Q: How is a “sweep account” defined for purposes of the 12 C.F.R. § 330.16(c)(3) notice
requirement?
A: For purposes of the 12 C.F.R. § 330.16(c)(3) notice requirement, the FDIC considers a
“sweep account” to be an account held pursuant to a contract between an IDI and a customer
involving the pre-arranged, automated transfer of funds from a deposit account that qualifies
as a noninterest-bearing transaction account to an interest-bearing deposit account. This
definition is intended to include sweep arrangements providing for the automated, recurring
movement of funds, typically daily, between a noninterest-bearing transaction account and
an interest-bearing account (for example, a savings account such as an MMDA). This
definition does not include, for example, non-automated, customer-initiated transfers and
transactions used to amortize a loan according to a designated payment schedule. So-called
"target-balance" sweeps where, upon reaching a designated balance, funds are swept from a
noninterest-bearing transaction account to an interest-bearing account would come within
this definition of "sweep account."
This can be found in - FAQ#34 of FDIC’s FAQs. FDIC’s FAQs can be found at: http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf
Article ID: 615, Created: August 19, 2011 at 4:16 PM, Modified: August 19, 2011 at 4:18 PM