FDIC Proposes Stricter Recordkeeping Rules for Banks Partnering with Fintechs

Overview

• The Federal Deposit Insurance Corporation (FDIC) has proposed new rules requiring banks to maintain detailed records of fintech customer accounts.
• The regulations are a response to the bankruptcy of Synapse Financial Technologies, which led to thousands of accounts being frozen.
• Banks must now identify the beneficial owners of each account and their balances, ensuring timely access to funds even if a fintech partner fails.
• The FDIC's proposal allows third parties to maintain records, provided banks retain unrestricted access to data during insolvency events.
• The FDIC has also finalized a policy to scrutinize bank mergers resulting in entities with over $100 billion in assets, updating guidance for the first time in 16 years.