FDIC FAQs-How is a “sweep account” defined for purposes of the 12 C.F.R. § 330.16(c)(3) notice requirement?

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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

 

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