Advice or assistance in forming your Part 370 team or developing a comprehensive project plan. This ensures you are executing steps in the proper order to mitigate risk of project delays from common insurance determination pitfalls
- SME and Data Resources: You have already developed your project plan, but have detailed questions or need support with data mapping, data cleanup, building a compliant IT system, or any of the steps outlined in our webinar
- Internal Audit Support: You have completed your Part 370 project and want your efforts internally audited before the FDIC audit
- Outsourcing ITFG 2.1 Requirements: Integrate RCS 370 with your existing systems, allowing your team to focus on data cleanup
Stay in touch,
Managing Partner, Fintria
Loc.Nguyen@Fintria.com | (800) 913-9730.